SEC investigates purchase by Cherokee business group
Saturday, July 1st 2006, 12:43 pm
By: News On 6
TAHLEQUAH, Okla. (AP) _ The U.S. Securities and Exchange Commission has launched an investigation into Cherokee Nation Industries' acquisition of an air conditioning products company that is also the subject of a federal lawsuit.
Several Cherokee Nation tribal councilors had requested the SEC investigation and met with members of Oklahoma's congressional delegation regarding the $2.5 million purchase of a majority interest in Global Energy Group last August by Cherokee Nation Industries, one of three business entities owned by the tribe.
Councilors said they met with U.S. Sen. Tom Coburn, R-Okla., and U.S. Rep. Dan Boren, D-Okla., and a representive from the office of U.S. Sen. Jim Inhofe, R-Okla., to tell them the sale may have included stocks fraud. They also provided the congressmen with a 50-page report detailing allegations about the deal.
The report, compiled by Cherokee Nation Council executive director of financial oversight Doug Evans, was also sent to Tom Baudhuin of the Securities Exchange Commission on Feb. 21.
In it, Evans said he finds the transaction ``highly questionable,'' and asks the SEC to look into the matter.
The Global Energy Group deal also was the subject of a federal lawsuit filed June 23 by seven Cherokee councilors. Cherokee Chief Chad Smith, Cherokee Nation Industries head Jim Majewski and Benjamin Dixon were named as defendants in the lawsuit, which alleges stock price manipulation and fraud in the deal.
Smith sent an e-mail to Cherokee Nation employees this week maintaining that Global Energy Group stock is trading ``at about the same level that it was when the stock was purchased'' and said the allegations were brought by ``dissident Council members.''
Cherokee Nation Industries' board put Majewski on administrative leave June 7 pending further review.
Global Energy Group, with offices in Texas, Florida and Arizona, manufactures heat pump and air-conditioning equipment.