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by Mike Caswell

The U.S. Securities and Exchange Commission has filed civil fraud charges against Penn West Petroleum Ltd. and three former executives for a scheme to mislead the public about the company's financial condition. From 2012 to 2014 the company understated its operating expenses by at least $281-million, according to the SEC. (All figures are in U.S. dollars.) The improper accounting led to the company making a substantial restatement, the SEC claims.

The allegations are contained in an 81-page complaint that the SEC filed on Wednesday, June 28, in the Southern District of New York. The defendants in the case include Penn West's former chief financial officer, Todd Takeyasu, 56, of Calgary. Also named is the company's former vice-president of accounting, Jeffrey Curran, 48, of Calgary. The final defendant is Wally Grab, 58, of Carstairs, Alta., who was the company's operations controller.

The SEC claims that the group was behind a scheme that ran in 2012, 2013 and the first quarter of 2014 in which they intentionally underreported operating expenses. These expenses receive much attention from analysts and investors. According to the SEC, they were also a sore spot with Penn West. The company was considered one of the highest-cost producers in the industry and had been for many years. Despite legitimate cost-cutting efforts, it remained far behind other Canadian oil and gas producers, the complaint states.

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