Crime

Federal fraud defendant treated for heart problems; sentencing delayed

Campbellsville businessman Gary Moss Milby was to have been sentenced Thursday morning for crimes stemming from a gas- and oil-drilling scam in which investors lost millions of dollars, but he became ill and was taken to a hospital before the court proceedings began.

U.S. District Court Judge Karen Caldwell postponed the sentencing. The date and time are to be set later.

Paramedics were called to the federal courthouse in Lexington to examine Milby, who had been brought to the courthouse from the Grayson County jail. They determined that Milby, who is in his late 50s, needed to be taken to a hospital. After lunchtime Thursday, Milby remained at a local hospital, and the judge called off the sentencing.

Caldwell said Milby had several stents in his heart and vascular problems.

According to the U.S. Attorney's Office for the Eastern District of Kentucky, at least 594 investors from throughout the continental United States and Canada were defrauded out of more than $36.5 million from 2004 to 2008. Former Lexington lawyer Bryan S. Coffman, 48, was sentenced Wednesday to 25 years in prison for his role in the scam and was ordered to pay restitution.

On Thursday while Milby was at the hospital, David and Pamela Hallin of Memphis spoke in court about how they were victimized in the scam. The couple lost about $84,000 in their dealings with Milby, they said. Later, they lost tens of thousands of dollars more after they were scammed again by a company that purchased a company they and friends started with oil well leases acquired from Milby, they said. David Hallin asked the judge to sentence Milby to the maximum amount of time allowed.

In May 2011, Milby and Coffman were convicted by a jury of multiple counts of mail fraud and wire fraud. Coffman also was convicted of two counts of securities fraud, 10 counts of money laundering and one count of money-laundering conspiracy. Milby also was convicted of one count of securities fraud. He was acquitted of two counts of money laundering. Coffman's wife, Megan, was acquitted of money-laundering charges in the case.

Milby and Victor Tsatskin of Canada solicited money from investors, giving them bogus predictions and guarantees about potential profits of the oil- and gas-drilling programs, according to the U.S. attorney's office. Coffman provided legal and business advice with knowledge of the scheme, and he helped hide the scheme from investigators, according to the U.S. attorney's office.

Coffman and Milby used the money to pay for boats and vehicles, real estate, jewelry, parties, family travel and trust funds, according to the U.S. attorney's office.

Milby surfaced in the public eye after he threw his daughter a lavish birthday party that was featured on MTV.

In February, Caldwell sent Milby to the Grayson County jail after prosecutors asked her to revoke his bond, saying he had tested positive for cocaine use several times in previous months.

Coffman was ordered to report to the Federal Medical Center on Leestown Road on May 16. Tsatskin is serving a prison sentence in Canada.

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