Clash With Titan
Ex-Crescent exec seeks to recoup millions, restore damaged reputation
KANSAS CITY, Mo. -- Former Crescent Oil president Phil Near claims that he has lost his company, his life savings and his reputation through the actions of Titan Global Holdings Inc., which acquired Crescent in January 2009. Through a lawsuit filed earlier this month in federal court in Kansas, Near alleges that Titan executives committed fraud and breached its contract and promises to him, and that they "have pilfered the Crescent Cos. of assets and cash and left Near on the hook for it all." The suit also alleges that they drove Crescent into bankruptcy.
(Click here for previous CSP Daily News coverage.)
Developer Frank P. Crivello and his business associate David Marks were named earlier this month in a suit filed by Kansas businessman Near, who also claims that Titan, which counts Crivello and Marks among its largest shareholders, failed to properly compensate him when Titan bought Crescent. Near's suit also names Titan CEO Bryan Chance, Greystone Business Credit LLC, a New York City-based lender to Titan, and Greystone's Chicago-based law firm, Goldberg, Kohn, Black, Bell, Rosenbloom & Moritz.
Richardson, Texas-based Titan is a diversified holding company with a portfolio of subsidiaries spanning consumer products, international telecommunications and energy resources and distribution.
Crescent, Independence, Kansas, distributes gasoline and operates a chain of nearly 350 convenience stores in Kansas, Oklahoma, Arkansas, Missouri, Illinois and Louisiana. In 2008, it was distributing more than 300 million gallons of fuel per year and had almost $1 billion in sales, according to the court documents, and it was one of ConocoPhillips top-five U.S. fuel distributors and one of Shell's top-10 distributors. It also distributes Valero and BP fuels.
Stephen Kravit, attorney for Titan, Crivello, Marks and Chance, recently told The Milwaukee Journal Sentinelthat Near's claims are "nonsense. This suit is grandstanding, with the purpose of shaking down my clients for money, and it will be vigorously defended."
In response, Near's attorney, Michael Pospisil of Edgar Law Firm LLC, Kansas City, Mo., told CSP Daily News that he is "shocked at [Kravit's comments]. This is anything but grandstanding. This is a pure case of fraud."
According to the court documents, Crescent in 2008 began looking for an equity partner to help fund expansion, which led Near to a meeting with Titan executives, who touted their apparent success with Blountville, Tenn.-based Appalachian Oil Co. (Appco) as an example of what Titan could do, and expressed a desire to merge Crescent and Appco.
But the "defendants lied, cheated and stole from Near," the court documents say. The "defendants made false promises to Near about their ability to fund the purchase of Crescent and their willingness and ability to fund future operation of Crescent, so as to allow it to expand even further. They promised Near valuable stock, funding of operations, employment and...the extinguishment of Near's personal guarantees, including the guarantee of a $35 million loan, issued by M&I Bank, in exchange for his ownership of Crescent. None of the promises made by [the] defendants were fulfilled. Near has yet to receive anything of value for his ownership interest in Crescent."
Pospisil said that Titan's "mantra seems to be that they borrow from Peter to pay Paul. They'll take money from one corporation, drain it, put it into another corporation, drain it (and so on], which is what they did with Crescent. They did the same thing with Appco."
Crescent filed for Chapter 11 bankruptcy protection on Feb. 7, 2009. In April, the oil company was operating under the guidance of Titan after president Near and executive vice president Jon Viets were asked to resign. Crescent was "hemorrhaging losses in the millions of dollars" before Titan acquired it, Kravit told the newspaper.
Chance has been serving as president of Crescent since March 31, and the Kansas district of U.S. Bankruptcy Court authorized auctioning "substantially all of the debtor's assets" on April 2. Bankruptcy Judge Robert Berger ordered the sale of Crescent's assets, initially on June 1, but that date was later dropped and a new date has yet to be arranged.
Appco, which was purchased by Titan in September 2007, filed for bankruptcy protection on February 9. In late April, a Tennessee bankruptcy judge put that company in the hands of an outside chief restructuring officer, NRC Realty Advisors' Andy Weber, beginning the process of giving NRC the authority to sell the company and its 58 c-stores in Tennessee and Kentucky.
(Click here for previous CSP Daily News coverage.)
Pospisil said that they are "very confident in the lawsuit." He added, "Our expectations are to get what was bargained for and to recoup the millions of dollars that were laid his feet in terms of liability by the actions of the defendants.
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