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Pull the Other One

CHICAGO (CN) - Sixty-four-year-old Gregory E. Webb, of Arlington Heights, raised $20 million in a fraudulent offering of InfrAegis stock, claiming he had $20 billion in government contracts, though he "never sold a single product," the SEC says.

The SEC claims Webb bilked at least 395 investors in 29 states through the scam he began in 2005.

"Webb and InfrAegis fraudulently raised those funds from investors by falsely portraying InfrAegis as a successful company that had both high-level connections in the homeland security market and lucrative contracts for the sale of InfrAegis' products," the complaint states. "In reality, InfrAegis was at all times a startup company that never sold any of the products that Webb and InfrAegis claimed were developed and operational."

Among Webb's false and misleading statements, the SEC says, were:

"a. The City of Chicago had agreed to install one of InfrAegis' products - a kiosk that purportedly can detect the presence of nuclear or biological weapons - throughout the city and that the agreement would result in profits of well over $80 million;

"b. InfrAegis had a contract with the Washington Metropolitan Transit Authority ('WMATA') to install thousands of InfrAegis' kiosks throughout the Metro train system in Washington, D.C. and that the contract was worth $20 billion over twenty years; and

"c. InfrAegis sold a partial stake in the company for $8.7 billion in cash to a company named the DW Group and that the transaction would result in 3,800% to 4,000% returns to investors."

But it was all hooey, the SEC says: "Despite the fact that InfrAegis never sold a single product, and that InfrAegis' offering materials claimed that he did not receive compensation from the company, Webb directed InfrAegis to pay him at least $741,000 using investor funds over the course of the offering. In addition to his investor-funded 'salary,' from April 2005 through June 2010, Webb used an InfrAegis corporate credit card, again funded by InfrAegis investors, to purchase at least $70,000 in goods and services for himself, including vacations, clothing, fast food, groceries, tobacco, liquor, movies, video games, and music."

The SEC seeks disgorgement and civil penalties, and it wants the judge to tell Webb never to do such a thing again: never never never.

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