Miller Energy Charged with Fraud over Alaska Assets

The U.S. Securities and Exchange Commission on Thursday charged Miller Energy Resources Inc and two executives with accounting fraud for overstating the value of Alaskan oil and gas properties that the company bought in 2009 by more than $400 million.

 

In charging Miller, former Chief Financial Officer Paul Boyd and current Chief Operating Officer David Hall, the SEC said the inflated value helped the Knoxville, Tennessee-based company transform itself from a penny stock into a New York Stock Exchange-listed company valued in 2013 at $393 million.

 

Miller now trades on the Pink Sheets, which list prices of small over-the-counter stocks, after the NYSE delisted its shares last week.

 

The SEC said Miller valued the oil and gas properties on its books at $480 million in early 2010, despite having acquired them for just $2.25 million in cash, plus the assumption of $2 million of liabilities, in a December 2009 bankruptcy auction.

 

In an order instituting civil administrative proceedings, the SEC said the "grossly overstated" valuation did not represent "fair value," and reflected a double-counting of some assets and an understating of some expenses.

 

Carlton Vogt, who oversaw an independent audit of Miller's financial statements while working at the now-defunct Sherb & Co, was also charged by the SEC for engaging in alleged improper professional conduct.

 

The SEC wants Miller, Boyd and Hall to pay civil fines and give up improper gains. It also wants officer and director bans against Boyd and Hall, and to bar Boyd and Vogt from public company accounting.

 

Carl Giesler Jr, Miller's chief executive, in a statement said the company does not believe the SEC action was warranted, but has been cooperating with the regulator. "Current management has taken the allegations very seriously," he said.

 

A lawyer for Boyd and Hall did not respond to requests for comment.

 

Vogt's lawyer Douglas Jensen said his client looks forward to being vindicated, and "vigorously disputes the SEC's allegation that he failed to exercise due professional care."

 

Miller shares closed down 3 cents at 14 cents on Thursday.


(Reporting by Jonathan Stempel in New York; Editing by Bernadette Baum and Bill Rigby)