Knoxville couple indicted in fraud, money laundering scheme

KNOXVILLE, Tenn. (WATE) — A Knoxville couple has been indicted in a money laundering and wire fraud scheme after the husband was accused of fraudulently accepting money for “legal fees” from victims to help them get settlement funds between 2019 and 2024, according to the Department of Justice.

The DOJ released on Wednesday that Kenneth Francis Lee, 53, and Susan Amie Lee, 54, of Knoxville were indicted by a federal grand jury on August 8. Kenneth Lee was indicted on seven counts of wire fraud, one count of money laundering and three counts of tax offenses, and Susan Lee was indicted on three counts of money laundering offenses, the DOJ said.

The release explains that Kenneth Lee is accused of operating a fraud scheme from March 2019 to August 2024, where he allegedly told defrauded investors by claiming he was in litigation to sell a company to a large U.S.-based investment firm.

The DOJ said victims wired “Kenny” Lee funds for “legal fees” to help procure the settlement, and were promised a percentage of the sale proceeds. Instead, the indictment alleges there was no settlement and Kenneth Lee used the funds for “personal expenses, including funding his gambling habit.”

The DOJ added that it is also alleged that Kenneth Lee did not report any of the income to the Internal Revenue Service. Susan Lee is alleged to have assisted in collecting the funds into accounts in her name and spending the money, the DOJ said.

The Lees appeared in court on Wednesday, the DOJ said, and the trial is scheduled to begin on October 22, 2024. If convicted, Kenneth Lee faces a maximum of 20 years in prison, a fine, restitution, forfeiture, and a maximum of five years of supervised release for the fraud and money laundering offenses. Susan Lee is also facing a maximum of 20 years in prison as well as a fine, or twice the amount involved in the money laundering transactions, forfeiture, and up to three years of supervised release if she is convicted, the DOJ said.

The case was investigated by IRS Knoxville and FBI Knoxville.

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