Orion Group Holdings has appointed Scott Thanish as its new CFO. He replaces Robert Tabb, who resigned in October 2021 to become CFO at privately-held Signal Energy Constructors.

Orion is based in SE Houston. The company was formed in 1994 to provide dredging and other marine construction services. However, it later diversified into concrete construction services. The company has revenues of over $600 million and a market cap of $96 million.

CEO and interim CFO Mark Stauffer was fired in April 2022. Chairman Austin Shanfelter took over as interim CEO until Travis Boone was appointed as its new CEO last month. Mr. Boone was a regional CEO of AECOM, an infrastructure engineering firm.

The root of the problems appears to be negative margins in the concrete segment, especially in the Austin and San Antonio regions, relatively new territories for the company.  The company had inexperienced management and weak relationships with customers in these regions and was unable to pass on cost increases.

Mr. Thanish joins from CHC Group, a private company providing helicopter services to the oil and gas industry. He has been CFO there for almost 5 years. He will receive a base salary of $425,000.

SEC filing – Orion Group CFO appointment

Kiromic Biopharma, based in the Medical Center, has fired its CEO for misconduct and also admitted it misled investors during a $40 million public stock offering in 2021.

The company is developing immuno-oncology therapeutics for the treatment of blood cancers and solid tumors. It went public in October 2020, raising $15 million at $12 per share. It raised a further $40 million in July 2021 at $5 per share. The shares now trade at $1.

On August 17 and 23. 2021, then CFO and Board member Tony Tontat submitted substantially identical reports through the company’s complaint hotline. The complaints pertain to the company’s public disclosures with the SEC regarding the anticipated timing of the US Food and Drug Administration (FDA) authorization of its drug applications and the anticipated timing of human clinical trials.

The complaints were passed to the Audit Committee of the Board. In turn, the Audit Committee recommended the Board form a Special Committee to investigate. After engaging outside counsel (Sidley Austin) and AlixPartner, the Special Committee reported on its findings to the Board on February 2, 2022

FDA Clinical Hold

In short, the company received communications from the FDA  on June 16 and June 17, 2021 that the FDA was placing two new potential drugs on clinical hold. A clinical hold means the company has to suspend ongoing clinical work. The formal clinical hold letters were received from the FDA on July 13, 2021.

On July 16, 2021, the company issued a press release disclosing it had received comments from the FDA but did not mention the term ‘clinical hold’. It was only on August 13, 2021 that the company disclosed this fact.

These dates are important as the company filed its S-1 Registration Statement on June 25 without mentioning the correspondence from the FDA on the clinical holds. It closed its IPO on July 2, 2021. That lack of disclosure will trigger even more shareholder lawsuits.

Disclosure Committee

The SEC filing doesn’t explicit state who in the company knew what and when. The Special Committee did recommend the formation of a Disclosure Committee comprising the CEO, CFO, General Counsel, the Corporate Controller and any Executive in charge of FDA submissions. Their role is to ensure timely and accurate disclosure of relevant information to investors and the SEC.

CFO lied about his education

For good measure, the Special Committee also found that Mr. Tontat lied to the company about his educational background. Instead of a BA in Economics from Harvard University, he received a Bachelor of Liberal Arts, a degree conferred by the Harvard Extension School.

Mr. Tontat resigned as CFO in October 2021, with Dan Clark, VP of Finance, promoted to interim CFO. The SEC filing announcing Mr. Tontat’s resignation stated that it was due to personal reasons and did not relate to any disagreement with the operations, policies or practices of the Company on any matters.

CEO fired

CEO Maurizio Chiriva-Internati was terminated for cause on January 27, 2022 after the Special Committee found ‘evidence of conduct that the Board believe was inconsistent with the Company’s policies.’

Pietro Bersani, a current member of the Board, has been appointed interim CEO while the company searches for a permanent CEO.

SEC filing – Kiromic Biopharma fires CEO

Gary Coronado/Houston Chronicle

ExxonMobil has announced that they will be moving their head office from Irving, TX to their campus in Spring, TX. The move will be completed by mid-2023.

Exxon has a market capitalization of $319 billion. When it relocates, it will be the largest in Houston, by market cap.

Exxon moved its head office from Manhattan to Irving in 1989. The current head office is 365,000 square feet and houses 250 employees, who have been offered relocation packages. Last year, Exxon put up for sale 50 acres of vacant land around its headquarters. In addition, it owns another 50 acres in the area.

Construction on the campus in Spring began in 2011 when oil was over $100 a barrel. It was completed in 2015, when oil was below $60. It is based on 385 acres and officially houses 10,000 employees. The campus is currently appraised at $890 million.

