Bloomberg News

InterOil Says Web Article Seeks to Divert Attention (Update2)

March 29, 2010

InterOil Corp., (IOC:US) the Canadian natural-gas explorer and oil refiner that fell 13 percent on March 26, said a Web-site article posted last week about litigation involving Chief Executive Officer Phil Mulacek was intended to divert attention from the company’s operations.

The company said the article was timed to benefit short- selling activities, or bets that the shares will decline, InterOil said today in a statement. The company is based in Whitehorse, Yukon Territory, and run from Cairns, Australia.

InterOil fell (IOC:US) $8.88 to $62.01 March 26 after the Web-based news service iBusiness Reporting published a report about a federal judge’s decision last year that Mulacek acted in “bad faith” in seeking bankruptcy protection for a company he controlled. Mulacek intended to benefit himself when he filed a legal action related to the bankruptcy of Nikiski Partners, U.S. Bankruptcy Court Judge Marvin Isgur ruled in Houston on Dec. 30, according to court documents confirmed by Bloomberg. The judge dismissed the bankruptcy petition.

The author of the iBusiness report, William Lobdell, said he has a short position on InterOil. The news service is a division of Barry Minkow’s Fraud Discovery Institute. Lobdell didn’t immediately return a voicemail message seeking comment today.

Not Related

“InterOil and its subsidiaries were not party to, nor otherwise involved in, the Nikiski Partners filing referenced in the article,” InterOil said in today’s statement.

InterOil rose $1.97, or 3.2 percent, to $63.98 at 4:15 p.m. in New York Stock Exchange composite trading.

InterOil said it previously disclosed that the company and certain subsidiaries are defendants in a lawsuit, Todd Peters, et. al. v. Phil Mulacek et. al.; Cause No. 05-040-03592-CV; pending in the 284th District Court of Montgomery County, Texas. Plaintiffs said Mulacek and his controlled entities committed fraud and breached fiduciary duties, according to an InterOil filing.

“We have been able to continue our ongoing business even with this suit fully disclosed in our annual statement,” Wayne Andrews, InterOil’s vice president for capital markets, said today in a telephone interview.

The Fraud Discovery Institute is a San Diego-based investigative and consulting firm co-founded by Minkow, who served more than seven years in federal prison for fraud while running ZZZZ Best Co.

To contact the reporter on this story: Edward Klump in Houston at eklump@bloomberg.net.

To contact the editor responsible for this story: Susan Warren at susanwarren@bloomberg.net.


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Companies Mentioned

  • IOC
    (InterOil Corp)
    • $60.61 USD
    • -1.14
    • -1.88%
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