InterOil Offers Misleading Information About Questionable Employees to Investors

Documentation obtained by this blog shows that Carl Caserta, who in 1991 was barred by the Securities and Exchange Commission from “association with any broker, dealer, or investment advisor” still has an available, current, and active email address ([e-mail]) at InterOil (IOC). Other documentation obtained by this blog show that Caserta has continued helping InterOil promote its stock to investors. That documentation has been delivered to securities regulators. However, a January 2007 New York Times article reported that Caserta “stopped working for InterOil” after the company found out that he was barred from the securities industry by the SEC.

According to a 2005 report by short seller Citron Research, InterOil used Lighthouse Capital as its investor relations agent. As a principle of Lighthouse, Caserta’s job was “bringing InterOil around Wall Street attempting to attract buyers to the stock.” In 2007, the New York Times made inquiries to both InterOil and Lighthouse Capital about Caserta’s role in helping InterOil promote its stock to investors:

In 2004, Mr. Mulacek hired an investor relations executive named Carl Caserta, whom the Securities and Exchange Commission had barred from the securities industry almost two decades earlier, after he was accused of buying hundreds of thousands of stock shares for clients without their authorization. Mr. Caserta, who declined to speak on the record, stopped working for InterOil in 2005, according to his former employer, Lighthouse Capital Ltd.

Mr. Byker [InterOil Board Member] said the InterOil board was not aware of Mr. Caserta's history when he was retained. Mr. Dermedgoglou of InterOil said he was not aware that the firm had hired Mr. Caserta.

Note: Bold print and italics added by me. Bracketed information added by me for clarity.

According to the New York Times article above, Carl Caserta “stopped working for InterOil in 2005” and InterOil board member Gaylen Byker told them that the company “was not aware of Caserta’s history when he was retained.” However, documentation obtained by me shows that Caserta still has a current email address at InterOil and continued working for the company, after the New York Times article was published in 2007.

The email address [e-mail] is owned by InterOil Corporation and the secure mail server resides physically in Cairns. (60-92 Cook St Cairns 04870). The administrative contact is Terry Gilsenan.

Administrative Contact: Gilsenan, Terry

InterOil Corporation

Level 2, Orchid Plaza

79-87 Abbott St

Cairns, Queensland 4870 Australia

61417600360

InterOil used employees to blog about company while hiding their affiliation

In another stunt, Susuve Laumaea, Senior Manager Media Relations at InterOil, wrote an blog post promoting InterOil's business agenda in Papua New Guinea and apparently tried to conceal his relationship with the company. According to the article, Laumaea identified himself as:

...An award-winning veteran PNG newspaper journalist. He writes a popular weekly Public Affairs column in Port Moresby-based weekly newspaper, Sunday Chronicle.

However, the article failed to disclose Laumaea's employment by InterOil. I clinked on the link hidden under the author's name, Susuve Laumaea, and there was an InterOil email address ([e-mail]).

If Mr. Laumaea wants to cite journalism awards to impute his credibility for his article on InterOil, he should have disclosed his relationship with InterOil, too.

Anonymous Netherlands based blog promotes InterOil agenda

Another peculiar twist is an anonymous Netherlands based blog called Shareholdersunite.com that hypes InterOil's prospects to investors and acts as an apologist for the company's misdeeds. In addition, the blogger using the anonymous handle STPIOC, posts messages day and night promoting InterOil's agenda on the Yahoo message board.

For example, he wrote a blog post sarcastically trying to rebuke the article by the New York Times, detailed above, about the relationship between InterOil and Carl Caserta. He quoted the New York Times article:

“In 2004, Mr. Mulacek hired an investor relations executive named Carl Caserta, whom the Securities and Exchange Commission had barred from the securities industry almost two decades earlier, after he was accused of buying hundreds of thousands of stock shares for clients without their authorization. Mr. Caserta, who declined to speak on the record, stopped working for InterOil in 2005.”

Then, he offered the following excuse:

Yes, you read that right. IOC hired somebody who, almost two decades ago(!), was accused (convicted? The article doesn’t say so, and you’ll bet if he was convicted, this article would have mentioned it) of something improper. Not a hint that that ’something improper’ had anything to do with anything related to IOC (pretty hard, as it was almost two decades ago), and when IOC management found out, they released him.

