On October 14, 2008, the United States Bankruptcy Court for the District of Delaware appointed Louis Freeh, the former Director of the FBI, as examiner in the SemCrude bankruptcy. Five weeks after his appointment, Freeh submitted the Examiner’s Preliminary Work Plan as required under the order granting his appointment (the "Examiner Order"). Pursuant to the Examiner Order, Freeh was directed to investigate circumstances surrounding SemCrude’s trading strategy, the potential misuse of borrowed funds and whether any of SemCrude’s employees or directors participated in fraud or mismanagement. The Examiner Order requires Freeh to complete his investigation within six months after the Bankruptcy Court approves the Examiner’s Work Plan.
As indicated in the Examiner’s Preliminary Work Plan, soon after his appointment Freeh traveled to Tulsa, Oklahoma and met with SemCrude’s attorneys, spoke with various employees and toured its offices. During subsequent meetings, Freeh, or his associates, met with the SEC, Department of Justice and the Commodity Futures Trading Commission. These meetings culminated in SemCrude and Freeh reaching an agreement regarding the sharing of information and documents.
The Examiner’s Propoposed Work Plan consists of five components: (i.) gather and verify information; (ii.) interview and depose witnesses; (iii.) communicate with the Bankruptcy Court and agencies investigating SemCrude; (iv.) monitor the bankruptcy proceeding and various investigations; and, (v.) prepare the Examiner’s Report. Freeh expects to examine approximately 60 witnesses and under a separate motion seeks the Bankruptcy Court’s authority to issue subpoenas. During the last 30 to 60 days of the Examiner’s investigation, Freeh will begin preparing the Examiner’s Report containing factual findings regarding his investigation.
In order to carry out his duties, Freeh seeks to retain his law firm, the Freeh Group, as well as Morrison & Foerster LLP, KPMG LLP and Polsinelli Shalton Flanigan Suelthaus PC. The Freeh Group will handle witness interviews, document analysis, as well as meeting with counsel and various government agencies. Morrison & Foerster, along with Polsinelli, will serve as the Examiner’s lead and local bankruptcy counsel. As Examiner, Freeh also retained KPMG to assist in investigating SemCrude’s alleged fraud, improper trading strategy as well as other alleged abuses. Freeh estimates his fees through the investigation deadline will total $5.9 million.