SEC Charges GilmanSound Founder Defrauded Investors for $3.3 Million - ProSoundNetwork.com
Purported Oil “Sonication” Companies Sell Snake Oil Instead, SEC Alleges

Dallas, TX (June 8, 2018)—Multiple sound-oriented oil ventures founded by audio entrepreneur Paul Gilman are a sham, according to the U.S. Securities and Exchange Commission.

Filed in federal court in Dallas on June 4, a SEC complaint claims that Gilman used two of his companies—Oil Migration Group and WaveTech29—to defraud 40 investors of approximately $3.3 million, and makes similar claims about his stadium-sound company, GilmanSound.

The SEC document states, “Although Gilman has no apparent experience in the oil and gas industry, he claimed OMG and WaveTech would revolutionize the industry by using soundwave technology to lower the viscosity of oil and enhance water separation and purification processes involved in oil and gas exploration and production.

“In truth, OMG and WaveTech were sham enterprises that operated as fraudulent vehicles for Gilman to solicit, receive, and misappropriate investor funds.”

According to the SEC, nearly all the money Gilman raised was used to fund a lavish lifestyle. “Gilman spent substantially all of the investor funds on personal expenses and non-business items,” including “luxury Las Vegas hotels, restaurants, designer clothing, airline flights, home furnishings, ATM cash withdrawals at Las Vegas casinos, as well as transfers to his personal bank accounts,” the filing states.

The complaint alleges that Gilman additionally defrauded investors in GilmanSound, a company he launched in 2009 that licenses software to optimize sound in sports stadiums. GilmanSound provides services at Major League Baseball stadiums for the Texas Rangers and Houston Astros; the SEC charges suggest that a substantial amount of the GilmanSound investor funds were misused for Gilman’s personal expenses.

The SEC complaint notes, “Gilman lured investors into the OMG and WaveTech ventures by highlighting his musical past and ongoing GilmanSound efforts to legitimize his claimed soundwave expertise to persuade others that he was capable of developing these technologies.”

Gilman’s attorney, John Teakell, gave a statement to USA Today on June 5: “Mr. Gilman believes that the evidence will show that the subject technology was being developed and continued to be developed. Therefore, he had no intent to defraud anyone.”

Gilman is a musician and composer who has recorded music for TV commercials, composed and recorded his own music albums, and produced and starred in a documentary (Paul Gilman’s Ocean Odyssey) about his musical encounters with whales and dolphins.

In a 2013 interview in Sports Business Journal, Gilman said of GilmanSound, “The technology itself evolved from mastering [a song] in the recording studio. In a studio, you do everything you can to make it the best you can, then send it to a mastering lab and they fine-tune it. We’re kind of like a mastering lab in a sports facility.”

In that story, Gilman explained that his software reshapes sound waves and distributes them evenly in a stadium, which is beneficial for stadium owners who want to hold concerts at their venues. Gilman said his technology provides an acoustic mix on par with a concert hall.