‘Every Penny Out Of My 401(k)’

As construction season approaches, albeit a little bit delayed by Mother Nature this week, we’ll be watching closely to see if any work begins at the Meridian Energy Group’s Davis Refinery site next door to Theodore Roosevelt National Park. I’ve been doing a little digging myself, not of the physical nature, but I encountered a couple stories to share about what is going on with that damn refinery.

Richard’s Story: “Every penny out of my 401(k).”

            Through a series of strange coincidences, I found myself on the phone one morning last week with an elderly gentleman from the East Coast named Richard who had made a significant investment in stock in Meridian Energy Group.

So I asked him “Richard, are you comfortable with that investment?”

“Oh, yes, very comfortable,” he replied. “I’ve taken every penny out of my 401(k). They’re going to go public in two weeks and I’m going to make a lot of money.”

So I asked him how his investment came about. It started with a cold call in October 2017, he told me. A salesman named Paul Stillwell, who worked for Meridian, was offering the deal of a lifetime, a chance to invest in Meridian Energy Group, Inc., a company whose goal was to “provide long-term shareholder value through the development and operation of the cleanest, most environmentally compliant and profitable crude oil refineries in the world.”

That got his attention. Richard is a mostly-retired businessman, and had made a little money in his working days. He knew a little bit about investing, and a little bit about refineries.

“Refinery stock is usually in the 40-45 dollars a share range,” Richard told me. “Paul was offering me 5,000 shares at seven dollars a share.” I told him I wanted to think it over.”

A few weeks later, On Nov. 1, 2017, Richard’s phone rang again. This time it was a different representative of Meridian, Stephen Gjolme, who told Richard that Paul was no longer with the company, but they wanted to know if Richard was interested. Richard said yes, and said he’d move $35,000 from his 401(k) into the company’s stock.

Three more calls followed. On January 18, 2019, Richard sent another check for $30,000.  Four months later, on May 2, 2019, he sent another check for $16,000. Just a couple months ago, on January 7, 2020,  he sent a check for $23,496. That drained the 401(k). The check hasn’t cleared yet, and Richard’s a bit puzzled about that. When it clears, he will have invested a little more than $100,000 in stock in Meridian Energy’s Davis Refinery.

Richard’s shares have been purchased at various prices, some at $7, most at $10 and the latest at $8. The only return he’s seen on his investment so far—Richard’s 76, and is counting on that 401(k) for some retirement income—is a dividend in the form of a warrant he received from the company recently. “They sent a warrant as a dividend. I can buy more shares at $8.25, even if they are selling for $30.”

Richard’s got more than $100,000 tied up in Meridian stock, some for as long as 2 1/2 years, and has never received a penny in interest or dividends.

Richard repeated that’s he’s feeling good about the investment, though.  “I’ve heard there’s a lot of activity out there and they could start building next week.”

I didn’t have the heart to tell him there’s a big old weed patch out there sitting idle since October of 2018, almost 18 months now.

But I did tell him that my sources inside the company tell me that work on the design has stopped and that there’s no realistic timetable for construction of the plant. And I told him that I had been told by two people inside the company that employees aren’t getting paid, and contractors aren’t getting paid for work done so far.

Richard said he knows that the project is behind schedule, blaming it, as the company has told him, on “those darn environmentalists.”

I thanked him for visiting with me. He replied “Well, I was half a millionaire until you called.”

NOTE: Richard knew all the dates of his stock transactions because, as he told me, he’s an obsessive note-taker. He then ticked off the names and phone numbers, including cell phones, of three top company officers who he’s talked to over the last couple of years.

But the one number he didn’t have was for Paul Stillwell, the salesman who called him initially, and who he says “got canned.”

Canned indeed.

Paul Stillwell’s Story

The same day, November 1, 2017, that Stephen Gjolme, vice president of business development for Meridian, confirmed Richard’s first stock purchase, he fired Stillwell. Fired Stillwell in the morning, closed a deal in the afternoon. Quite a day for Mr. Gjolme.

But Stillwell didn’t take his firing lying down. About a year later, in October of 2018, he filed a lawsuit against Meridian and Gjolme, claiming, among other things, assault, battery, defamation, wrongful termination, failure to pay minimum wages, intentional infliction of emotional distress, violations of California’s labor laws, and unlawful business practices. The suit sought damages “in excess of $50,000” and asked for a jury trial.

There were a bunch of interesting claims outlined in the lawsuit, which I have a copy of, among them failure to pay a minimum wage. Stillwell claims that his hourly wage was variously $4.00, $8.00 and $10.00 (might’ve been based on the price of the stock?), all below California’s minimum wage of $10.50 at the time.

Not that Mr. Stillwell was under-compensated. He worked mostly on commission, and earned $71,445 in the 41 weeks he worked for Meridian in 2017.

I wanted to read the lawsuit, so I bought a copy of the complaint online. You can do that in California. Here is Stillwell’s description of what took place the morning he got fired, quoted directly from the complaint filed in Superior Court of the State of California.

FACTUAL ALLEGATIONS

On or about November 1, 2017, only minutes before the daily business update meeting, Mr. Gjolme approached a new shareholder relations employee to the company and stated: “Hold on because what is about to happen this morning is going to be very ugly and probably unlike anything you have seen before.” Mr. Gjolme then proceeded into the daily business update. The approximately 20 employees gathered represented the business management team, management and administration.

