PRESS RELEASE
STATE REGULATOR FILES CIVIL ACTION AGAINST FORMER QUEST CFO
 
For Immediate Release
Friday, February 27, 2009 
 
Contact: Irving Faught, Administrator
  Oklahoma Department of Securities
  405-280-7700
 
 
Oklahoma City/////  The Oklahoma Department of Securities has filed a civil action in Oklahoma County District Court alleging that David E. Grose (Grose), the former Chief Financial Officer of Quest Resources Corporation (Quest), directly participated in and materially aided the fraudulent conduct of Jerry Cash (Cash), the former Chief Executive Officer of Quest. The Department filed a petition against Cash in August of last year alleging violations of the Act for fraudulent financial transactions involving Quest. The Department alleges that Grose concealed the true nature of the Cash transactions.

The Department further alleges that Grose engaged in fraudulent activities through which he converted Quest funds for his personal benefit and use. Grose received a series of kickbacks totaling in excess of $800,000 during his employment at Quest. The kickback scheme is alleged to involve Grose, the former Quest purchasing manager, and an outside vendor of the company. In addition, Grose is alleged to have converted Quest funds in the amount of $1,000,000 to invest personally in an Oklahoma limited liability company.

The Department's suit seeks a permanent injunction, disgorgement of all ill-gotten gains, and a civil penalty. “This action was filed, in part, to place public companies on notice that the Department will enforce all aspects of the securities laws, including violations of Sarbanes-Oxley to the extent such violations result in false and misleading financial statements,” said Irving L. Faught, Administrator of the Department of Securities. Faught added, “The Sarbanes-Oxley Act was passed by Congress to address financial deception and misleading statements by public companies to investors. As a result, chief financial officers, like Mr. Grose, are being held to a higher accountability standard.”

Copies of the Department's Petition can be found on the Department's website at securities.ok.gov or by using the link below.

The Department of Securities is charged with administration and enforcement of the Oklahoma Securities Act. The Department investigates securities fraud, the offer or sale of unregistered securities, and the sales practices of stockbrokers and investment advisers. The Administrator may seek administrative or civil sanctions against any person who violates state securities regulations and, when appropriate, make criminal referrals.
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Petition for Permanent Injunction and other Equitable Relief [David Grose] 
 
This press release, and related information, is available on the Securities Commission's web site at securities.ok.gov, by phone at (405) 280-7700, or in writing at:  Oklahoma Securities Commission, 204 North Robinson, Suite 400, Oklahoma City, OK 73102.