Paul A. Frame, Jr., the former CEO of Houston-based geophysical seismic provider Seitel, Inc., has been indicted of defrauding the company of $750,000 to settle a lawsuit by his former fiancee. The criminal case against Mr. Frame is pending in U.S. District Court in Houston.
Seitel emerged earlier this year from a chapter 11 case that was commenced in 2003 several months after Mr. Frame had been terminated as CEO amidst revelations of Mr. Frame’s use of corporate assets for personal purposes and accounting issues regarding the value of Seitel’s primary asset, which is its library of geophysical seismic data. The indictment against Mr. Frame consists of two counts of mail fraud, two counts of wire fraud, money laundering and making a false statement to the Securities and Exchange Commission.
Mr. Frame is accused of using $750,000 from Seitel without Board of Directors’ authorization to settle a lawsuit that his former fiancee brought against him. The colorful allegations in that lawsuit asserted that Mr. Frame took back $1 million in gifts that he had given his former fiancee, including sable, lynx and chinchilla jackets, expensive jewelry and two wedding dresses, and that Seitel was responsible for Mr. Frame’s alleged wrongdoing as well. In addition to the settlement with his former fiancee, the SEC has also alleged in a civil complaint that Mr. Frame used Seitel funds without Board approval to race a Ferrari and to install an expensive security system in his tony River Oaks home.
After Seitel’s reorganization, Mellon Financial holds a 21.8% stake in the company, and ValueAct Capital owns a 12.3% stake. Shares of Seitel closed Tuesday at $1.07.