Miller Energy Resources, Inc.(fka MILLQ)

[Renee]

(fka MILLQ): https://www.sec.gov/files/litigation/admin/2024/34-99904.pdf

Plan of Distribution:

https://www.sec.gov/files/litigation/admin/2024/34-99904-pd.pdf

[janice shell]

You're absolutely right! And the KMPG accountant wasn't fined nearly enough.

[Renee]

My thoughts too, Janice. Shareholders would benefit more from a few gulps of Miller beer than whatever may come their way from Miller Energy Resources.

[janice shell]

Mildly interesting, though I doubt it'll amount to much for individual shareholders.

[Renee]

Miller Energy Resources: Notice of Proposed Plan of Distribution and Opportunity for Comment:

https://www.sec.gov/files/litigation/admin/2024/34-99469.pdf

[janice shell]

I think that makes sense. The KPMG guy was in Scotty Boruff's pocket. KPMG should have supervised him better.

[bar1080]

"KPMG Can’t Get Out of Class-Action Suit By Miller Energy Investors"

"A Tennessee federal judge on May 7 greenlighted class certification in a multiyear lawsuit against KPMG by investors of the now-defunct oil and gas company Miller Energy Resources Inc., despite KPMG’s best efforts to get the lawsuit thrown out."

https://www.goingconcern.com/kpmg-class-action-suit-miller-energy-investors/

[janice shell]

lol, quite a few things made it very different. I just loved Scotty Boruff's adventures in the company jet.

[bar1080]

NYSE Listing plus KPMG as CPA, made it very different.

[janice shell]

What made MILL different--or rather, what made investors believe MILL was different--was that it was listed on the NYSE.

It'd started out on the OTC, though, and after a few years on the Big Board, it ended up there once again.

[scion]

There is more fantasy and 'creative writing ' in penny stocks accounting than in any science fiction book.

[bar1080]

scion, do you know much about pennyland accounting? Do you have an opinion on this stuff?


"Janice, you once mentioned Miller to me as an example of a rare NYSE scam stock and a penny that had actually clawed its way up to the Big Board. I wasn't familiar with the company.

I'm working with a young accountant who's preparing for the CPA exam. I mentioned to him how Rennova Healthcare (Pink: RNVA) just bought a hospital for about $1 million and immediately booked it at $8 million, claiming Bargain Purchase Gain with a footnote in the 10Q warning that the gain might be subject later to adjustment, up or down.

Today I see that Miller has become the poster boy for misapplication of Bargain Purchase Gain. Miller took $4.5 million in oil assets and assigned a value of $480 million to them! KPMG's role as CPA in the fraud cost them $6 million in SEC penalties.

https://mercercapital.com/financialreportingblog/475-million-bargain-purchase-leads-to-an-sec-settlement/

This gambit was all pretty new to me. Am I correct that the Bargain Purchase means of jacking up reported asset values and claiming income from that isn't tried often... even in sleazy pennyland? It's certainly a huge red flag.

Am I correct in expecting the SEC to question RNVA's action in jacking up the value of the acquired hospital?"

[bar1080]

BTW, while you're waiting in the emergency room, consider that RNVA's stock trades at .001.

see you later...

[janice shell]

Horrifying thought...

[bar1080]

Think of it this way. If you have a car accident while driving thru eastern Tennessee YOU could end up in a RNVA hospital. Or an aircraft accident while flying over. They're the only hospital in their counties.

I'll check out EFLN

[janice shell]

What does a lab company that's losing tens of millions want with an underperforming rural hospital that Community Health Systems is trying to sell?

Horrifying possibilities. Could it have something to do with EFLN's sinister Condemned Hospital?

[bar1080]

They laid off 15% of the staff of one hospital recently!

Here's an excellent article about RNVA from a real healthcare publication. Modern Healthcare isn't impressed with Rennova:

"Lab company Rennova is an unlikely buyer of CHS hospital
By Tara Bannow | May 11, 2018

"The planned purchase of an 85-bed hospital in Tennessee by lab testing company Rennova Health raises a lot of questions. Chief among them: What does a lab company that's losing tens of millions want with an underperforming rural hospital that Community Health Systems is trying to sell?

