Ky. oilman who appeared on MTV ‘Sweet 16′ show indicted by federal grand jury on fraud charges

Oilman seen on MTV show indicted on fraud charges

NASHVILLE, Tenn. — A Kentucky oilman featured on an MTV show about lavish teenage birthday parties has been indicted by a federal grand jury in Nashville on charges of money laundering and securities fraud.

Prosecutors say Gary Milby, 55, of Campbellsville, Ky., was charged with three counts of mail fraud, one count of securities fraud and three counts of money laundering in an indictment returned Wednesday.

According to the indictment, Milby owned an oil-and-gas company called Mid America Energy operating out of Portland, Tenn., that raised millions selling interests in oil wells in Kentucky. He gained fame after he and his daughter showed up on an 2007 episode of “My Super Sweet 16,” an MTV reality show about rich kids and their outrageously opulent birthday parties.

Milby’s attorney, David Bridgers of Nashville, had no comment regarding the indictment.

The indictment alleges that Milby made false claims about the company’s status and his own financial condition, such as failing to disclose that regulators in several states had issued cease-and-desist orders against the company. The indictment also claims he exaggerated the likely investment returns, and the oil wells where he planned to drill historically produced only a small fraction of the oil he claimed was obtainable.

A substantial amount of money he received, according to the indictment, was used for salaries, vehicles and lavish personal spending.

A federal judge in Tennessee has awarded investors more than $5.6 million in damages from Milby, and he reached an agreement with the Securities and Exchange Commission in 2008 to stop selling oil and gas securities in several oil fields in south-central Kentucky.

Wynne James, a Nashville, Tenn.-based attorney who represents 75 of Milby’s investors, said Thursday they are still working to collect the money.

The SEC says Milby never paid off on the investments and pocketed much of the money.

State securities regulators in Montana fined Milby $652,000 for selling unregistered securities, and the Arizona Corporation Commission ordered Milby to pay a $1 million penalty in 2006 for selling securities despite a cease-and-desist order.

Milby has also been ordered by state agencies to stop selling securities in Alabama, California, Illinois and Pennsylvania.

Milby surfaced in the public eye when he threw a lavish party for his daughter that was featured on the reality TV show around the time Mid America was accepting money from Montana investors. The episode showed Milby giving his daughter a private helicopter ride, a new BMW and a shopping spree.

The cameras followed Milby to his Kentucky oil fields where his daughter, Ariel, exclaimed, “I love oil! Oil means shoes and cars and purses!” Pointing to one of the drills, Milby told his daughter, “This one here will make over 20 barrels a day.”