Daddy's Little Fraud

The worlds of MTV and the S.E.C. rarely intersect. But they have collided in an alleged oil-investment fraud unfolding in Kentucky.

The Securities and Exchange Commission said today that it had filed a civil complaint against Gary M. Milby and his company, Mid-America Energy Inc., asserting that they bilked several hundred investors of more than $19 million in what the commission described as "a fraudulent oil-and-gas investment scheme."

The complaint contends that Milby and Mid-America sold interests in at least 30 oil-and-gas investment programs by falsely telling investors they were properly registered and hugely profitable. The S.E.C. also asserted that Mid-America neglected to tell investors that authorities in several states had concluded the investments illegal and had forbidden Milby to sell the investments in their jurisdictions.

Regulators also said Mid-America had never alerted investors to Milby's personal bankruptcy and his being barred from drilling in Texas. The commission said Milby and his company "misappropriated and misapplied" about $12 million of the funds raised.

Investors wondering where some of that missing money might have gone could look for some answers on MTV. Milby and his daughter were featured on an episode last February of the network's My Super Sweet 16 reality program. The series is about some rich parents' over-the-top 16th birthday parties for their children.

The episode featuring Milby begins with him buying his daughter a $1,200 necklace and browsing the Versace and Coach sections of a department store.

They then go on to plan and enjoy her 16th birthday party, a princess-themed event on a 50-acre farm in Campbellsville, about 65 miles south of Louisville. The centerpiece is a tent that resembles a castle and is big enough to accommodate 150 guests and a live band.

The evening ends with a fireworks show and the presentation to the birthday girl of her real present: A new BMW.

Federal regulators declined to mention the program in their complaint. But they did say they are seeking to force Milby to disgorge any ill-gotten gains from his oil-investment firm, and to pay a hefty civil penalty as well.

by Mark Stein