$36 million con job involving hundreds of victims
Updated On: Dec 29 2013 12:00:00 AM EST
Hundreds of victims fell for a $36 million scam and it's because the con-artists knew exactly how to outsmart their victims.
“I’ve been very blessed. The good Lord has taken care of me well. I make a lot of money, and have a lot of fun,” said Gary Milby pitching his company, Mid-America Oil and Gas, to potential investors.
“We guarantee production. These wells that I’m offering you folks today are going to last longer than I’m going to live,” Milby's pitch continued.
Milby provided a detailed prospectus, as well as what seemed like a strong argument on why investors should trust him.
More of the pitch video said, "How many of those wells have productive? All of them? You're batting 100 percent? That's great. Yes sir. That sounds phenomenal in the oil business."
The man asking Milby that question is Robert Buchner, a lawyer who had invested in similar projects with other companies.
"He basically guaranteed the wells would be productive and investors would make money," said fraud victim Robert Buechner.
Buechner was intrigued and did his due diligence, including visiting the the oil wells to see them first-hand. In one picture, Buechner says he witnessed oil gushing out of the wells and was impressed.
"He would say, 'oh my gosh, this is going to be 60 barrels a day, this looks like a real winner 90 barrels a day,'" said Buechner.
However, the truth was it was all a show.
"What we find is that they pumped that oil in and staged it for the investors to make an impression on them," said U.S. Postal Inspector Roberta Bottoms.
Postal inspectors say the presentations and the demonstration at the oil wells were all part of a scam.
"It's another tactic they used to try and make people make a decision quickly and it plays on the investors' emotions," added Bottoms.
Inspectors say Gary Milby, along with attorney Brian Coffman, lured more than 260 victims into this scam. Total losses came to more than $36 million.
"Brian Coffman was the wizard in the Wizard of Oz movie; you pull back the curtain he was the one always pulling the strings," said Bottoms.
Inspectors found Coffman was depositing investors' funds into accounts he and his family controlled. the money bought condos and luxury items.
"He bought a yacht that was named For Your Eyes Only - this yacht was purchased with investors funds and valued at $1.5 million," said Bottoms.
The scam began to unravel when investors starting asking questions about their statements.
"The big problem was we were not getting the money we were promised," explained Buechner.
He says he did everything he could to research the investment. The problem was the con artists in this case outsmarted the victims.
"This isn't a case of inadequate due diligence done, the due diligence was flawed, because you didn't get the right answers. I don't know how you get right answers, when you ask the right questions when people purposely give you the wrong answers," said Buechner.
Coffman and Milby were both charged with eight counts of mail fraud and nine ounts of wire fraud. Milby was sentenced to 20 years in prison and Coffman received 25.
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