Matrix Service Company Under Investor Investigation After The Matrix Service CEO And CFO Resign
After Matrix Service Company announced on November 9, 2010, that Matrix Service’s CEO Michael J. Bradley and CFO Thomas E. Long resigned from the company an investigation on behalf of investors in Matrix Service Company (NASDAQ:MTRX) over possible securities laws violations and breaches of fiduciary duty was announced.
The investigation by a law firm concerns whether Matrix Service Company and/or certain of its current and former directors and officers violated any securities laws and breached their fiduciary duties in connection with the recent resignations of the CEO and CFO of Matrix Service Co.
Tulsa Oklahoma based Matrix Service Company provides construction, and repair and maintenance services primarily to the energy and energy related industries. Matrix Service Company earlier announced in a filing with the U.S. Securities and Exchange commission that in connection with a routine project review, Matrix Service determined that a subcontractor and an employee of Matrix Service in one operating location in the United States may have been in collusion to obtain improper payments from Matrix Service. Matrix Service said it conducted with the assistance of internal audit, forensic accounting specialists and outside counsel, an investigation into the matter which has led Matrix Service to the conclusion that Matrix Service was improperly invoiced for a total of approximately $1.7 million by the subcontractor, a majority of which was in turn paid by the subcontractor to five current and former employees of Matrix Service over the last four fiscal years. Matrix Service said to conceal the scheme, the employees over-billed certain other Matrix Service clients by $1.3 million. Matrix Service said it will refund the clients.
Matrix Service Co did not say in its Nov. 9 announcement if the departures of its CEO and CFO are related to the investigation, but the departures come weeks after the internal investigation was announced.
Matrix Service Company’s 12 month Total Revenue went from $639.85million reported on May 31, 2007 to $550.81million reported on June 30, 2010. Its Net Income went from $19.17million to $4.88million. Matrix Service Company reported for the first two quarters in 2010 quarterly Total Revenue of $122.01million, respectively $140.73million. While Matrix Service was able to barley report any Net Income in the first quarter 2010, it had to report a Net Loss of $4.23million for the second quarter 2010. According to its last week quarterly report the investigation cost Matrix Service Co $500,000 in the quarter that ended Sept. 30.