CHICAGO COMPANY CHARGED OF DEFRAUDING INVESTORS OF $20 MILLION

The following is an excerpt from the SEC website:
On October 11, 2011, the SEC filed a civil enforcement action in the United States District Court for the Northern District of Illinois against Gregory E. Webb and InfrAegis, Inc. Webb, a 64-year-old resident of Arlington Heights, Illinois, is the Chairman, CEO, and President of InfrAegis. InfrAegis is a company based in the Chicago suburb of Elk Grove Village, Illinois and purports to make products for the homeland security market. The SEC’s Complaint charges Webb and InfrAegis with conducting a fraudulent, unregistered offering of InfrAegis stock that raised over $20 million from hundreds of investors across the country.
The SEC’s Complaint alleges that, throughout the offering, in written offering materials provided to investors, Webb and InfrAegis made false and misleading claims about InfrAegis’ commercial success, including the existence of contracts for the sale of InfrAegis’ products. For example, according to the SEC’s Complaint, Webb and InfrAegis made false and misleading statements to investors about the existence of lucrative contracts with the City of Chicago and the Washington Metropolitan Area Transit Authority that would result in billions of dollars in revenue for InfrAegis. The SEC also alleges that Webb and InfrAegis made false and misleading claims about the purported sale of a partial stake in InfrAegis for $8.7 billion, which they told investors would result in 3800% to 4000% returns on their investments. According to the Complaint, Webb personally solicited investors during conference calls in which he repeated these false and misleading claims.
Based on their conduct, the SEC alleges that Webb and InfrAegis violated 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. The SEC’s Complaint seeks a permanent injunction and disgorgement, plus prejudgment interest, against Webb and InfrAegis and a civil penalty against Webb.”