The former Directors and Officers of the now defunct Aegean Marine Petroleum Network Inc. are facing a lawsuit exceeding US $300 million at the United States District Court for the Southern District of New York over alleged misconduct.

A complaint has been filed by a Trustee of the Aegean Litigation Trust representing several creditors against E. Nikolas Tavlarios, Peter C. Georgiopoulos, John P. Tavlarios, and George Konomos on 12 September at the U.S. court.

“Defendants, former directors and officers of Aegean, had duties to oversee Aegean’s business, including duties of care, loyalty, and good faith that required monitoring its systems of internal control, insider transactions, and financial dealings,” stated the complaint seen by Manifold Times.

“However, Defendants knowingly abdicated these duties, leaving Aegean’s former CEO, Dimitris Melisanidis, free to defraud Aegean and manipulate its finances without any monitoring, oversight, or scrutiny.

“In bad faith dereliction and breach of their duties, Defendants turned their heads as Melisanidis essentially had his way with the Company and rendered it hopelessly insolvent.”

The document claimed Melisanidis ultimately misappropriated over $300 million from Aegean by 2018.

Melisanidis first led Aegean to engage in a “sham consulting contract” with OilTank Engineering and Consulting, Ltd (OilTank), an entity owned by him, which resulted in amounts totalling between $68 million and $126 million paid for consulting services in an over budgeted construction project.

He later transferred approximately $186 million between Aegean and OilTank or other firms controlled by himself after construction was completed.

Melisanidis further engineered a massive accounting fraud whereby Aegean accumulated $200 million in fake accounts receivable between 2015 and 2017 from sham entities affiliated with his associates.

He also purported to sell his approximately 22% stake in Aegean for approximately $100 million, where the company never actually paid for the shares.

“Defendants were officers or directors of Aegean during each of these events — all of which resulted from Defendants’ failure to monitor Aegean’s systems of internal control, insider transactions, and financial dealings,” continued the complaint.

“Defendants were all aware of numerous irregularities and other red flags during their tenure, yet they did nothing to prevent Melisanidis from using his position to denude the Company of value.

“In addition, Defendants knew of Melisanidis’s sordid background, including his extensive criminal history for fraud related conduct, his suspect business practices, and his propensity for physical violence.

“But as beneficiaries of Melisanidis’s corporate largesse at Aegean’s expense, Defendants were motivated to utterly disregard their fiduciary duties in order to remain in Melisanidis’s good graces and continue their symbiotic relationship with him.”

The complaint further explained a new group of investors who were appointed independent board members at Aegean later found Melisanidis and his affiliates misappropriating over $300 million from Aegean after completing a 2018 Audit Committee Investigation.

“The new independent directors did not have more or different authority or investigative powers than Defendants,” said the complaint.

“Had Defendants earlier sought to protect Aegean from Melisanidis as the independent directors later did, they could have prevented Melisanidis’s company-destroying wrongdoing.

“These revelations ultimately led Aegean to file bankruptcy days later on November 6, 2018. Now the Trustee, on behalf of the Aegean Litigation Trust, brings this lawsuit to recover the hundreds of millions of dollars in damages caused by Defendants’ breaches of fiduciary duty.”

The original version of the complaint can be read here.

A timeline organised list of events preceding the current development have been recorded by Manifold Times below:

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Published: 23 September, 2019