BULLETIN: SEC Says InfrAegis — Purported ‘Homeland Security’ Firm With Product To Detect Weapons Of Mass Destruction — Was A $20 Million Fraud Based In Part On A ‘Trillion’-Dollar Lie; Company And CEO Gregory E. Webb Charged

BULLETIN: The SEC has gone to federal court in Illinois to charge InfrAegis Inc. and CEO Gregory E. Webb with fraud amid allegations they fleeced investors in a $20 million scam that traded on post-9/11 fears and claims that government security contracts worth more than $1 trillion would make everybody rich.

Webb, 64, resides in the Chicago suburb of Arlington Heights, Ill. The firm is based in the suburb of Elk Grove Village and purportedly was in the “homeland security” business, according to the SEC.

But InfrAegis duped investors by falsely claiming to have lucrative contracts with the cities of Chicago and Washington. D.C., for kiosks that purportedly could detect the presence of nuclear or biological weapons.

Investors were told the Chicago contract would fetch “profits of well over $80 million.” Meanwhile, the Washington contract — purportedly with the Washington Metropolitan Transit Authority (WMATA) — would be worth the staggering sum of $20 billion over 20 years.

Moreover, the SEC charged, Webb and the firm told investors that “InfrAegis sold a partial stake in the company for $8.7 billion in cash to a company named the DW Group and that the transaction would result in 3800% to 4000% returns to investors.”

“InfrAegis never sold, and never had any agreements to sell, any of its products to the City of Chicago,” the SEC charged.

“Similarly, InfrAegis never sold, and never closed on a contract to sell, any of its products to WMATA,” the agency charged. “Finally, InfrAegis never received any money from the DW Group and Webb had no reasonable basis to believe that such a transaction would ever take place.”

In addition to lying about the success of the firm even as investors were the only source of the company’s income since January 2005, Webb also lied about receiving no compensation from InfrAegis, the SEC charged.

“Despite the fact that InfrAegis never sold a single product, and that InfrAegis’ offering materials claimed that he did not receive compensation from the company, Webb directed InfrAegis to pay him at least $741,000 using investor funds over the course of the offering,” the SEC charged. “In addition to his investor-funded ‘salary,’ from April 2005 through June 2010, Webb used an InfrAegis corporate credit card, again funded by InfrAegis investors, to purchase at least $70,000 in goods and services for himself, including vacations, clothing, fast food, groceries, tobacco, liquor, movies, video games, and music.”

The scheme raised $20 million from 395 investors in 29 states and the District of Columbia, the SEC charged.

Webb and the firm traded on the emotions of investors to pick their pockets, the SEC charged.

“Some of InfrAegis’ offering materials even included photos of the World Trade Center shortly after the 9/11 attacks with smoke billowing from the towers” the SEC said. “Certain InfrAegis offering materials also claimed that InfrAegis’ products could have prevented major terrorist attacks in London, England and Mumbai, India.”

Even sports and American pride in seeking to host the Olympic games were part of the fraud pitch, the SEC charged.

When the city of Chicago was bidding to host the 2016 Summer Olympics, “Webb told investors that InfrAegis had received the endorsement of the 2016 Olympic Committee,” the SEC charged.

“Webb further stated that the DW Group was in the process of completing a transaction with the United States government and certain foreign governments that exceeded $1 trillion and that, once the transaction was completed, InfrAegis would begin receiving multiple, multi-billion dollar payments from the DW Group,” the SEC charged. “Webb additionally told investors that once the DW Group transaction was completed, InfrAegis would pay its shareholders — who typically invested at $1.00 per share — between $39 and $41 per share.”

Read the SEC complaint.