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10 sentenced to prison for $14M 'Blue Gem Coal' fraud

Ten men were sentenced to a total of 284 months in federal prison for their roles in operating a $14 million fraudulent investor scheme.

Brian Rose advertised that his company, New Century Coal Inc., had developed "Blue Gem Coal," a special type of coal used to manufacture computer electronics. Prosecutors said New Century staff sold shares in nine different limited partnerships and falsely represented the existence of coal assets despite never developing any coal.

According to a news release from the U.S. Attorney's Office for the Eastern District of Tennessee, 90% of investor funds were diverted to support the men's "extravagant lifestyles," including thoroughbred horses, multiple homes, truck racing and extensive travel.

The release said 168 investors were affected. The judge ordered that the investors be paid restitution.

Prosecutors originally stated the amount of the fraud was $15 million but later revised the total received from the investors.

The 10 men and their prison sentences are as follows: Brian Rose, 37, Piney Flats, Tenn., 108 months; Hugh Sackett, 86, Anderson, S.C., 12 months; Robert McGregor, 38, Bowling Green, Ky., 12 months; Johnny Phillips, 35, Bowling Green, 30 months; Dallas McRae, 46, Orlando, Fla., 24 months; Thomas Berry, 36, Bowling Green, 27 months; Jason Smith, 41, Franklin, Ky., 27 months; David Rose, 66, Louisville, Ky., 18 months; Jim Robinson, 57, New Albany, Ind., two months; and Brent Loveall, 33, Louisville, 24 months.