The former CEO and former CFO of Quest Resource Corp. have been sued by the Securities and Exchange Commission (SEC) for allegedly siphoning millions of dollars from the Oklahoma City-based producer.
Ex-CEO Jerry Cash, 47, was charged with embezzling $10 million for a period of time until last year, when other Quest executives questioned some money transfers, the SEC said Wednesday. The SEC said Grose, 56, helped to create a cover story for Cash's transactions while he misappropriated $1 million and collected a $850,000 kickback from a supplier.
The lawsuit was filed in U.S. District Court for the Western District of Oklahoma (SEC v. Jerry D. Cash and David E. Gross, No. 09-CF-639).
Cash resigned in August (see Daily GPI, Aug. 26, 2008). He had served as chairman of Quest beginning in November 2002 when Quest acquired STP Cherokee Inc. and was named CEO in September 2004. Grose was first put on a paid administrative leave last August, but he was fired by the company a month later.
Last month Quest entities said they had recovered $2.4 million in cash, some stock in a separate corporation and interest in two natural gas assets as settlement following an internal investigation (see Daily GPI, May 27).
"Cash and Grose treated Quest like a personal piggy bank and then lied about their wrongdoing to the company's investors and auditor," said Rose Romero, who directs the SEC's office in Fort Worth, TX. The SEC wants the men to forfeit "illicit profits" and pay unspecified fines.
Meanwhile, Quest and its entities are attempting to regain a listing on NASDAQ after its late filing on Tuesday of the required 2008 annual report Form 10-K. In addition to the 2008 annual report, Quest said it filed reaudited and restated annual financial statements for 2005, 2006 and 2007, and reaudited and restated financial statements for the period from Jan. 1, 2007 to Nov. 14, 2007.
Quest said it also "continues to work diligently" to complete and file its 3Q2008 Form 10-Q and 1Q2009 Form 10-Q.
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