A former gospel singer and member of the famous Winans family was sentenced to serve nearly fourteen years in prison for a massive Ponzi scheme that duped more than 1,000 investors out of at least $8 million. Michael Winans, 30, received a 165-month sentence from United States District Judge Sean F. Cox, who took the rare step of upwardly departing from prosecutors' recommended 12.5 year sentence and highlighted the widespread devastation suffered by victims. Winans pled guilty to a single charge of wire fraud in October 2012, and faced up to twenty years in prison.
According to authorities, Winans operated the Winans Foundation Trust (the "Trust"), telling potential investors that the Trust was involved in a lucrative venture investing in Saudi Arabian crude oil bonds. Between October 2007 and September 2008, potential investors were told that the bonds yielded exorbitant short-term returns of up to 100% in just two months, and that these returns were 'guaranteed'. Winans initially recruited a group of eleven investors, who served as "shareholders" and recruited other investors on a large-scale basis. In all, at least 1,000 victims invested more than $8 million in what they thought were Saudi Arabian crude oil bonds.
However, in reality, there were no Saudi Arabian crude oil bonds with exorbitant returns. Rather, Winans operated the classic Ponzi scheme by using new investor funds to pay 'returns' to existing investors. Investor funds were also used to pay Winans' personal expenses.
In handing down his sentence, Judge Cox focused on the fact that many of the victims were recruited using Winans's religious appeal and family reputation. The Winanses are widely known in the gospel music arena; Winans's uncle, Marvin, gave a eulogy at Whitney Houston's funeral, and Winans is the nephew of Marvin Winans, a Detroit pastor who is known nationally for gospel music. Indeed, Winans himself also dabbled in gospel singing, even releasing an album in September 2011. None of Winan's relatives were implicated in his scheme.
Winans was also ordered to pay $4.8 million in restitution, and remains free on bond until his prison location is determined.