HELENA – Montana’s securities commissioner has ordered a Tennessee-based oil and gas development company, accused of defrauding Montana investors, to pay more than $657,000 in fines and restitution.
Montana State Auditor John Morrison, who is also the securities commissioner, on Monday upheld the findings of an administrative hearing examiner who ordered fines of $510,000 and restitution of $147,513.
Morrison had previously ordered Mid-America Energy Inc. to cease operations after a Missoula resident invested about $120,000 in the company. The investor has not received any payment on the investment, either in returns or the principal invested and has been unable to make contact with the company for over a year.
Morrison’s office said Mid-America and its officers Gary Milby, Clinton Goff and Sy Schaiken, promised investors “incredible returns,” including a 100 percent return on investments in 12 months and large dividend checks.
“Instead of honoring the promises to investors, Milby threw a 16th birthday party for his daughter in October of 2006 that has been well publicized, including a feature on MTV’s ‘My Super Sweet 16’ television show,'” Morrison said in a news release. “Milby reportedly spent over $100,000 on the party and then bought this 16-year-old girl a BMW as a birthday gift.”
Jamey Petersen, a spokeswoman for the state Securities Department, said the order states that investors should be paid back fully plus 10 percent interest.
“Milby and the company has been ordered” (to pay restitution), she said. “Whether or not he does is based on his ability.”
Several other states, as well as the Securities and Exchange Commission, have taken action against Mid-America, Milby, Goff and Schaiken for securities violations similar to those alleged by the Montana Securities Department. Milby recently agreed to a permanent injunction from the SEC that bars him from selling investments in several oil fields in south-central Kentucky.