"West Palm Beach, Fla.-based Rennova recently reported in a Securities and Exchange Commission filing a $51 million net loss from continuing operations in 2017 and a $16 million operating loss on less than $5 million in revenue. The company ended the year with no cash on hand from continuing operations, and has been sued by landlords and contractors alleging unpaid bills, according to the SEC filings. Three former employees have sued the company in Palm Beach County court alleging unpaid wages..." [much more]

http://www.modernhealthcare.com/article/20180511/NEWS/180519970

[janice shell]

Well hey! $7k in cash sounds just GREAT! How do they keep the respirators and the like working?

[bar1080]

A penny stock in the hospital business. Today's Q said they had $7,000 in cash and a GC warning! Terrifying. Thanks

[janice shell]

That is not promising.

[bar1080]

Rennova's an odd bird in that they actually own two real hospitals in Appalachia with real patients. Heaven help em!

A cute note from their 10Q that came out today:

"The Company is currently undertaking a valuation study to determine the fair value of the assets acquired. The preliminary estimated fair value of the net assets acquired, and liabilities assumed is approximately $8.4 million. The excess of the aggregate fair value of the net tangible assets acquired over the purchase price is currently estimated to be $7.7 million and has been treated as a gain on bargain purchase in accordance with ASC 805. In addition, during the measurement period or until the valuation study is complete, the provisional amounts used for the purchase price allocation are subject to adjustments for a period not to exceed one year from the acquisition date. As a result, upon completion of the valuation study, the gain on bargain purchase presented below may be increased or decreased. The preliminary purchase price allocation was based, in part, on management’s knowledge of HMA Fentress County General Hospital and Jamestown HMA Physician Management, LLC."

[janice shell]

lol, I don't think I can help with that. I'm not a hardcore accounting type. But given what happened here, It does look as if RNVA could encounter problems.

[bar1080]

Janice, you once mentioned Miller to me as an example of a rare NYSE scam stock and a penny that had actually clawed its way up to the Big Board. I wasn't familiar with the company.

I'm working with a young accountant who's preparing for the CPA exam. I mentioned to him how Rennova Healthcare (Pink: RNVA) just bought a hospital for about $1 million and immediately booked it at $8 million, claiming Bargain Purchase Gain with a footnote in the 10Q warning that the gain might be subject later to adjustment, up or down.

Today I see that Miller has become the poster boy for misapplication of Bargain Purchase Gain. Miller took $4.5 million in oil assets and assigned a value of $480 million to them! KPMG's role as CPA in the fraud cost them $6 million in SEC penalties.

https://mercercapital.com/financialreportingblog/475-million-bargain-purchase-leads-to-an-sec-settlement/

This gambit was all pretty new to me. Am I correct that the Bargain Purchase means of jacking up reported asset values and claiming income from that isn't tried often... even in sleazy pennyland? It's certainly a huge red flag.

Am I correct in expecting the SEC to question RNVA's action in jacking up the value of the acquired hospital?

[janice shell]

LOLOL!! That's good!

[scion]

SEC Charges KPMG with Audit Failures

FOR IMMEDIATE RELEASE 2017-142

SEC Order
http://www.sec.gov/litigation/admin/2017/34-81396.pdf

Washington D.C., Aug. 15, 2017—

The Securities and Exchange Commission today announced that KPMG has agreed to pay more than $6.2 million to settle charges that it failed to properly audit the financial statements of an oil and gas company, resulting in investors being misinformed about the energy company’s value. KPMG’s engagement partner in charge of the audit also agreed to settle charges against him.

According to the SEC’s order, KPMG was hired as the outside auditor for Miller Energy Resources in 2011 and issued an unqualified audit report despite grossly overstated values for key oil and gas assets. KPMG and the engagement partner John Riordan failed to properly assess the risks associated with accepting Miller Energy as a client and did not properly staff the audit, which overlooked the overvaluation of certain oil and gas interests that the company had purchased in Alaska the previous year. Among other audit failures, KPMG and Riordan did not adequately consider and address facts known to them that should have raised serious doubts about the company’s valuation, and they failed to detect that certain fixed assets were double-counted in the company’s valuation.

“Auditing firms must fully comprehend the industries of their clients. KPMG retained a new client and failed to grasp how it valued oil and gas properties, resulting in investors being misinformed that properties purchased for less than $5 million were worth a half-billion dollars,” said Walter E. Jospin, Director of the SEC’s Atlanta Regional Office.

