Titan Counter-Sues After Crescent Oil Lawsuit

Richard, Texas-based Titan Global Holdings Inc., accused of defrauding Crescent Oil, which eventually filed for bankruptcy, is fighting back, saying it was the victim of fraud, the Associated Press reported.

Last week, Titan counter-sued in response to a lawsuit filed in May by Philip Near, former president of Crescent Oil Co. Inc., in Independence, Kan.

Crescent Oil and its subsidiaries, which supplied fuel to c-stores in six states, filed for Chapter 11 protection in February after it went into default with creditors and could not purchase fuel to distribute to its customers.

In his lawsuit, Near alleged that Titan offered to buy Crescent last year, but instead siphoned off money, which caused the financial problems that resulted in bankruptcy. He went on to accuse Titan of forcing him out of the company in March without paying him for his stock shares, leaving him millions of dollars in debt.

Meanwhile, Titan executives deny Near’s claims and are alleging it was Near who committed fraud against Titan during the acquisition process. The countersuit claims Crescent was already approaching bankruptcy before Titan began considering the acquisition. It alleges that Near covered up the depth of the company’s financial problems using secret agreements with various c-store customers. Though the arrangement, on Crescent Oil’s books, large amounts of accounts receivable, or amounts that Crescent was owed for fuel deliveries, were listed, but the c-stores informed Titan they were told they wouldn’t have to pay those accounts and, in November, Near canceled those payments.

“Near’s actions in forgiving such accounts receivables caused a sudden and intense deterioration in the working capital available to Crescent, causing Crescent to enter bankruptcy,” Titan said in a statement. “Once Crescent entered bankruptcy, the truth about Near’s mismanagement and fraudulent activities slowly began to surface, and various operators of convenience stores to which Crescent supplied fuel began telling Titan story after story about the secret ‘off book’ agreements that Near had orchestrated with such operators.”

The Titan executives claim that because they relied on the accuracy of the financial information given to them by Near, they were defrauded and are demanding damages.

Michael Pospisil, one of Near’s attorneys, on Wednesday dismissed Titan’s response. She alleged that the filing by Titan does not provide details on the alleged “off book” agreements, or which customers were involved.

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