Mammoth Energy Services, Inc. (TUSK) Subsidiary’s Contracts Are Being Investigated
According to the complaint against the Company’s directors for breach of fiduciary duty, unjust enrichment, waste of corporate assets, and alleged violations of federal securities laws, Mammoth’s officers and directors caused the Company to file false financial information with the SEC regarding its anticipated $1.8 billion contract between its subsidiary Cobra Acquisitions LLC and Puerto Rico Electric Power Authority (“PREPA”) for repairs to PREPA’s electrical grid after Hurricane Maria. Mammoth’s officers and directors had failed to disclose that the agreement was tainted by improper dealings, but in May 2019, The Wall Street Journal revealed that the Department of Homeland Security was investigating FEMA’s then Deputy Regional Administrator, who was placed on administrative leave, over allegations that she steered work to Cobra. On this news, Mammoth’s shares fell over 10% over the next three trading days. Then, in June 2019, The Wall Street Journal published another article reporting that the FBI had opened a related criminal inquiry into the origin of Cobra’s contracts with PREPA. On this news, Mammoth’s shares fell over 45% over the next two trading days to close at $6.11 per share on June 6, 2019. Then, on September 3, 2019, FEMA’s former Deputy Regional Administrator, Cobra’s former president, and a second FEMA employee who later worked for Cobra, were indicted and arrested for conspiring to defraud the federal government in connection to the contracts with PREPA. Mammoth’s stock has yet to recover and currently trades at around $2. Additionally, the Company is the subject of a federal securities class action, which can cause Mammoth additional harm.