Houston-based Miller Energy Resources will pay $5 million in penalties in a tentative agreement with the U.S. Securities and Exchange Commission after the company was charged with accounting fraud earlier this month.
Miller Energy, which relocated from Tennessee to Houston earlier this year, is fighting to stave off filing for bankruptcy, and the company said in a new CEO filing Thursday that it will pay the $5 million over three years.
Miller and its former chief operating officer and chief financial officer were all charged with manipulating accounting data and falsely inflating the value of its assets in the Cook Inlet area of Alaska. The company has increasingly focused on exploration and production in Alaska.
Miller was recently delisted by the New York Stock Exchange and it was trading over the counter at the close of Wednesday at 16 cents per share. The company is more than $170 million in debt and some of the companies owed money are pushing for Miller to file for bankruptcy.
Miller COO David M. Hall resigned in early August after he was charged by the SEC and former CFO Paul W. Boyd had previously left the company. Miller’s $5 million deal, which must be approved by the SEC, does not impact Hall’s and Boyd’s charges.
In the new SEC filing, Miller said it will review and, if necessary, restate its financial statements dating back to 2009 and notify its investors.
The SEC and Miller Energy did not immediately respond to requests for additional comment on Thursday.
The SEC’s Division of Enforcement alleges that, after acquiring assets in Alaska’s Cook Inlet area in late 2009, Miller Energy overstated their value by more than $400 million, boosting the company’s net income and total assets. The allegedly inflated valuation turned a penny-stock company into one that reached a 2013 high of nearly $9 per share, the SEC stated.
“We’ve charged that Miller Energy falsified financial statement information and grossly overstated the value of its Alaska assets and that the company’s independent auditor failed to conduct an audit that complied with professional standards,” said William Hicks, associate regional director of the SEC’s Atlanta office, in a prepared statement when the charges were first filed. “The SEC will aggressively prosecute such conduct.”
Miller Energy paid $2.25 million and assumed certain liabilities to purchase the Alaska properties and later reported them at a value of $480 million, the SEC added, including double counting $110 million in fixed assets.
The SEC’ is seeking to obtain cease-and-desist orders, civil monetary penalties and the return of allegedly ill-gotten gains from the company, Boyd and Hall. It also is seeking to bar Boyd and Hall from serving as public company officers or directors and to bar Boyd from public company accounting.
The company acknowledged in late July that is was facing potential civil action from the SEC.
“While the company does not agree that filing a civil administrative action was warranted in this case, current management has taken the allegations very seriously and is working with the Board of Directors to effect appropriate actions,” Miller CEO Carl Giesler said in an email response after the charges were filed.