SEC names two former Newpark Resources officials, vendor in complaint
The US Securities and Exchange Commission said that two former Newpark Resources Inc. financial officials and the principal of one of the company’s vendors conspired to engage in a fraudulent accounting scheme in fiscal 2003.
The US Securities and Exchange Commission said on July 16 that two former Newpark Resources Inc. financial officials and the principal of one of the oilfield service company’s vendors conspired to engage in a fraudulent accounting scheme in fiscal 2003.
It named Matthew W. Hardey, Newpark’s former chief financial officer; L. Cyrus DeBlanc, former CFO of Newpark subsidiary Soloco LLC, and Joe E. Penland, president of Quality Mat Co., a Newpark vendor, in a civil complaint filed in federal district court for Louisiana’s eastern district.
The three allegedly devised a scheme to let The Woodlands, Tex.-based Newpark avoid writing off $4.2 million in debt, according to the SEC. It said that this let the company report $500,000 of net income for fiscal 2003 instead of a significant loss.
It said that in 2002 and 2003, Newpark recognized $4.2 million of revenue based on sales of Soloco’s primary product, industrial mats used to lay temporary roads at drilling sites, to Quality Mat and another vendor, Easy Frac.
The complaint said that neither vendor had made any payment on the sales through the end of 2003, and that Hardey, DeBlanc, and Penland devised and executed a scheme to funnel money to Quality Mat and Easy Frac through sham transactions which would then allow the vendors to pay Newpark.
Newpark has cooperated in the investigation, the SEC said. The company placed Hardey and DeBlanc on administrative leave on April 12, 2006, and fired them in June 2006, according to its filings. In its latest 10-K filing, it said that Hardey sued the company on Oct. 9, 2007, in Louisiana alleging breach of contract, unfair trade practices, defamation, negligence and other allegations stemming from a Newpark internal investigation and Hardey’s resulting termination. Newpark said that it will vigorously fight the lawsuit.
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