Terrible! I’m shocked!! They hired somebody who was accused of something two decades ago. How could they! That makes me lose all my trust in IOC!! Think of it for a moment. Which company hasn’t hired somebody who was accused of something a couple of decades ago…

I’m not going to trust IOC because one of their employees tried to chat up my wife once. Terrible!

You see how he smears the company with really VERY VERY little substantive issues. So unsubstantiated, in fact, that you could smear ANY company this way, if you wanted to. And that this guy wanted to is beyond reasonable doubt after reading this.

First, he questioned whether Caserta was actually convicted of any securities violations by writing "was accused (convicted? The article doesn’t say so, and you’ll bet if he was convicted, this article would have mentioned it) of something improper."

According to the SEC:

Robert J. Gallaro and Carl Caserta, Registrant's president and vice-president, respectively, have submitted Offers of Settlement, which the Commission accepted. Registrant, Gallaro and Caserta, without admitting or deny-ing the allegations, consented to Findings and Order Imposing Remedial Sanctions which finds that they wilfully violated various antifraud provisions of the securities laws, and that Gallaro and Caserta wilfully aided and abetted Registrant's violations of other antifraud provisions of the Exchange Act, and the net capital, bookkeeping and reporting provisions of the Exchange Act.

While Caserta technically did not admit or deny the SEC allegations, he did in fact consent to "Findings and Order" which found that he "willfully violated antifraud provisions of the securities laws...."

According to Shareholdersunite.com, when Interoil "found out" about Caserta being barred from the securities industry, "they released him." However, documentation delivered by me to securities regulators show that Caserta continued promoting InterOil stock to investors and has a current company email address.

Other recent developments

Fraud Discovery Institute, led by my close friend and convicted felon turned fraud fighter Barry Minkow, released a report showing how InterOil's press releases raising "investor expectations of a potentially huge commercially exploitable oil and gas find" inflated the company's stock price. Yet to date, InterOil has not reported a single barrel of proven commercially exploitable reserves." Additional information on Minkow's continuing investigation of InterOil can be found on his website InterNoOil.com.

Disclosure:

I am a convicted felon and a former CPA. As the criminal CFO of Crazy Eddie, I helped Eddie Antar mastermind one of the largest securities frauds uncovered during the 1980s. I pleaded guilty to three felonies.

I am assisting Barry Minkow and Fraud Discovery Institute in researching InterOil and Minkow has a short position in Interoil. I have no position in InterOil securities, long or short.

Comments

[J Maher:]

What a surprise, a convicted fraudster who is allied with professional shorters stirs up some old news to try to push down a stock price.

How does this all change the 6.7 TCF of NG found, reported by a third party engineering firm? Or the fact that CNOOC out of China is looking to buy in on IOC's finds , read the real news not the old man trying to stir up the old news for his own interest.

Jul 01 06:22 AM

[Forrest Hoe...:]

In your disclosure you, and in all your numerous postings on the Board you "Print" : "I am a convicted felon"

I would think that Post - Madoff, guys like you would be ashamed of your fraudulent past.
I get the idea that you are proud to make that claim.
It's not like you are Michael Jackson saying that you are "BAD", you make or made a living cheating people, get a real Job.

Binc

Jul 01 06:28 AM

[J Maher:]

Wonder how many terminated employees still have active email addresses in small cap companies, I'm guessing quite a few, IT has better things to do with their time most days.

Boring...... how 'bout some real news Sam like this..........

Sydney, 30 June (Argus) — Canadian independent InterOil is in talks with Chinese state owned producer CNOOC and other Asian oil and gas companies about the sale of up to 35pc of its exploration permits covering the Elk and Antelope onshore gas and condensate fields in Papua New Guinea (PNG). The fields are likely to feed InterOil's proposed 4mn-8mn t/yr Liquid Niugini Gas project in PNG.

Jul 01 06:35 AM

[kencooksam:]

I think Sam should lead with convicted felon disclosure and his stock ownership position SHORT.Then no one would bother to read this nonsense..

