Millersburg Man Sentenced for $3 Million Investment Fraud Conspiracy

JEFFERSON CITY, MO—Beth Phillips, United States Attorney for the Western District of Missouri, announced that a Millersburg, Missouri man was sentenced in federal court today for participating in a $3 million investment fraud conspiracy.

William Colwell McNeely, 78, of Millersburg, Missouri was sentenced by U.S. District Judge Nanette K. Laughrey this morning to six years in federal prison without parole. The court also ordered McNeely to pay $2.4 million in restitution.

On Jan. 27, 2009, McNeely and co-defendant Craig F. Swoboda, 74, of Lake Ozark, Missouri each pleaded guilty to their roles in a conspiracy to commit mail fraud and wire fraud from December 1997 through February 2006. McNeely was president and chief operating officer of United Management, Inc. (UMI), in Columbia, Mo. Swoboda was the chief executive officer of UMI.

Swoboda was sentenced to five years in federal prison without parole, and held jointly and severally liable to pay $2.4 million in restitution. Co-defendant Gail M. Wilkerson, 63, of Denver, Colo., was secretary of UMI. McNeely and Wilkerson were married, and all three co-defendants were residents of Columbia at the time of the conspiracy. Wilkerson, who also pleaded guilty, was sentenced to two years in federal prison without parole and held jointly and severally liable for the $2.4 million in restitution.

McNeely admitted that he formed UMI to solicit investments from persons, and sold what purported to be opportunities to purchase and participate in the development of vending machine-related inventions. Although investors were told that the product was ready for mass production, there were financial and technical setbacks that caused substantial delays and prevented the production and marketing of the product.

Victims invested up to $400,000 in the fraudulent scheme, with a total loss of $3 million. Swoboda and McNeely admitted that they used investor money for their own personal use and gain.

McNeely, Swoboda and Wilkerson used telephone, facsimile, Federal Express, U.S. mail and e-mail in order to conduct business, as well as instructing investors to wire funds to bank accounts, as part of the scheme to defraud investors. They made false and misleading statements in order to attract persons to invest. For example, investors were told that each of the defendants – and their families – had invested large sums of money toward the development of the vending machine-related inventions. Wilkerson falsely told investors that her father was a wealthy executive for Piper Aircraft who had left her a large inheritance.

McNeely, Swoboda and Wilkerson also omitted certain material facts that would have discouraged potential investors, such as the fact that McNeely and UMI were involved in pending lawsuits with existing investors and that few investors had gotten their investment back without filing a lawsuit.

McNeely and Swoboda made false and misleading statements about the extent of their and UMI’s financial worth, in order to attract persons to invest, including:

• that UMI was worth $150 million;
• that UMI had agreements with various companies to distribute the product;
• that the company shares were worth $5 per share;
• that a major bottler wanted to buy UMI for $1 per share; and
• that investors could get their money back if they were not happy.

This case was prosecuted by Assistant U.S. Attorney Jim Lynn. It was investigated by the Federal Bureau of Investigation, IRS-Criminal Investigation, the Missouri Secretary of State and the Missouri Attorney General’s Office.