Mammoth Energy Services, Inc. (TUSK) Subsidiary’s Contracts Are Being Investigated
According to the complaint from October 19, 2017 and June 5, 2019, Mammoth failed to disclose that its subsidiary, Cobra Acquisitions LLC, had entered into two contracts totaling approximately $1.8 billion of services with Puerto Rico Electric Power Authority (“PREPA”) to aid in Puerto Rico’s rebuilding efforts. In May 2019, The Wall Street Journal revealed that the Department of Homeland Security was investigating FEMA then Deputy Regional Administrator, who was placed on administrative leave, over allegations that she steered work to Cobra. On this news, Mammoth’s shares fell over 10% over the next three trading days. Then, in June 2019, The Wall Street Journal published another article reporting that the FBI had opened a related criminal inquiry into the origin of Cobra’s contracts with PREPA. On this news, Mammoth’s shares fell over 45% over the next two trading days to close at $6.11 per share on June 6, 2019. Then, on September 10, 2019, The New York Times announced that FEMA’s former Deputy Regional Administrator, Cobra’s former president, and a second FEMA employee who later worked for Cobra, had been arrested for conspiring to defraud the federal government in connection to the contracts with PREPA. Mammoth’s stock has yet to recover and currently trades at around $3.50.