Jul 01 07:22 AM

[Ozarker:]

Disclaimer--I am not a convicted felon. Everyone else seems to be real proud that they are. In mafia terms, it sounds like a bunch of crapola to me.

Jul 01 10:03 AM

[107Sid:]

How would you guys react, if a convicted fellon posted his findings and conclusions without pointing out that he was a convicted fellon? You'd be all over the guy. Sam paid for his crime and is disclosing his criminal past. Why not let the guy get on with his life and evaluate his findings simply base on their meit, or lack thereof.

Jul 01 10:11 AM

[User 104668:]

Thanks! Maher for commenting & bringing readers the news facts from Sidney, Aus. I am a shareholder in IOC, I just want the hardcore facts on real gas quanties & possible crude oil in the ground. And the new news that coonoc is looking for a possible stake and/or buying natGas & possible crude oil. I don't know if Boone Pickens still has a %stake. Fraudsters & criminals are allways a problem, but I hate to say that "Crime does Pay" until you get Caught". I live in Connecticut, near NYC, I follow many types of investments for the small investor, and choose to buy investments that seem and deem fit for profit. "Just the Facts"
Thanks, Norman S

Jul 01 11:21 AM

[SupaSage:]

Let's think about this... I'll give Sam the benefit of the doubt here. Lets assume:

1. Carl Caserta was in fact barred by the Securities and Exchange Commission from “association with any broker, dealer, or investment advisor”
2. Carl stilll has an available, current, and active email address at InterOil (IOC)

What does having an email address have to do with his barring by the SEC? IOC is not a broker, dealer, or investment advisor. And even if IOC were a broker/dealer and Carl was associated with IOC, does that have anything to do with the assessments of IOC's potential resource?

Moreover, isn't it a bit hypocritical for Sam to be casting stones at Carl, when he too, was found guilty of wrongdoing in the past? If Sam expects us to believe that he is "reformed", why shouldn't we believe that Carl is "reformed" as well.

That said, I think its important to focus on the facts. IOC is apparently getting closer to signing a deal with a partner on its LNG project. If we look at the news article from Monday, we'll see that CNOOC or PetroChina could be paying $500mm for a 35% stake. That implicitly values the entire project at $1.4 billion. Add to that the value of IOCs other net assets (about $600 million) and you get a total value of about $2.0 billion. That equates to more than 80% upside from IOC's $1.1 billion market cap today.

Jul 01 11:52 AM

[Shareholder...:]

In all our writings about InterOil, which we "hype" (according to you, without substantiating..), that's all you could come up with? And how should we have known Mr. Casserta has a current email address at IOC, and why does that matter so much anyway, if at all?

Jul 01 08:14 PM

[User 422955:]

There are so many companies out there. Why invest in one with a controversy like this? And why argue about it?

Jul 01 08:56 PM

[FeelTheHeat:]

SupaSage-

Mr. Casserta was barred from offering the securities of any company. Instead of living by this ban, he violated it by acting as a placement agent for Interoil stock. It makes no difference if the act he committed was twenty years ago or twenty months ago. By acting as a placement agent for Interoil stock, Mr. Casserta, showed a willful disregard for securities laws.

It makes no difference if Mr. Casserta is in fact "reformed". Mr. Antar is also barred for life from offering securities, and from acting as an officer of a public company. Unlike Mr. Casserta, Mr. Antar is as far as I know abbiding by that ban. Publishing articles on corporate fraud, and writting a blog is not a violation Mr. Antar's ban. If he so wishes, Mr. Casserta may also write a blog, or publish articles. He chooses instead to continue to act as a placement agent for a public company in violation of his life-time ban.

By continuing to employ Mr. Casserta, even though they knew he was a barred for life by the SEC, Interoil Inc. also showed a willful disregard for securities laws. Further, they lied to the New York Times about Mr. Casserta's involvement witih the company. Mr. Antar showed in this article for the second time in a week, that Interoil has no problem hidding the truth from the public if that truth is embarrassing or negative.

