Ex-Gallatin oilman indicted in federal fraud case

A 55-year-old former Gallatin oilman has been indicted in federal court here in connection with a multimillion-dollar mail fraud case linked to oil and gas wells in Kentucky, and a lavish Sweet 16 party for his daughter televised on MTV more than two years ago that tipped off angry investors to his whereabouts.
This week, the U.S. Attorney's Office in Nashville indicted Gary Milby, the former owner of Mid America Energy Co., who now lives in Campbellsville, Ky., on three counts of mail fraud, one count of securities fraud and three counts of money laundering.

Milby allegedly used investors' money for lavish personal spending and to pay company salaries rather than investing much of it in oil and gas production, the indictment alleges. The scheme ran from December 2004 to mid-2006, federal authorities said.

The oilman allegedly inflated claims of possible returns from wells to be drilled under various limited partnerships in different parts of Kentucky, the indictment says.

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He failed to invest funds as outlined in written agreements with investors, though, instead in a couple of cases wiring $100,000 to an offshore account in the Turks & Caicos Islands and buying a $28,000 BMW automobile, federal officials said.

Of the little oil revenue that investigators believe was actually generated by wells, Milby's company still failed to pay investors the agreed-upon percentage of the proceeds, the indictment says.

In a bizarre twist in the case dating to early 2007, not long after entrusting millions of dollars to Milby, many investors were alarmed when they happened to see an episode of My Super Sweet 16 , an MTV reality show about rich kids and opulent birthday parties thrown for them by their families.

Milby, who once lived in Gallatin and had his business headquarters in nearby Mt. Juliet, was giving his daughter a private helicopter ride, a new BMW and a shopping spree on the show.

Cameras followed Milby to his Kentucky oil fields, where his daughter, Ariel, exclaimed at the time: "I love oil. Oil means shoes and cars and purses."

Though he faces criminal charges, Milby probably won't be arrested, said Assistant U.S. Attorney Ty Howard. Instead, Milby will be summoned to appear in court, a process that Howard said is common in white-collar crime cases.

Tennessean staff writer Clay Carey contributed to this story.

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