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Self-described music visionary Paul Gilman allegedly told investors he was creating soundwave technology to speed up oil production, but spent the money on luxury hotels and Las Vegas casinos instead.
The “Whale Whisperer"—as Gilman calls himself in a documentary about musical experiences with dolphins and whales--fraudulently solicited investments worth $3.3 million in a number of sham companies, the Securities and Exchange Commission said in a June 4 complaint.
Gilman told investors his companies would perfect sports stadium sound systems and use soundwaves to make oil flow faster, according to the complaint in the U.S. District Court for the Northern District of Texas.
“We believe that the evidence will show that Mr. Gilman was developing the sound technology and that he’s continued to develop the sound technology, which is being used successfully,” John Teakell, a Dallas-based attorney representing Gilman, told Bloomberg Law. His client “had no intent to defraud anyone,” Teakell, formerly a trial attorney for the SEC, said.
Gilman allegedly asked for investments in GilmanSound LLC, Oil Migration Group LLC, and WaveTech29 LLC. GilmanSound began as a real business providing services to a few Major League Baseball stadiums, while OMG and WaveTech were both attempts to “revolutionize” an oil and gas industry with which Gilman had no experience, the complaint said. Gilman said he would use investments in OMG and WaveTech to develop and test soundwave technology to lower oil’s viscosity and move it through pipelines more efficiently, the SEC said.
Instead, investor funds went to fancy Vegas hotels, cash withdrawals at casino ATMs, designer clothes, and Ponzi-style repayments to earlier investors, the complaint said. Gilman didn’t solicit investments in a particular company, but told investors they were buying an interest in whichever oil and gas tech firm succeeded first, the SEC said.
Gilman sometimes had investor wire funds meant for one of the oil and gas companies to his GilmanSound bank account instead, the SEC said. Investor funds were allegedly commingled in GilmanSound, WaveTech, and personal bank accounts. The commingling, whichever-succeeds-first investment pitch, and Gilman’s failure to keep appropriate records all make it harder for the SEC to separate the investments, the agency said.
The case is SEC v. Gilman , N.D. Tex., No. 3:18-cv-01421, complaint filed 6/4/18 .
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