An Oilman Entices, and Investors Cry Foul

[Nitrogenica]

NY Times~

"LIKE so many of the over-the-top birthday parties that typically appear on “My Super Sweet 16” on MTV, Ariel’s celebration took the fairy-tale-princess theme to new heights.

Horse-drawn carriages delivered teenage guests to a faux-castle tent where they were met with dancing jesters and disco lights. The birthday girl, wearing a white dress and tiara, flew in via helicopter. And the evening ended with fireworks and the arrival of Ariel’s gift from her father: a brand new BMW 325i.

As viewers learned, Ariel’s dad was a successful oilman. “I love oil. Oil means shoes and cars and purses,” Ariel exclaimed to the camera as she and her father stomped around oil drilling sites in the muddy hills near her home in Campbellsville, Ky. When her father pointed to one of the sites and told viewers that it produced 120 barrels a day, Ariel asked, “How many Louis Vuittons is that?” Her father’s answer was “a bunch.”

The show typically attracts younger viewers, but this particular episode, shown in February 2007, caught the attention of an entirely different demographic: government regulators.

Ariel’s father was Gary M. Milby, a man regulators now say was bilking hundreds of investors across the country out of millions of dollars by offering fraudulent investments in nearly 30 oil and gas limited partnerships with names like “Black Gold Oil No. 6” and “Fort Knox Oil No. 8.”

Last fall, the Securities and Exchange Commission filed a complaint accusing Mr. Milby of raising more than $19 million from 375 investors over about a year and a half, starting in February 2005. At least $12 million was diverted into offshore accounts and family trusts and millions of dollars was spent on Mr. Milby’s lavish lifestyle, the S.E.C. said in its complaint. Mr. Milby denied all of the accusations against him."

Horse-drawn carriages delivered teenage guests to a faux-castle tent where they were met with dancing jesters and disco lights. The birthday girl, wearing a white dress and tiara, flew in via helicopter. And the evening ended with fireworks and the arrival of Ariel’s gift from her father: a brand new BMW 325i.

As viewers learned, Ariel’s dad was a successful oilman. “I love oil. Oil means shoes and cars and purses,” Ariel exclaimed to the camera as she and her father stomped around oil drilling sites in the muddy hills near her home in Campbellsville, Ky. When her father pointed to one of the sites and told viewers that it produced 120 barrels a day, Ariel asked, “How many Louis Vuittons is that?” Her father’s answer was “a bunch.”

The show typically attracts younger viewers, but this particular episode, shown in February 2007, caught the attention of an entirely different demographic: government regulators.

Ariel’s father was Gary M. Milby, a man regulators now say was bilking hundreds of investors across the country out of millions of dollars by offering fraudulent investments in nearly 30 oil and gas limited partnerships with names like “Black Gold Oil No. 6” and “Fort Knox Oil No. 8.”

Last fall, the Securities and Exchange Commission filed a complaint accusing Mr. Milby of raising more than $19 million from 375 investors over about a year and a half, starting in February 2005. At least $12 million was diverted into offshore accounts and family trusts and millions of dollars was spent on Mr. Milby’s lavish lifestyle, the S.E.C. said in its complaint. Mr. Milby denied all of the accusations against him.

http://www.nytimes.com/2008/03/30/business/30gas.html?_r=1&ex=1364616000&en=803b67c338cea204&ei=5090&partner=rssuserland&emc=rss&oref=slogin

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