FROM: SECURITIES AND EXCHANGE COMMISSION
Federal Grand Jury Indicts CEO of Chicago-Area Company Accused of Defrauding Investors in Multi-Million Dollar Stock Scam
On February 28, 2014, the United States Attorney’s Office for the Northern District of Illinois announced that a federal grand jury returned an 11-count indictment against Gregory Webb, the CEO and President of InfrAegis, Inc., a Chicago-area company that claimed to make products for the homeland security market. According to the indictment, between 2007 and October 2013, Webb and InfrAegis obtained more than $9 million from investors through the offer and sale of InfrAegis stock by making false representations about the solvency and financial condition of InfrAegis, about contracts that the company allegedly expected to be awarded or had been awarded, and about the expected and actual return on investment investors would get from the company. For example, Webb falsely represented that the City of Chicago had agreed to install InfrAegis’ iaMedium ― a kiosk that purportedly could detect the presence of nuclear or biological weapons ― throughout the city and that the agreement would result in profits of more than $80 million a year. While InfrAegis engaged in some discussions with the city about the installation of the iaMedium kiosks, there was never any agreement or contract to install the system in Chicago. In another example, Webb falsely represented that the company had a contract with the Washington Metropolitan Area Transit Authority (WMATA) to install iaMedium kiosks throughout the Washington, D.C., Metro train system. Again, there was never any agreement or contract beyond initial negotiations.
In October 2011, the SEC filed a civil enforcement action in U.S. District Court in Chicago against Webb and InfrAegis based, in part, on the conduct alleged in the criminal indictment. The SEC alleged that, from January 2005 through June 2010, Webb and InfrAegis orchestrated a fraudulent, unregistered offering of stock that raised more than $20 million from hundreds of investors across the country. The SEC claimed that, among other things, Webb and InfrAegis made false and misleading claims about the company’s commercial success and the existence of contracts for the installation of InfrAegis’ products, including the City of Chicago and WMATA contracts described in the criminal indictment. Based on their conduct, the SEC charged Webb and InfrAegis with violations of Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. [SEC v. Gregory E. Webb and InfrAegis, Inc., 1:11-cv-07152 (N.D. Ill.)] (LR-22122)
Webb, who currently lives in Dallas, Texas, will be arraigned in U.S. District Court in Chicago on a date to be determined. Webb faces eight counts of mail fraud and three counts of wire fraud, each of which carries a maximum penalty of 20 years in prison and a $250,000 fine. Restitution is mandatory.
