Crescent Oil accused of fraud

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July 22, 2009

Anonymous The Joplin Globe Wed Jul 22, 2009, 08:29 PM CDT

From staff, AP reports

news@joplinglobe.com

A Texas company, accused of defrauding a Kansas-based gasoline distributor that eventually filed for bankruptcy, says it also was a victim of fraud.

Richardson, Texas-based Titan Global Holdings Inc. last week filed its answer to a lawsuit filed in May in Kansas federal court by Phillip Near, the former president of Crescent Oil Co. Inc.

Crescent Oil and its subsidiaries, based in Independence, Kan., filed for Chapter 11 protection in February after the company went into default with creditors and was no longer able to buy fuel to distribute to its customers. The company supplied fuel to convenience stores in six states.

The bankruptcy filing came after several retailers reported in February that they had not received regularly scheduled deliveries of fuel.

Gas outlets in Joplin, Neosho and Asbury in Missouri, and Pittsburg, Frontenac and Weir in Kansas were among those left in the lurch.

Near alleged in his lawsuit that Titan offered to buy Crescent last year but instead siphoned off money, which caused the financial problems leading to Crescent’s bankruptcy. He also said Titan forced him out in March without paying him for his stock shares, leaving him millions of dollars in debt.

Titan executives deny Near’s claims. They allege that it was Near who committed fraud against Titan during the acquisition procedure.

The countersuit claims that Crescent was close to bankruptcy before Titan began considering an acquisition. It alleges that Near covered up the depth of the company’s financial problems through a series of secret agreements with certain convenience-store customers.

Titan contends that those agreements created large accounts receivable, or amounts Crescent expected to be paid for fuel deliveries, on the company’s books. But Titan says the customers were told that they wouldn’t have to pay those accounts and, in fact, Near allegedly executed agreements with the customers in November canceling those payments.

“Near’s actions in forgiving such accounts receivables caused a sudden and intense deterioration in the working capital available to Crescent, causing Crescent to enter bankruptcy,” Titan’s response reads. “Once Crescent entered bankruptcy, the truth about Near’s mismanagement and fraudulent activities slowly began to surface, and various operators of convenience stores to which Crescent supplied fuel began telling Titan story after story about the secret ‘off-book’ agreements that Near had orchestrated with such operators.”

The Titan executives claim that because they relied on the financial information provided by Near as accurate, they were defrauded. They are demanding damages.

Michael Pospisil, one of Near’s attorneys, on Wednesday dismissed Titan’s response, saying that the filing provides no details about the alleged “off-book” agreements or which customers were involved.

“The claims are absolutely 100 percent false,” Pospisil said.

An attorney for Titan didn’t return a call requesting comment.

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Crescent Oil accused of fraud

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