Founder of Suburban Tech Company Sentenced to 9 Years for Defrauding Investors out of More Than $9 Million
CHICAGO — The founder of a northwest suburban tech company has been sentenced to nine years in federal prison for defrauding investors out of more than $9 million.
GREGORY WEBB, 71, the founder and Chief Executive Officer of Elk Grove Village-based InfrAegis Inc., was convicted last year on nine counts of mail and wire fraud for fraudulently raising more than $9 million from more than 200 investors. In written materials and telephone conference calls with investors between 2007 and 2012, Webb falsely portrayed InfrAegis as a successful company with growing stakes in the science and technology field. Among other things, Webb told investors that the company had signed or was on the verge of signing billion-dollar contracts with government agencies and municipalities across the world, including Chicago. The company’s products purportedly could protect the public from terrorist attacks by recognizing individuals on the terrorist watch list and instantaneously detecting biological, chemical and radiological threats on city streets, as well as by identifying harmful bacteria and other threats to the world’s food and water supply.
In reality, InfrAegis was not in a position to deploy any of its products because they had never been fully developed or tested, and the company had never signed contracts or even came close to signing contracts for the deployment of its products. The investors, some of whom included Chicago firefighters and other first responders, never received any return on their investment in the company.
U.S. District Judge Virginia M. Kendall imposed the 108-month sentence Wednesday in federal court in Chicago. In imposing the sentence, Judge Kendall described the offense as “egregious,” and noted it was “heartbreaking” to read letters that victims had submitted to the Court.
The sentence was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; and Michael J. Anderson, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation. The U.S. Securities and Exchange Commission, which filed a civil enforcement action against Webb and InfrAegis, provided valuable assistance.
“Defendant engaged in a multi-year, multi-million-dollar fraud scheme designed to extract as much money as he could from trusting investors by lying to them,” Assistant U.S. Attorneys Kruti Trivedi and Rick D. Young argued in the government’s sentencing memorandum. “Defendant’s actions have had and will continue to have long-term consequences for many of these victims.”
Evidence at Webb’s trial revealed that more than $500,000 was paid to Webb and his spouse between 2007 and 2012. The company also spent more than $800,000 to pay corporate credit cards that were used to charge Webb’s daily living expenses, including charges at restaurants, grocery stores, gas stations, tobacco stores, a movie theatre, a sporting goods store, and an Apple iTunes account.
Webb, of Dallas, Tex., formerly resided in Arlington Heights. InfrAegis is now defunct.