I also find it interesting that so many of Interoil's supporters are willing to chalk up these willful violations of the law to common errors. One poster in this forum suggested that having an old e-mail address on the server of a small-cap company is common. Another poster on the yahoo message board attributed, Interoil's false Reg D filling to "forgetting to fill out a form."

These assertions are simply ridiculous. As a matter of security, all companies immediately remove the e-mail addresses of former employees upon seperation. Not doing so risks that the former employee may use his former address to inflict harm upon his former employer.

Besides, even if we accept that this happens "accidently" from time to time, what are the chances that the one employee who's address Interoil forgot to remove from its server just so happened to also be its most infamous? Slim and none. Somehow we are supposed to believe that Interoil both "forgot to fill out a form", resulting in a false Reg-D, and forgot to remove from the server the e-mail address of a rogue ex-employee that it had supposedly fired.

I see by shareholders unite's response that they are incapable of understanding the purpose of Mr. Antar's mention of them in his blog. Shareholders Unite spends its days making excuses for all of Interoil's misdeeds. In the blog post quoted he tries to minimize Mr. Casserta's involvement by first trying to falsely cast doubt on his lifetime ban, and then comparing violating securities laws to "chatting up his wife".

In other posts on the yahoo message board, Shareholders Unite makes it clear that he thinks that Interoil's willful violation of securities laws isn't a big deal. He compares these transgressions to "an unpaid 20 year old traffic ticket", and says that he doesn't mind if Interoil "cuts a few corners", as long as it helps the comapny. I heartilly disagree.

Securities Laws aren't just minor annoyances that can be broken at will and brushed aside. These laws are in place to protect investors from unscrupulous operators who seek to line their pockets at the public's expense. If it is acceptable to employ persons you know to be banned by the securities industry, and to knowingly file false Reg D's, then it must also be acceptable to knowingly file false numbers or to lie to investors about your future prospects.

If these misdeeds aren't punnished how can we take any company's word for anything? Investing in public companies requires a public trust that investors know what risks they are taking have a realistic idea as to the possible rewards. If this trust is broken, then the whole capital market system breaks down.

I call on the SEC to launch a full scale investigation of Interoil Inc. Since the company has proven that it cannot be trusted, it must now turn over all interal doccuments to law enforcement to prove that these are the only lies it has told. Only then, can the public trust that Intetroil violated have a chance of being restored.


On Jul 01 11:52 AM SupaSage wrote:

> Let's think about this... I'll give Sam the benefit of the doubt
> here. Lets assume:
>
> 1. Carl Caserta was in fact barred by the Securities and Exchange
> Commission from “association with any broker, dealer, or investment
> advisor”
> 2. Carl stilll has an available, current, and active email address
> at InterOil (seekingalpha.com/symbo...)
>
> What does having an email address have to do with his barring by
> the SEC? IOC is not a broker, dealer, or investment advisor. And
> even if IOC were a broker/dealer and Carl was associated with IOC,
> does that have anything to do with the assessments of IOC's potential
> resource?
>
> Moreover, isn't it a bit hypocritical for Sam to be casting stones
> at Carl, when he too, was found guilty of wrongdoing in the past?
> If Sam expects us to believe that he is "reformed", why shouldn't
> we believe that Carl is "reformed" as well.
>
> That said, I think its important to focus on the facts. IOC is apparently
> getting closer to signing a deal with a partner on its LNG project.
> If we look at the news article from Monday, we'll see that CNOOC
> or PetroChina could be paying $500mm for a 35% stake. That implicitly
> values the entire project at $1.4 billion. Add to that the value
> of IOCs other net assets (about $600 million) and you get a total
> value of about $2.0 billion. That equates to more than 80% upside
> from IOC's $1.1 billion market cap today.

