San Antonio-based Primera Energy was part of a heated bankruptcy court hearing today on whether the company would appoint a third party chief executive to replace CEO Brian Alfaro.
Alfaro was present today for the hearing where investors wanted to appoint a Chapter 11 trustee to take control of the company. The CEO has been accused of skimming millions of dollars for company investors.
Primera attorney Dean Greer stated in court that the parties pushing for the trustee represent a small percentage of individuals who have invested in the company’s oil and gas wells.
“I do not believe this proceeding should go forward until all of the investors have been notified,” Greer told U.S. Bankruptcy Judge Craig A. Gargotta.
The San Antonio company has been accused of defrauding more than 25 investors. According to a report from the San Antonio Business Journal, attorneys who filed a fraud lawsuit the behalf of 26 investors against Primera Energy and its owner compared the allegations to the Hollywood movie “The Wolf of Wall Street.” Some of the noted complaints alleged that Alfaro led a “lavish lifestyle” with investor’s money and headed up a “boiler room” where he oversaw cold call salesmen in what they are alleging is a $40 million oil field Ponzi scheme.
“The tactics he used were the same,” Attorney Lawrence Morales II, one of the lawyers representing the investors, told the San Antonio Business Journal Referring to allegations made in the lawsuit, Morales said that Alfaro “used high-pressure sales tactics with half-truths and poor information.”
Last Thursday, Alfaro sat down with the San Antonio Business Journal to narrate his side of the controversy. The CEO in question stated that the company’s woes started when an employee was sued for embezzlement last year and that he believes the employee and Primera Energy’s former accountant were involved in the plot together. In addition, Alfaro denied the allegations noting that he drilled and completed every well that he started and that they produced oil.
However, Morales stated that the drilling was not the real issue. The subcontractors filed liens against them because Primera Energy never paid them creating complex legal problems for the investors and the landowners to recover their money. The investors also targeted Alfaro’s multimillion-dollar properties, luxury vehicles, fudging oil well production numbers and cover ups of accidents at the oil wells.
The latest from the Business journal stated that the hearing ended with both sides agreeing to postpone discussing the issue until July 9. The two sides entered into an agreement where Alfaro will remain at the head of the company but Primera Energy’s accountant Edgar Perez and third-party attorney Eric Terry must sign all company checks until the hearing.