 In a loud voice, Mr. Gjolme commenced the morning meeting and commenced the following tirade:

“Let me ask all of you a question, if someone in the room were to break a rule and put us all at risk, what would you have to say about that?” Tyrone Brown, a manager, responded, in essence, that he would have a problem with that. Mr. Gjolme continued with “[Y]ou would? Well, me too!”  He then proceeded to pull out a red Folgers coffee can which he kept in his office for his so-called “cussing jar,” and a wad of bills for all to see. He announced that, for now, it should just be called the “F-BOMB jar,” and “don’t worry, I have a ton of money on me!” He then began to scream and yell: “I heard someone in our group really f-cked up and has jeopardized all of us. What do you all say to that?” Many present were silent, others were swept up in his frenzy and started to chant and jeer: “Justice! Death! Fire them!”  He continued screaming “So what I hear is you want f-cking justice?” and began to shove dollar bills into the can.

At about six feet, Mr. Gjolme makes an imposing figure. Mr. Stillwell is about 5’6”, nearly a foot shorter, and considerably older. Gjolme rapidly advanced on Mr. Stillwell, got very close to his face, and in an absolute rage he started screaming uncontrollably. He stated “So Paul, did you f-cking tell someone yesterday that we are f-cking expecting the f-cking Governor to announce us? Did you f-cking say that?” This was apparently a reference to an erroneous suggestion that Mr. Stillwell had been making improper disclosures in his sales efforts, which he has not and vigorously denies doing so.

Gjolme continued slamming dollar bills into the Folgers can with every curse, and in a complete rage, Gjolme screamed at Mr. Stillwell only inches from his face, spit coming from his mouth and striking him in the face, saying “Well Paul did you f-cking say it? Or did you not f-cking say it? Which is it man? What the f-ck?”

Employees who first seemed to laugh thinking this was a joke, became very silent.

Gjolme continued: “Well Paul what is your answer? Did you f-cking do it? Did you f-cking say that to an investor?” Mr. Stillwell responded that he did not recall saying such a thing. This catapulted Mr. Gjolme into an even higher frenzy, now screaming at the top of his lungs: “I am so f-cking angry right now! You are f-cking FIRED! Just get the f-ck out of here, pack up your f-cking things and GO!”

Feeling threatened and fearing imminent bodily harm, and suffering an undeserved public attack and humiliation, Mr. Stillwell exited the room before things got any worse. All the other employees just stood there seemingly stupefied at what they had just witnessed.

As Stillwell was exiting, Mr. Gjlolme screamed: “Any real salesperson would not have to stoop to such f-cking bull sh-t to bring in such a chicken sh-t deal. And if anyone else is that f-cking stupid expect the same!”

Despite the presence of other management personnel, no one intervened upon Gjolme’s tirade.

This out of control, raging tirade rose to the level of a screaming assault and battery, and caused an extraordinary level of harm to Mr. Stillwell. He is currently under the continuing care of a physician and a counselor.

Wow! That’s in the court record. Word for word. How’d you like to be a juror with tender ears in that case!

The complaint goes on to say that someone who works close by Stillwell overheard him making statements about the North Dakota Governor in relation to the subject of Meridian’s sales efforts, the Davis refinery in North Dakota. But Stillwell claims in the complaint that his co-worker was in the process of being fitted for hearing aids and was wrong about what he believed he had overheard from Stillwell’s phone conversation.

So Stillwell is claiming that the “Grossly negligent and malicious actions” of his co-worker along with Mr. Gjolme’s “violent and terrifying  actions, public humiliation and firing of Mr. Stillwell, caused severe harm to Mr. Stillwell. Mr. Stillwell claims he suffers extreme and continuing distress.

That’s interesting, because of the reference to North Dakota’s Governor, Doug Burgum at the time. I’ve never heard Burgum say anything about the refinery in public, in fact he’s stayed as far away from it as he can.

Well, anyway, the jury trial didn’t happen. Meridian and Gjolme filed a response a couple months later, on January 15, 2019, denying every allegation, asking for the complaint to be dismissed, and asking for Stillwell to pay their attorney fees and other costs associated with the lawsuit. All standard procedure. Then the lawyers sat down and negotiated, also standard procedure. Nobody really wanted to take this to trial—Meridian just wanted Stillwell to go away, and Stillwell just wanted a chunk of change from Meridian.

They apparently both got what they wanted. On May 3, 2019, Stillwell filed a “Notice of Settlement” with the court, and on July 11 he filed a “Request for Dismissal” of the suit.

I don’t know how much Stillwell got, but obviously it was enough to make the lawsuit go away. I’ve tried calling him a couple times, but he doesn’t respond to my messages. Well, nobody in this whole Meridian mess ever responds to any calls. The only time I ever talk to anyone on the phone is when a disgruntled employee or former employee calls me. I tend to believe what they tell me, but I’m always a little bit suspicious.

I did have one tell me as recently as this week that they don’t believe the refinery will get built. But that doesn’t mean we should be letting down our guard. I’ve even sent e-mails and left phone messages with people from Morgan Stanley, the company that Meridian says is going to provide the financing, but no return calls or e-mails from them.

Meanwhile, we’re still waiting for the North Dakota Supreme Court to rule on the two lawsuits by those “darn environmentalists” as Richard calls them. Richard and many other investors like him, could be part of the sad ending to this story. I hope he doesn’t lose his 401(k).

FOOTNOTE: The current and former employees I’ve talked to have one big question: Where did the money go? Meridian CEO William Prentice told the Associated Press last fall that the company had raised $40 million of the $900 million needed for the plant. He might have been exaggerating a bit. I checked the company’s SEC reports this week, and as of December 16, 2019, they had reported raising a little under $35 million. Prentice is either fibbing to the news media or the SEC. The later would be more serious. Employees I’ve talked to say “Where did the $40 million go? We’ve got secretaries working without paychecks.” Somebody needs to do some checking.

4 thoughts on “‘Every Penny Out Of My 401(k)’

  1. Thanks Jim. As always you provide fascinating reading. Thanks for bird dogging this issue b You and Liilian stay well. Bill Lardy

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