Judge: Pair convicted in oil drilling scam must forfeit $33 million in cash, cars, property by Brett Barrouquere, February 4, 2014
LOUISVILLE, Kentucky — Two men convicted in an oil-and-gas drilling scheme in which investors lost millions of dollars have been ordered to forfeit $33 million in cash, cars and property. The decision by U.S. District Judge Karen K. Caldwell in Lexington brings to an end the long-running saga of 50-year-old former attorney Bryan Coffman and 60-year-old Tennessee businessman Gary Moss Milby, who were convicted in May 2011 of multiple charges of mail, wire and securities fraud. Caldwell granted a request by Milby’s wife to omit $290,000 from two bank accounts, a condo in South Carolina and an interest in eight properties from the forfeiture order.
Coffman is serving a 25-year sentence at the federal prison in Terre Haute, Indiana Milby is serving a 20-year sentence at the federal prison in Ashland.
Judge Caldwell found that Bryan Coffman and Milby either illegally took the money from clients of their businesses, or had used funds of their own to disguise the ill-gotten cash. The funds were tucked away in a series of bank and investment accounts held by Coffman, his wife Megan, or various business entities the couple used. Caldwell found that money, either belonging to the clients or to the Coffmans, facilitated the money laundering part of the oil drilling scheme and should be forfeited. “Bryan clearly exercised control over the accounts — so much so that, according to Megan, he was able to launder at least $1.5 million through them without her knowledge,” Caldwell wrote.
The funds were tucked away in a series of bank and investment accounts held by Coffman, his wife Megan, or various business entities the couple used. Caldwell found that money, either belonging to the clients or to the Coffmans, facilitated the money laundering part of the oil drilling scheme and should be forfeited. The jury acquitted Megan Coffman of all charges against her, all of them money laundering. Prosecutors dismissed charges against co-conspirator Vadim Tsatskin after he was sentenced to three years in prison in Canada.
Caldwell allowed Megan Coffman to hold on to about $289,000 in two bank accounts, a condo in South Carolina and an interest in eight pieces of property in Lexington. During the trial that lasted nearly a month, prosecutors characterized the investments as operating like a pyramid scheme with payments from new investors being given in small amounts to longer-term investors with some people receiving no money at all. Prosecutors said the defendants spent their investors’ money on cars, jewelry, yachts, parties and retirement accounts. Coffman and his wife may keep a house they purchased in Lexington, even though prosecutors sought to seize the property as ill-gotten proceeds from the scheme. Caldwell found that, even though the house served as a mailing address for one of the businesses involved in the scam, no proceeds from the illegal activity could be traced to either the purchase or any improvements on the structure. “It appears that the government has been unable to track a huge portion of the total fraud proceeds,” Caldwell wrote. Milby surfaced in the public eye when he threw his daughter a lavish Sweet 16 birthday party that was featured on MTV. The episode showed Milby giving his daughter a private helicopter ride, a new BMW and a shopping spree. [Emphasis added]