Monday, November 14, 2005

Patterson-UTI Energy Internal Investigation Finds $70 Million Embezzlement

Drilling and oil exploration firm Patterson-UTI Energy, Inc., announced that an internal investigation has disclosed that upwards of $70 million may have been embezzled from the company by an officer through payment for phantom assets.  According to the company's press release (here):

[A]s a result of information received by senior management of the Company on November 9, 2005, the Audit Committee of the Board of Directors of the Company has begun an investigation into unauthorized payments made by the Company for assets which were not delivered to the Company. The Audit Committee will engage legal counsel and forensic accountants to conduct the investigation. Based on preliminary findings, it appears that approximately $70 million may have been embezzled from the Company by a former officer over a period of more than five years. Because the investigation is just beginning the Company has not yet made a final determination as to the impact of these developments upon its previous financial results and assessment of internal controls.

The company issued a press release (here) just six days earlier, on Nov. 3, announcing "that John E. Vollmer, Senior Vice President-Corporate Development, has assumed the added responsibilities of Chief Financial Officer. Mr. Vollmer replaces Jonathan D. (Jody) Nelson who has resigned for personal reasons."  What were the personal reasons?  Nelson has not been identified as being involved in the $70 million embezzlement, but it would be difficult to siphon off that amount of money -- even in a company with over $1 billion in annual revenues -- without the infolvement of financial executives or, at a minimum, a complete breakdown in the company's internal controls.  Tom Kirkendall on the Houston's Clear Thinkers blog has a detailed post (here) on the topic.  (ph)

November 14, 2005 in Fraud, Investigations, Securities | Permalink | Comments (1) | TrackBack (1)

Palmeiro Dodges the Perjury Bullet

The House Government Reform Committee decided not to make a criminal referral to the Department of Justice regarding possible perjury by former Baltimore Oriole Rafael Palmeiro for his statement in March 2005 that he never took steroids and subsequent positive test for stanozolol, a powerful steroid.  The Committee's report (here) describes Palmeiro's statement regarding how the steroids might have entered his system:

During his interview with Committee staff, Mr. Palmeiro stated that his best guess as to what caused his positive steroid test was his use of liquid B-12. The Committee obtained no evidence indicating that B-12 has ever been inadvertently contaminated with stanozolol. The vial of B-12 provided to Mr. Palmeiro by Mr. Tejada was discarded by Mrs. Palmeiro. However, two bottles of B-12 were provided to the Players Association by Mr. Tejada. Neither sample was contaminated with stanozolol. During the Committee staff’s interview of Player A, he stated he had a remaining vial of B-12 provided to him by Mr. Tejada in May of 2005. Player A gave to the Committee the remainder of the vial of B-12. This bottle was tested, and also contained no stanozolol.

During the 2005 season, Mr. Tejada and Player A both injected B-12 purchased by Mr. Tejada and neither tested positive for steroids under MLB’s testing program. Based on this information, the interviews with Miguel Tejada and Player A, and the analysis run on the vial of B-12 provided to Player A by Mr. Tejada, the Committee is unable to determine whether the B-12 provided to Mr. Palmeiro by Mr. Tejada contained stanozolol.

Despite the clear problems with this excuse, the Committee concluded, quite properly, that the higher threshold for perjury could not be met, despite such a seemingly preposterous "explanation" from Palmeiro.  Of course, showing that birds of a feather truly flock together, Jose Canseco, who accused Palmeiro in a book of taking Stanozolol, refused to provide the Committee with any specific information about Palmeiro's use that would support a perjury charge.  No doubt such information would have required Canseco to wrack his brain, and would be unlikely to generate additional book sales.  A sad chapter is closed, at least until Palmeiro comes up for election to the Hall of Fame five years from the end of his playing career, which may well have already happened. (ph)

November 14, 2005 in Perjury | Permalink | Comments (0) | TrackBack (0)

How Not to Resolve a Dispute Over Your Airline Seat

Dr. Kenneth Goodrich was trying to fly home to Pennsylvania from Atlanta's Hartsfield-Jackson International Airport when he got into a dispute about his boarding pass (perhaps concerning a seat assignment).  He left the plane after raising a bit of a ruckus, and then when he was informed that his checked luggage would be waiting for him in Scranton when he would not be on the plane, he responded by asserting that they may be explosives in the suitcase.  Not a good idea, as summarized in the press release (here) issued by the U.S. Attorney's Office for the Northern District of Georgia:

KENNETH GOODRICH, M.D., 52, of Towanda, Pennsylvania, has been indicted by a federal grand jury on a charge of False Information and Hoaxes (a violation of 18 U.S.C. § 1038), in connection with a false bomb threat at Hartsfield-Jackson International Airport. According to Nahmias and the documents and information presented in court:

On June 26, 2005, GOODRICH, a medical doctor, had boarded an Atlantic Southeast Airlines (ASA) aircraft destined for Scranton, Pennsylvania. GOODRICH was asked by airline officials to exit the plane to resolve a boarding pass issue. GOODRICH became aggravated and initially refused to leave the aircraft before ultimately agreeing to do so. After discovering that his luggage would remain on the aircraft for his pick-up in Scranton, GOODRICH is alleged to have made a threat, while on or near the plane, that his luggage might contain explosives. The flight was delayed as a result, as law enforcement was called to respond and the aircraft’s passengers were ordered to de-plane. Subsequent inspection of GOODRICH’s luggage revealed his threat to have been false.

The service on airlines these days may be straight out of the Soviet Union, but mentioning explosives near a plane is sure to make things even worse than any delay at the airport. (ph)

November 14, 2005 in Prosecutions | Permalink | Comments (1) | TrackBack (0)