advertisement

Former exec for Kansas-based fuel distributor claims fraud

Saturday, May 23, 2009 | 2:43 p.m. CDT

KANSAS CITY — The former president of a Kansas-based gasoline distributor that filed for bankruptcy in February is claiming he and the company were victims of fraud.

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

Phillip Near, Crescent's former president and majority shareholder, filed a federal lawsuit in the U.S. District of Kansas earlier this month. Near claims in the complaint that the company's failure was caused when Texas company Titan Global Holdings Inc. offered to buy Crescent but financially gutted it instead.

"Defendants lied, cheated and stole from Near," the lawsuit reads. "Defendants have pilfered the Crescent Companies of assets and cash and left Near on the hook for it all. In doing so, they have driven Crescent — once a very successful business with a reputation second to none — into bankruptcy and have placed Near on the verge of doing the same."

Bryan Chance, chief executive officer of Richardson, Texas-based Titan, said in an interview with the Associated Press that the charges were "false."

"The company was insolvent prior to us coming along and prior to us discussing a purchase of the company," said Chance, who added that Titan wanted to refinance Crescent but those plans fell through. "We believe very strongly that the facts will disprove the wild allegations in the lawsuit."

In the lawsuit, Near said he began working at Crescent in 1989 when the distributor was small, delivering about 2 million gallons annually. By 2008, he was president and 52 percent shareholder and the company was distributing more than 300 million gallons to convenience stores in Kansas, Missouri, Oklahoma, Arkansas, Illinois and Louisiana and was a key distributor for ConocoPhillips and Shell Oil.

According to its bankruptcy filing, the past two years had been financially rough for Crescent, with estimated losses of $12.8 million last year on $910 million in revenue and $3.5 million in 2007.

The lawsuit says Titan approached Crescent last year and offered to merge it with Appalachia Oil Company, a Tennessee-based distributor Titan had bought in 2007. Near, who said he needed help expanding the business, agreed and turned over his majority shares to Titan's attorneys on condition that the deal closed. The sale also hinged on Titan helping Near pay off a $35 million bank loan for which he was personally liable.

The deal fizzled, the lawsuit claims, but Titan acted as if it had closed, refusing to return the stock shares, pay Near for those shares or help Near with his bank loan. Instead, the complaint alleges, Titan began siphoning money from Crescent, wiring $500,000 to various Titan executives and using the company's good credit with fuel companies to purchase gasoline for financially troubled Appalachia Oil.

The Tennessee company failed to pay $1.5 million back to Crescent for that fuel, the lawsuit says, and filed for bankruptcy shortly after Crescent did.

Near was pushed out in March, never having been paid for his share of the company and still on the hook for the $35 million bank loan, $6 million in unpaid fuel excise taxes, $5 million in debts to fuel vendors and $1 million in lease guarantees, the lawsuit states.

 


Like what you see here? Become a member.


Show Me the Errors (What's this?)

Report corrections or additions here. Leave comments below here.

You must be logged in to participate in the Show Me the Errors contest.


Comments

Leave a comment

Speak up and join the conversation! Make sure to follow the guidelines outlined below and register with our site. You must be logged in to comment. (Our full comment policy is here.)

  • Don't use obscene, profane or vulgar language.
  • Don't use language that makes personal attacks on fellow commenters or discriminates based on race, religion, gender or ethnicity.
  • Use your real first and last name when registering on the website. It will be published with every comment. (Read why we ask for that here.)
  • Don’t solicit or promote businesses.

We are not able to monitor every comment that comes through. If you see something objectionable, please click the "Report comment" link.

You must be logged in to comment.

Forget your password?

Don't have an account? Register here.

advertisements