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updated: 2/28/2014 5:42 PM

Elk Grove CEO charged with defrauding investors of $9 million

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More than 200 investors in a company with an Elk Grove Village office that claimed to make Homeland Security and food safety products lost more than $9 million through the offer and sale of stock, according to a federal fraud indictment against the company's chief executive officer.

Gregory Webb, chairman, CEO, president and majority shareholder of InfrAegis Inc., was charged with eight counts of mail fraud and three counts of wire fraud in an 11-count indictment returned by a federal grand jury on Thursday, the U.S. attorney's office said Friday.

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Webb, 68, of Dallas and formerly of Arlington Heights, will be arraigned on a date to be determined in U.S. District Court in Chicago. He formed InfrAegis in 2003 under the name Intelagents Inc., and changed its name to InfrAegis in 2005. Messages left at Webb's offices and with his attorney, Eugene Murphy of the Murphy and Hourihane law firm in Chicago, were not returned.

The indictment also seeks forfeiture of more than $9 million in alleged fraudulent proceeds, documents said. Each count of mail and wire fraud carries a maximum penalty of 20 years in prison and a $250,000 fine, and restitution is mandatory if Webb is convicted.

The U.S. Securities and Exchange Commission also filed a civil case against Webb and InfrAegis in 2011 in federal court in Chicago.

The company website lists its corporate office in Washington, D.C., and other offices in Elk Grove Village, Chicago and Carlsbad, Calif.

According to the indictment, between 2007 and October 2013, Webb and InfrAegis obtained more than $9 million from investors through offering and selling stock in the company by falsely portraying InfrAegis as having high-level connections in the Homeland Security market and lucrative contracts for the sale of its products.

Webb and InfrAegis are accused of falsely representing in written materials and investor conference calls that the city of Chicago had agreed to install InfrAegis' iaMedium, a kiosk that purportedly could detect the presence of nuclear or biological weapons, throughout the city and the agreement would result in profits of more than $80 million a year, the indictment alleged.

While InfrAegis had some discussions with the city about installing iaMediums in 2007 and 2008, there was never any agreement to install the system in Chicago, documents said.

In 2009 and 2010, Webb and InfrAegis allegedly falsely represented that the company had a contract with the Washington Metropolitan Area Transit Authority to install iaMediums throughout the Washington, D.C., Metro train system. Negotiations were terminated when WMATA determined that InfrAegis was not financially responsible, documents said.

The indictment alleges that Webb and InfrAegis concealed material facts from investors by failing to disclose that in 2007 and again in 2008, the Illinois secretary of state's securities department prohibited Webb and InfrAegis from selling securities here. Those orders were not lifted until June 2010, when Webb and InfrAegis entered into an agreement with the state requiring them to comply with state securities laws.

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