The largest shareholder of Tosco Corp. has filed a suit accusing the company and its board of violating antifraud provisions of federal securities laws by not disclosing enough detail about cost overruns and other difficulties confronting the company's government-subsidized oil shale project.
Kenneth M. Good, a Denver real estate investor and developer who has been seeking control of the company since last summer, charged in a suit filed in U.S. District Court in D.C. that Tosco and its board "have engaged and continue to engage in a series of fraudulent, deceptive and manipulative acts and schemes."
Among other things, Good charged that Tosco failed to make adequate disclosures about cost overruns on the company's oil shale project, the amount of additional funding that Tosco might have to produce to retain its 40 percent share of the project and an option to buy Tosco's share held by Exxon. The Colony Oil Sale project, one of the most promising synfuels efforts so far, is a joint Exxon-Tosco venture.
Recent estimates have suggested that costs may be $2 billion more than Tosco represented them as being as recently as last October. Because of the cost overruns and other questions about collateral, the U.S. Synthetic Fuels Corp. last month threatened to end a $1.1 billion government loan guarantee.
Good, whose group of shareholders owns approximately 2 million shares of Tosco (roughly 8.8 percent) charged that Tosco's directors engaged in a series of wrongful acts aimed at preventing him from seeking control of Tosco.