Insurance exec indicted in insider trading through Delta Petroleum
A Denver insurance executive has been indicted for allegedly profiting from insider trading through confidential information provided to him by an executive of the now-defunct Delta Petroleum Corp.
Michael Van Gilder, 45, of Denver, was indicted by a federal grand jury in Denver on five counts of insider trading, according to a news release from U.S. Attorney John Walsh and the FBI.
The allegations include alleged profiteering based on advanced knowledge that billionaire Kirk Kerkorian’s Tracinda Corp. planned to make a major purchase of stock from Delta.
Delta owned oil and gas interests based in the Collbran area of Mesa County. This summer it completed a bankruptcy reorganization plan, changed its name to Par Petroleum Corp., and entered into a joint venture with Laramie Energy II in which they pooled their assets in Mesa and Garfield counties under an entity called Piceance Energy LLC.
Van Gilder surrendered to the FBI on Friday morning, federal authorities said. If convicted on all counts, he faces up to 100 years in federal prison and up to $25 million in fines. Also Friday the U.S. Securities and Exchange Commission filed a complaint charging Van Gilder with civil insider trading violations.
Van Gilder had been the chief executive officer and a member of the board of directors of Van Gilder Insurance Co., which is owned by his family. The company said in a news release Thursday that he resigned as CEO for personal reasons.
The indictment said Van Gilder was a close friend of the Delta executive who supplied him with information. It didn’t identify the executive by name and made no mention of whether charges are being contemplated against the executive.
“I can only say that the investigation in general continues,” said Jeff Dorschner, a Department of Justice spokesman.
The indictment said Van Gilder at times arranged for and provided insurance policies covering some Delta business operations.
It said he benefited once by buying more Delta stock when the executive assured him, prior to Delta’s release of its 2007 third-quarter results, that the company would hit financial and operational forecasts for the quarter. The indictment indicates Van Gilder had been concerned about a pessimistic Barron’s article on Delta headlined “Day of Reckoning.”
The indictment said the executive then informed Van Gilder about Tracinda’s interest in investing in Delta, and regularly apprised him of the discussions and actions leading up to Tracinda’s ultimate purchase of $684 million in common stock, or 35 percent of outstanding shares. As a result of the information, Van Gilder engaged in multiple transactions, including a $272,212 purchase of Delta shares, the indictment said. It said he realized an $86,100 profit from one sale he made based on Delta’s rising stock price after the company publicly announced Tracinda’s purchase agreement.
The indictment also alleges he used the inside information to try to help friends and family profit. It says that prior to Tracinda’s investment, he sent an email to two relatives with the subject line “Xmas present” and a promise that something significant was about to happen to Delta stock.
Delta’s shareholders prior to its emergence from bankruptcy received no financial consideration under its reorganization plan. According to media reports, Kerkorian has sued an adviser who persuaded him to buy the Delta stock.