updated 9/21/2007 7:06:42 PM ET 2007-09-21T23:06:42

A new federal lawsuit reveals more information about the finances of a Kentucky oilman who investors say swindled them out of millions at the same time he was throwing his daughter an extravagant 16th birthday party on a reality TV show.

The U.S. Securities and Exchange Commission said in a complaint filed last week in a Kentucky federal court that Gary Milby spent millions of investors' money on vehicles and personal trust funds.

The complaint alleges Milby raised more than $19 million from more than 300 investors between February 2005 and September 2006 in a fraudulent oil-and-gas investment scheme that was based out of Tennessee and Kentucky.

During this time, Milby and his daughter Ariel were featured on an episode of "My Super Sweet 16," an MTV reality show about spoiled rich kids and their outrageously opulent birthday parties.

Investors saw Milby on the show giving his daughter a private helicopter ride, a new BMW and a shopping spree. Overall, the SEC accuses Milby of misappropriating about $12 million.

"We suspect that investors' funds were used for that party, for that car and for other personal items," SEC trial attorney Marshall Gandy said.

One investor, the Rev. Joseph Wheat, a minister at the First Apostolic Church in Bastrop, La., gave Milby $58,500 after hearing about the securities through a radio ad. He said he always believed his money went to pay for Milby's birthday party, a gift he could never give his own children.

"He probably feels like he's above the law," said Wheat, who is among about 70 investors who have filed civil lawsuits against Milby in Tennessee federal court.

Milby, who couldn't be reached at his house or through his ex-wife, has not responded to the civil complaints made by investors, said Wynne James, the Nashville attorney representing the investors. James said they are seeking a default judgment in the case.

He spent at least $7 million on his family, personal cars, salaries and company expenses, according to the SEC complaint. Additional, Milby diverted $4.8 million into his attorney's escrow accounts and additional money into used-car shop he owned and personal trust funds.

Milby's attorney, Hunter Durham of Columbia, Ky., said he is not the attorney referenced in the SEC complaint and said he didn't think the SEC's claims were accurate. He declined to comment further.

Financial records obtained by the SEC show that millions were transferred to unknown offshore accounts.

"We will seek to have those funds repatriated," Gandy said.

During the MTV episode, cameras followed Milby to his Kentucky oil fields where his daughter exclaimed, "I love oil! Oil means shoes and cars and purses!" Pointing to one of the drills, Milby told his daughter, "This one here will make over 20 barrels a day."

Milby made similar promises to investors of Mid-America, a privately held Nevada corporation based in Portland, Tenn. The complaint said Milby exaggerated the returns investors would receive, promising as much as a 100 percent return in just 12 months.

According to the SEC, the two Kentucky counties where Milby had oil wells have never historically produced enough oil to sustain those claims.

The complaint said Milby has violated several sections of the Securities Act and seeks repayment and civil penalties.

Wheat said he doesn't like to get his hopes up about getting his money back from the sham investment, but he's encouraged by the SEC lawsuit. "I feel like the SEC is one of the best chances we have to recover anything," he said.

Copyright 2007 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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