Jul 02 01:38 AM

[Sam E. Antar:]

FTH: Excellent points


On Jul 02 01:38 AM FeelTheHeat wrote:

> SupaSage-
>
> Mr. Casserta was barred from offering the securities of any company.
> Instead of living by this ban, he violated it by acting as a placement
> agent for Interoil stock. It makes no difference if the act he committed
> was twenty years ago or twenty months ago. By acting as a placement
> agent for Interoil stock, Mr. Casserta, showed a willful disregard
> for securities laws.
>
> It makes no difference if Mr. Casserta is in fact "reformed". Mr.
> Antar is also barred for life from offering securities, and from
> acting as an officer of a public company. Unlike Mr. Casserta, Mr.
> Antar is as far as I know abbiding by that ban. Publishing articles
> on corporate fraud, and writting a blog is not a violation Mr. Antar's
> ban. If he so wishes, Mr. Casserta may also write a blog, or publish
> articles. He chooses instead to continue to act as a placement agent
> for a public company in violation of his life-time ban.
>
> By continuing to employ Mr. Casserta, even though they knew he was
> a barred for life by the SEC, Interoil Inc. also showed a willful
> disregard for securities laws. Further, they lied to the New York
> Times about Mr. Casserta's involvement witih the company. Mr. Antar
> showed in this article for the second time in a week, that Interoil
> has no problem hidding the truth from the public if that truth is
> embarrassing or negative.
>
> I also find it interesting that so many of Interoil's supporters
> are willing to chalk up these willful violations of the law to common
> errors. One poster in this forum suggested that having an old e-mail
> address on the server of a small-cap company is common. Another poster
> on the yahoo message board attributed, Interoil's false Reg D filling
> to "forgetting to fill out a form."
>
> These assertions are simply ridiculous. As a matter of security,
> all companies immediately remove the e-mail addresses of former employees
> upon seperation. Not doing so risks that the former employee may
> use his former address to inflict harm upon his former employer.
>
>
> Besides, even if we accept that this happens "accidently" from time
> to time, what are the chances that the one employee who's address
> Interoil forgot to remove from its server just so happened to also
> be its most infamous? Slim and none. Somehow we are supposed to believe
> that Interoil both "forgot to fill out a form", resulting in a false
> Reg-D, and forgot to remove from the server the e-mail address of
> a rogue ex-employee that it had supposedly fired.
>
> I see by shareholders unite's response that they are incapable of
> understanding the purpose of Mr. Antar's mention of them in his blog.
> Shareholders Unite spends its days making excuses for all of Interoil's
> misdeeds. In the blog post quoted he tries to minimize Mr. Casserta's
> involvement by first trying to falsely cast doubt on his lifetime
> ban, and then comparing violating securities laws to "chatting up
> his wife".
>
> In other posts on the yahoo message board, Shareholders Unite makes
> it clear that he thinks that Interoil's willful violation of securities
> laws isn't a big deal. He compares these transgressions to "an unpaid
> 20 year old traffic ticket", and says that he doesn't mind if Interoil
> "cuts a few corners", as long as it helps the comapny. I heartilly
> disagree.
>
> Securities Laws aren't just minor annoyances that can be broken at
> will and brushed aside. These laws are in place to protect investors
> from unscrupulous operators who seek to line their pockets at the
> public's expense. If it is acceptable to employ persons you know
> to be banned by the securities industry, and to knowingly file false
> Reg D's, then it must also be acceptable to knowingly file false
> numbers or to lie to investors about your future prospects.
>
> If these misdeeds aren't punnished how can we take any company's
> word for anything? Investing in public companies requires a public
> trust that investors know what risks they are taking have a realistic
> idea as to the possible rewards. If this trust is broken, then the
> whole capital market system breaks down.
>
> I call on the SEC to launch a full scale investigation of Interoil
> Inc. Since the company has proven that it cannot be trusted, it must
> now turn over all interal doccuments to law enforcement to prove
> that these are the only lies it has told. Only then, can the public
> trust that Intetroil violated have a chance of being restored. <br/>

Jul 07 10:34 PM

[Alan von Al...:]

0-5Hz passive seismic "direct detection of hydrocarbons" is utter rubbish, listening to worms crawling around in the topsoil. The goal of modern seismic is HIGH FREQUENCY resolution with plenty of lateral (wide azimuth) offset, thousands of shotpoints, and rigorous velocity modelling.

On Jul 07 07:53 PM berg wrote:
> Dear Oil Investors,
> If you want to get small investment risk ask your company about new
> exploration technology BSE (binaryseismoem.weebly.com

Jul 08 11:44 PM