Alaska oil and gas producer faces accounting fraud charges

A Tennessee-based company and its former chief financial officer and chief operating officer are facing accounting fraud charges after allegedly inflating values of oil and gas properties in Alaska.

Miller Energy Resources allegedly overstated the value of oil and gas properties in the Cook Inlet area, which boosted the company’s net income and total assets, according to a statement from the Security and Exchange Commission’s Division of Enforcement.

Miller Energy originally paid $2.25 million for the assets in 2009 and then later stated the value of the same properties was $480 million, the SEC alleges.

“The allegedly inflated valuation had a significant impact, turning a penny-stock company into one that eventually listed on the New York Stock Exchange, where its stock reached a 2013 high of nearly $9 per share,” the SEC statement states.

Then-CFO Paul Boyd is accused of relying on a reserve report, which “did not reflect fair value for the assets,” according to the SEC. Boyd also allegedly double-counted $110 million of fixed assets already included in the reserve report.

The report, made by a petroleum engineering firm, also allegedly contained expense numbers “knowingly understated” by David M. Hall of Anchorage, SEC says. Hall, who resigned from his COO position with Miller Energy this week, is also accused of doctoring a second report to make it seem as if the report reflected an outside party’s value estimate.

An audit team leader with Miller Energy’s former independent auditor was also implicated.

SEC’s Division of Enforcement says a 2010 fiscal audit was “deficient” because of Carlton W. Vogt III, the partner in charge of the audit. At the time, Vogt, of New York, was working at Sherb & Co., a now-defunct firm suspended in 2013 for conduct not connected to Miller Energy. Vogt is believed to have falsely said Miller Energy’s financial statements “were presented fairly” and were in line with generally accepted accounting principles.

The SEC’s Division of Enforcement is pursuing cease-and-desist orders, civil monetary penalties and return of allegedly “ill-gotten gains” from Miller Energy, Boyd and Hall.

The SEC says it is also trying to ban Boyd and Hall from serving as public company officers or directors and to bar Boyd and Vogt from public company accounting.

https://www.ktva.com/alaska-oil-and-gas-producer-faces-accounting-fraud-charges-526/