The Securities And Exchange Commission on Tuesday charged a Chicago-based business owner with allegedly defrauding investors of $20 million in investments in his company that claimed to manufacture homeland security products, according to the SEC complaint.
The SEC charged Gregory E. Webb, 64, Arlington Heights, Ill., who is chairman, CEO and president of InfrAgeis, with conducting fraudulent and unregistered securities offerings from January 2005 through June 2010 that raised at least $20 million from at least 395 investors in 29 states and the District of Columbia, according to the SEC's complaint.
The SEC complaint, filed in U.S. District Court for the Northern District of Illinois, alleges that Webb and InfrAegis throughout the stock offering and in written offering materials provided to investors, made false and misleading claims about the company's financial success, including the existence of contracts for the sale of InfrAegis' products.
The company claimed that the City of Chicago had agreed to install one of InfrAegis' products -- a kiosk that purportedly can detect the presence of nuclear or biological weapons -- throughout the city and that the agreement would result in profit of well over $80 million.
The SEC also claims that InfrAegis had a contract with the Washington Metropolitan Transit Authority to install thousands of InfrAegis' kiosks throughout the Metro train system in Washington, D.C., and that the contract was worth $20 billion over 20 years.
The SEC also alleges that Webb and InfrAegis made false and misleading claims about the purported sale of a partial stake in InfrAegis for $8.7 billion, which they told investors would result in 3800% to 4000% returns on their investments.
The SEC seeks a permanent injunction and disgorgement, along with prejudgment interest, against Webb and InfrAegis and a civil penalty against Webb.
-Jim McConville