Former Quest Purchasing Director Ordered to Serve Two Years in Prison and Pay $1 Million Restitution for Failing to Report Embezzlement

OKLAHOMA CITY, OK—Today, United States District Judge Stephen P. Friot sentenced Brent Mueller, 52, of Edmond, Oklahoma, to serve two years in prison for failing to report that his boss, David Grose, had embezzled $1 million, announced Sanford C. Coats, United States Attorney for the Western District of Oklahoma. Mueller was also ordered to pay over $1 million in restitution, serve one year of supervised release upon release from prison, and perform 104 hours of community service.

From about 2005 through 2008, Mueller served as Director of Purchasing for Quest Energy Partners, L.P. (“Quest”), a publicly traded oil and gas exploration and production business based in Oklahoma City (now known as PostRock Energy Corporation). According to the evidence submitted at sentencing, in the summer of 2008, Mueller and his boss, David Grose, planned to make a $1 million personal investment in a hydrogen fuel technology company. Both Mueller and Grose told the hydrogen fuel technology company that the investment would be funded with personal money. Instead, under the pretext of paying for the purchase of pipe, Grose wired approximately $1 million from Quest to a pipe supplier. Within minutes of the transfer, Grose contacted the pipe company to cancel the order and instructed the pipe company to wire the money to the hydrogen fuel technology company instead of returning the money to Quest. Mueller learned of Grose’s embezzlement while it was taking place, and, instead of trying to stop it, he began actively helping Grose cover up the crime. As a result of this scheme, Quest lost $1 million. The company has cooperated with law enforcement in the investigation.

The investigation was conducted by the Western District of Oklahoma’s Financial Fraud Task Force, which is comprised of special agents from Federal Bureau of Investigation, the Internal Revenue Service Criminal Investigative Division, and personnel from the U.S. Attorney’s Office. U.S. Attorney Coats thanked the Securities and Exchange Commission and the Oklahoma Department of Securities for their continuing coordination and assistance in the government’s investigation. This case was prosecuted by Assistant U.S. Attorney Jeb Boatman and U.S. Attorney Sanford C. Coats.

Other Cases Arising Out of Investigation

1. On February 5, 2010, Jerry Dale Cash, 47, of Oklahoma City, Oklahoma, the former Chief Executive Officer for Quest, pled guilty to making a false Sarbanes-Oxley certification to the SEC by failing to disclose his diversion of $10 million in corporate funds (Case No. CR-09-241F). As part of his plea, Cash admitted that prior to August of 2008 he worked with a fellow officer to transfer $10 million out of Quest to an account owned by Cash in the name of Rockport Energy. Cash admitted that he and the fellow officer made these transfers without the knowledge or approval of the Board of Directors. Cash admitted that he then spent the money on non-Quest investments and renovations to his Nichols Hills home, among other personal items. Cash admitted that no member of the Quest Board of Directors or any member of senior management, other than the fellow officer who helped him make the transfers, knew Cash was spending the $10 million on non-Quest investments or other personal items. Despite his diversion of the $10 million from Quest, on August 11, 2008, Cash certified Quest’s financial report filed with the SEC knowing that it was false because the diversion was not disclosed. Cash left Quest in August of 2008. Cash is awaiting sentencing where he faces up to 20 years in federal prison, a $5 million fine, and mandatory restitution.

2. On February 24, 2010, a jury found David Grose, 56, of Edmond, Oklahoma, guilty of three counts of wire fraud stemming from a scheme to defraud Quest out of $1 million. Grose served as the Quest’s Chief Financial Officer. Sentencing is pending and Grose faces up to 20 years in federal prison on each count and a fine of not more than the greater of twice the gross gain in this case, e.g., $2 million.

3. The SEC has filed a related civil complaint in the United States District Court for the Western District of Oklahoma styled SEC v. Jerry D. Cash and David E. Grose, (Case No. 09-CV-639). A copy of the SEC’s press release and civil complaint can be found at http://www.sec.gov/litigation/litreleases/2009/lr21087.htm. That action is pending.

4. The Oklahoma Department of Securities also has filed a related civil action, which can be found at www.securities.ok.gov.