2 men found guilty, woman acquitted in oil and gas scam

Pair face up to 20 years in prison; third defendant acquitted

jhewlett@herald-leader.comMay 12, 2011 

A federal jury in Lexington on Wednesday found two people guilty of numerous charges in connection with a gas and oil drilling scam in which hundreds of investors lost more than $33 million. A third defendant was acquitted.

Lexington lawyer Bryan S. Coffman, 47, was found guilty of eight counts of mail fraud, nine counts of wire fraud, two counts of securities fraud, 10 counts of money laundering and one money laundering conspiracy count. He was acquitted on two money laundering charges, according to the U.S. attorney's office.

Gary Moss Milby, 57, who is from the Campbellsville area, was convicted of eight counts of mail fraud, nine counts of wire fraud and one count of securities fraud.

Coffman's wife, Megan Coffman, 48, who was facing money laundering charges, was acquitted on all of the charges.

Bryan Coffman and Milby face up to 20 years in prison. U.S. District Judge Karen Caldwell is scheduled to sentence them Aug. 24.

A fourth defendant, Vadim "Victor" Tsatskin of Canada, testified for the prosecution and was promised he would not be prosecuted in exchange for his testimony.

Authorities said about 500 corporate and individual investors in several states and countries were promised big returns from wells in Green and Adair counties that were actually dry holes or wells that didn't produce as long as promised. The defendants intentionally misrepresented and omitted facts about their oil and gas drilling programs, prosecutors maintained. The defendants gave investors false information about the use of investor money, investor risk, successes of their previous drilling programs and their companies' compliance with federal laws, according to the prosecution.

The oil and gas production investment scheme, which used the company names Mid-America Energy Inc. and Global Energy Group, began in 2004 and lasted through 2008, according to prosecutors.

The defendants were accused of fraudulently using investors' money for things such as jewelry, real estate, a lavish birthday party, a yacht and retirement accounts.

During the trial, which started just over three weeks ago, defense attorneys said that the oil and gas exploration business was one of the riskiest investments a person could make and that the investors were aware of what they were doing when they participated in the well programs.

The attorneys maintained that the investors also met financial criteria that allowed them to invest. And the defense said it was not a crime for the defendants to make money from the sales of oil and gas drilling programs that were not successful.

Defense attorney Michael Murphy, who represented Milby, said Milby lied to potential investors in his sales pitches but that he was not guilty of crimes. Defense attorney Steve Romines, who represented Bryan Coffman, portrayed his client as a lawyer merely doing his job. And defense attorney Patrick Renn, who represented Megan Coffman, said his client was not involved in the oil and gas programs, and that companies she set up and bank accounts she held were not for handling dirty money. He said she shouldn't have been a defendant in the case at all.

Assistant U.S. Attorney Kenneth Taylor said the defendants knew they were selling a pipe dream that couldn't possibly come true. He called the drilling programs a Ponzi scheme.

Jurors deliberated for about a half-hour on Tuesday and from about 9 a.m. to 5 p.m. Wednesday.

Federal authorities seized some of the defendants' assets obtained through the scheme, according to the U.S. attorney's office. Court decisions are expected later regarding liability for a money judgment and whether assets owned by the defendants represent proceeds from the fraud.

Reach Jennifer Hewlett at (859) 231-3308 or 1-800-950-6397, Ext. 3308.

Lexington Herald-Leader is pleased to provide this opportunity to share information, experiences and observations about what's in the news. Some of the comments may be reprinted elsewhere in the site or in the newspaper. We encourage lively, open debate on the issues of the day, and ask that you refrain from profanity, hate speech, personal comments and remarks that are off point. Thank you for taking the time to offer your thoughts.

Commenting FAQs | Terms of Service