The SEC’s order finds that KPMG and Riordan engaged in improper professional conduct and caused Miller Energy’s violation of Section 13(a) of the Securities Exchange Act and Rules 13a-1 and 13a-13. Without admitting or denying the findings, KPMG agreed to be censured and pay $4,675,680 in disgorgement of all the audit fees received from Miller Energy plus $558,319 in interest and a $1 million penalty. KPMG also agreed to significant undertakings designed to improve its system of quality control. Riordan agreed, without admitting or denying the findings, to pay a $25,000 penalty and be suspended from appearing or practicing before the SEC as an accountant, which includes not participating in the financial reporting or audits of public companies. The SEC’s order permits Riordan to apply for reinstatement after two years.

Miller Energy was charged with accounting fraud in 2015 and later settled the charges.

The SEC’s investigation was conducted by William M. Uptegrove and John Nemeth, and the case was supervised by Peter J. Diskin and Aaron W. Lipson of the Atlanta office.

###

https://www.sec.gov/news/press-release/2017-142

[janice shell]

Oh, they WANTED to sell it. Along with the ancient plane. But back when they were still filing, they hadn't managed to find buyers.

Maybe they should try Craigslist.

[blackcat]

When they declared BK- wasn't there any forfeiture? Seems like all of that should have been sold.

[janice shell]

Yes. Party buses are a definite no-no. I wonder if the new board ever managed to get rid of the one Scotty bought.

[blackcat]

And party buses.

[janice shell]

LOL!! You're no doubt right. With a special lesson on the proper use of executive aircraft.

[blackcat]

Probably more like "You have to be a little bit more careful if you want to get away with this"

[janice shell]

And what advice does he give to those microcap companies? Do as I say, not as I do?

Sheesh.

[blackcat]

Experience

Chief Executive Officer
Platinum Equity Advisors,LLC
March 2016 – Present (1 year)

Mr.Boruff brings more than 20 years of Capital Markets and investing experience.Mr.Boruff specializes in originating ,advising emerging growth companies in the US. Mr.Boruff has extensive experience in financial and securities matters,including CEO of Miller Energy Resources from Aug 2008 through Sept 2014 ,taking that company from Pink Sheets to NYSE . Currently providing financial and advisory services to micro-cap public companies, including technology ,oil and gas and real estate . Graduated from East Tennessee State University with a BBA in Marketing with an emphasis on Real Estate Development.

Executive Chairman
Miller Energy Resources
September 2014 – Present (2 years 6 months)

[janice shell]

Me too. I wonder what he's up to right now. Probably no good.

[blackcat]

Still hoping for Scotty to end up in the jug!

[janice shell]

That's one thing the author got wrong. He said it was MILL's corporate trading account--or some such--that got margin calls. That wasn't the story; it was Scotty who got those calls. Unless there's additional information we're unaware of.

But all kinds of interesting stuff could come from an SEC investigation into insider trading.

[blackcat]

That is interesting. I sure know a lot o people that got badly hurt in that debacle. Everyone lost money- but some were way over their heads. Well- Scotty was too. I remember him selling millions of shares just to meet his margin calls.

[janice shell]

Here's an interesting obituary of MILL. The author got a few things about the company's history wrong--and in my view didn't beat up enough on Scotty--but it's still worth reading.

And it seems the SEC is now investigating insider trading in the company's stock. That is likely to mean more problems for Scotty and others.

http://www.knoxnews.com/story/news/local/2017/02/10/miller-energy-knoxville-would-be-oil-empire/97557876/

[janice shell]

Looks as if Scotty took a $3 million haircut on the sale of Tara. What a pity…

http://www.knoxnews.com/story/money/business/2016/11/25/barton-buys-villa-collina-6375-million/94425634/

[janice shell]

Yes. It does sound quite pleasant.

[blackcat]

yes. It would be a shame not to take advantage of all this:

Villa Collina sits on eight acres, has 50 rooms, including eight bedrooms, 11 full and five half-bathrooms, a three-tier library, exercise room, 2,600-square-foot wine cellar and provides sweeping, balcony views of the Great Smoky Mountains.

It has a commercial-grade kitchen, indoor and outdoor pools, sauna, dance floor, elevator, 11 gas-log fireplaces, guest suite, staff quarters and six-car garage.