US oil data company charged with $100m fraud

The Securities and Exchange Commission (SEC) has charged an international oil and gas exploration seismic data company, SAExploration Holdings (SAE), and four former executives over a multimillion dollar accounting fraud stretching back five years

According to the US regulator, the fraud saw the company’s revenue falsely inflated by approximately $100m (£77m) as well as the misappropriation of millions of dollars by the executives.

Houston-based SAE issued restated financial statements in February and declared bankruptcy in August.

According to the US regulator, in 2015 the company  at the direction of the four executives – former CEO and chairman Jeffrey Hastings, former CFO and general counsel Brent Whiteley, former CEO and COO Brian Beatty, and former VP of operations Michael Scott – entered into a series of seismic data acquisition contracts totaling approximately $140m with a purportedly unrelated Alaska-based company that was in fact controlled by Hastings and Whiteley.

The SEC alleges that, of the amount SAE recorded in revenue, approximately $100m was improperly recorded in light of the Alaskan company's inability to pay and the SAE executives' control of the company.

In order to create the false impression that the Alaskan company was actually paying SAE for seismic data, Hastings, Whiteley, Beatty, and Scott misappropriated nearly $6m from SAE and used the funds for a series of round trip transactions that caused the money to be sent back to SAE, the SEC alleged.

In addition, the SEC claimed the executives also stole a total of approximately $6m for themselves, while Whiteley separately misappropriated an additional $4m through a fictitious invoice scheme.

Jennifer Leete, an associate director in the SEC’s division of enforcement, said: ‘As alleged in our complaint, SAE's executives designed a multi-faceted fraud that enriched executives at the expense of investors.

‘We will vigorously pursue wrongdoing by individuals and companies who engage in fraud and mislead investors.’

The SEC's complaint charges the defendants with violating the antifraud, books and records, and internal accounting controls provisions of the federal securities laws.

In a parallel action, the US Attorney's Office for the Southern District of New York announced criminal charges against Hastings.

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