Imperial Petroleum, Inc. Accepts the Resignation of J. Greg Thagard as Chairman and Director
Nov 14 13
Imperial Petroleum, Inc. reported on November 11, 2013 that it had accepted the resignation of its Chairman and Director, J. Greg Thagard. Mr. Thagard resigned to pursue personal interests and had no disagreements with the Management of the company or with its Board of Directors.
Securities and Exchange Commission Charges Imperial Petroleum, Caravan Trading LLC, Cima Green LLC, and CIMA Energy Group for Defrauding Investors in Renewable Fuel Production Scheme
Sep 18 13
The Securities and Exchange Commission charged Imperial Petroleum and several executives and suppliers for posing to investors as a legitimate biodiesel production business while concealing the extensive illegal activity that accounted for 99% of its revenues. The SEC alleges that when Imperial Petroleum purchased Middletown, Ind.-based E-Biofuels LLC as a subsidiary in 2010, E-Biofuels owners falsely represented that they were producing renewable fuel from raw agricultural products such as soybean oil and chicken fat. E-Biofuels received significant government incentives based on its biodiesel production representations. But E-Biofuels actually used middlemen to buy finished biodiesel and portrayed those purchases in fake invoices as the raw feedstock needed to produce biodiesel. E-Biofuels later sold the purchased biodiesel for as high as double the price it paid for it. When Imperials CEO Jeffrey Wilson learned that E-Biofuels was not producing biodiesel from raw materials, he allowed the scheme to continue instead of taking corrective action. Imperials annual revenue increased from $1 million to more than $100 million and its stock price soared as the company falsely told investors that E-Biofuels was in the business of environmentally friendly biodiesel production. Imperials stock price plummeted to less than 10 cents per share after the scheme fell apart, resulting in a market loss of approximately $60 million. Imperial Petroleum and its executives outright lied to investors about how their company turned a profit. When their illegal scheme collapsed, investors paid the price. The SECs complaint filed in federal court in Indianapolis charges Imperial Petroleum and Wilson as well as three former owners of E-Biofuels brothers Craig and Chad Ducey of Fisher, Ind., and Brian Carmichael, who now lives in Bend, Oregon. The complaint also charges Caravan Trading LLC, Cima Green LLC, and CIMA Energy Group and their operators Joseph Furando and Evelyn Pattison (also known as Katirina Tracy) for acting as the middlemen in the scheme. They allegedly provided false and misleading documents to deceive government regulators and attract investors to Imperial. In a separate action, the U.S. Attorneys Office for the Southern District of Indiana announced criminal charges. The SECs complaint states that Imperial falsely stated in its annual reports for fiscal years 2010 and 2011 that E-Biofuels produced and sold more than 28 million gallons of biodiesel from May 24, 2010 (the closing date of Imperials acquisition of E-Biofuels) to July 31, 2011 (end of the fiscal year). More than 99% of Imperials revenues came from E-Biofuels during this time period. Wilson, the Duceys, Carmichael, and others under their direction misrepresented to customers that the product they were selling was valid renewable fuel produced by E-Biofuels. In reality, the vast majority was biodiesel bought from the New Jersey companies and fraudulently recertified with new incentives and tax credits. The biodiesel was purchased and then resold unchanged to customers for more than $100 million. The SEC alleges that the scheme generated gross illicit profits of more than $50 million by buying the biodiesel at or near market price, fabricating invoices describing the transactions as the purchase of soybean oil or some other legitimate type of feedstock, and falsely certifying to the Environmental Protection Agency that E-Biofuels had produced biodiesel. The SEC complaint charges Imperial with violating Section 17(a) of the Securities Act of 1933 and Sections 10(b), 13(a), and 13(b) of the Securities Exchange Act of 1934 and various rules there under. Wilson, the Duceys, and Carmichael are charged with violating Section 17(a) of the Securities Act, Sections 10(b) and 13(b) of the Exchange Act, and various rules thereunder. They also are charged with aiding and abetting violations of the Exchange Act. The complaint charges Furando, Pattison, and Caravan Trading LLC, Cima Green LLC, and CIMA Energy Group with aiding and abetting violations of Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act, and Rule 10b-5. The SECs complaint seeks disgorgement of ill-gotten gains, financial penalties, and permanent injunctions against further violations of the securities laws. The SEC seeks to bar Wilson, the Duceys, and Carmichael from acting as officers or directors of a public company.
Imperial Petroleum, Inc. Announces Settlement Agreement with the Lenders
Jun 26 13
Imperial Petroleum, Inc. finalized a previously announced Settlement Agreement and Consent Judgment and Covenant Not To Execute with the lenders of the company’s wholly-owned subsidiary, e-Biofuels, LLC, in satisfaction of the lawsuit filed by the lenders against the company in which the lenders were seeking to, among other things, enforce a corporate guarantee in the approximate amount of $7.5 million plus accrued interest since April 2012, estimated at approximately $0.5 million. The company agreed to the entry of a Judgment in the amount of $1.0 million in favor of the Lenders and further agreed to execute such documents as may be required and to facilitate the Lenders’ effort to sell the assets of e-Biofuels. The Lenders agreed to dismiss the lawsuit against the company in exchange for the Judgment and further agree not to execute on the Judgment until December 31, 2015. The Settlement Agreement removes any prior contingency related to the sale of the e-Biofuels assets.