ExxonMobil also announced a reorganization as part of efforts to save $6 billion in cost savings by 2023;

• The Downstream and Chemical segments will be combined into a segment called Product Solutions.
• The US and International Upstream businesses, previously run separately, will be consolidated into one organization
• A new segment called Low Carbon Solutions will be created.
• Technology and Engineering groups will be combined into one shared service for the segments.

The cost-cutting is probably the result of pressure by an activist investor, Engine No 1, who won three seats on Exxon’s board in June 2021, despite only owning 0.02% of the stock.

In July, the company hired Kathryn Mikells as its new CFO. She joined from Diageo PLC, a drinks manufacturer and is the first woman to be appointed to the Executive leadership team at Exxon.

ExxonMobil news release

A Katy woman, Angelica Garcia-Dunn, has pleaded guilty to defrauding BP.  Ms. Garcia-Dunn was the founder and CEO of Aim Global Logistics, a freight forwarding and logistics company.

She contracted with BP to act as an escrow agent in which she would make payments on BP’s behalf to BP’s railcar lessors and repair vendors. Between July 2018 and September 2019, BP made payments totaling $2,282,148.53 that Ms. Garcia-Dunn was supposed to use to pay the BP vendors. Instead she diverted the money to either pay other business obligations or to her own personal account.

Most of the money diverted was used to pay business creditors. However, Ms. Garcia-Dunn transferred at least $80,000 to her personal bank account.

The scheme went undetected for so long because Ms. Garcia-Dunn used later payments from BP to pay earlier vendor invoices that had not been paid due to the misappropriation of BP funds. As an accounting fraud, this is known as  ‘Teeming and Lading’.

Sentencing is set for September 30. At that time, Ms. Garcia-Dunn faces up to 20 years in prison and a possible $250,000 maximum fine. She will remain on bond pending that hearing.

https://www.justice.gov/usao-sdtx/pr/katy-resident-admits-fraud

Graf Acquisition Corp IV has completed its $150 million initial public offering. It is a Woodlands-based Special Purpose Acquisition Company (SPAC), otherwise known as a blank check company. It’s also the first Houston-area SPAC to go public since the SEC clamped down in April. All Houston-area SPACS are restating their results.

Interestingly, Graf IV has completed its IPO before Graf Acquisition Corp II ($225 million) and Graf Acquisition Corp III ($300 million). All three companies filed their registration statements in February.

The first Graf Acquisition SPAC went public in October 2018. It took Velodyne Lidar public in September 2020. The San Jose-based company, which makes radar-like sensors used in autonomous vehicles, has had a rocky beginning as a public company.

Velodyne Lidar’s rocky road

The first quarterly results since going public underperformed analysts’ expectations. It also reported material weaknesses in revenue recognition in its first annual report. Finally, the chairman and co-founder of Velodyne Lidar, David Hall, had a spectacular falling out with Jim Graf.  The company accused Hall and his wife (who worked at the company) of behaving inappropriately regarding the Board and company processes. In turn, Hall accused the Board of prioritizing its own self-interests over that of the shareholders.

Mr Hall is no longer on the Board, though he remains the largest shareholder. However, his wife, who was fired as an employee in February, remains on the Board as does his wife’s brother. That should make for some interesting dynamics at future board meetings!

When the deal closed, the share price popped to $24.75. It’s now trading around $10.

You can see the complete list of Houston-area public companies here.

https://www.businesswire.com/news/home/20210520006130/en/Graf-Acquisition-Corp.-IV-Announces-Pricing-of-150-Million-Initial-Public-Offering

Richard Garza, former Superintendent of Houston Gateway Academy, was sentenced to serve 60 months in prison. He pleaded guilty in September 2019 to taking $250,000.

The charter school is located in the Gulfgate area of Houston. It opened in 1999 with two classrooms. It now has about 2,300 students in three schools. Although over 90% of the students are considered economically disadvantaged, it has the highest average percentage of students meeting state standards in the Houston area.

Garza admitted he awarded a $280,000 no-bid contract in 2014 to a business owned by Ahmed Bokaiyan, an IT employee at the school. The contract was to supply IT equipment and services to a new school not yet constructed.

An audit revealed that Garza sent the business $252,757 before it completed any work. The business sent back $164,381 to Garza’s personal account. Garza used the funds to buy a Nissan Armada SUV and a condo.

Garza was ordered to pay a $20,000 fine and restitution of $191,292 to the Texas Education Agency. Bokaiyan had previously pleaded guilty and was ordered to pay $156,595 in restitution.

https://www.justice.gov/usao-sdtx/pr/former-charter-school-official-sent-prison-embezzling-funds