Slogging through the worst energy downturn in decades, south Louisiana service companies are feeling the squeeze, but one of those companies — family-owned and Lafayette-based Knight Oil Tools — is struggling more than most.
In January, Knight Oil lost its two top executives with the departures of Earl Blackwell and Doug Keller. In late December, an aircraft leasing company filed a lawsuit against Knight Oil for millions of dollars due to a missed lease payment. And last summer, employees in Texas and Louisiana filed federal lawsuits claiming they were cheated out of overtime pay. The federal suits seek to add other employees who may be owed overtime wages.
There’s also the self-inflicted wound caused by the company’s former top executive, Mark Knight, who was president, CEO and chairman of the board when the news broke last year that he allegedly set up his brother Bryan Knight for a cocaine arrest. Mark Knight, 58, now faces two felony racketeering charges.
Mark Knight has since removed himself from any official role with the company, but how hands-off he’s been is unknown outside the company.
Bryan Knight, who filed suit in federal court against his brother and others for allegedly setting him up for the cocaine arrest, claims in court filings that Knight Oil was having financial problems and that his brother blocked potential investors from looking at the company’s books.
“Most recently, after it became apparent that new capital would be required to be infused into Knight Oil because of Mark’s lavish spending, mismanagement and theft of corporate assets, Mark Knight refused to allow investors to conduct their due diligence unless (Bryan Knight) dismissed his suit against him,” according to a December filing in the federal lawsuit. Efforts last week to reach Mark Knight and Bryan Knight were unsuccessful.
It’s also unclear who is running the company now. Blackwell, a veteran of the oil industry who joined Knight Oil in 2014 and became its president and CEO in January 2015, has left the company. Blackwell last week declined to go into specifics about his departure or about the company’s financial health.
“I’m not a spokesman for the company. I really couldn’t share anything. … I really don’t want to, to be honest,” Blackwell said. He referred questions to Kelley Knight Sobiesk. Sobiesk is the Knight brothers’ sister and apparently has joined the company’s management. She did not return email messages last week.
Blackwell did confirm that Keller, a longtime Knight Oil executive, also is no longer there. Keller joined the company in 1988 and was named president of Knight Oil Tools International in February 2014. Efforts to contact Keller this past week were unsuccessful.
Company patriarch Eddy Knight opened the company’s first shop in Morgan City in 1972, operating under the name Knight Specialties that in 1984 became Knight Oil Tools.
Mark Knight took over as head of Knight Oil in 2002 after the death of his father and grew the company into a major player on the international stage. The Knight Oil website lists operations in 11 U.S. states and in international locations from Colombia to Chile, Russia to India and North Africa to Madagascar.
That role officially ended in April 2015, when Mark Knight was arrested along with two law enforcement officers and a Knight employee for allegedly framing Bryan Knight in a May 2014 drug arrest. Mark Knight was indicted on two counts of racketeering in August. The next court hearing in the case is set for Feb. 25. No trial date has been set. If convicted, Mark Knight faces five to 50 years in prison and a fine up to $1 million on each of the two charges against him.
Knight Oil remains a privately held company; there are no statements available for public inspection of revenue, cash flow and other measures of financial health.
There are, however, other indications of financial problems. According to a lawsuit filed in state district court in Lafayette, Path Air LLC is suing Knight Oil Tools Inc. and some of the company’s subsidiaries for breaking the terms of a lease initiated in 2007 lease for a Bombardier Challenger 300 jet.
The lawsuit, along with demand letters from the jet company’s attorneys, claims Knight Oil was more than 10 days late on a $149,284 monthly lease payment that had been due Oct. 1. The late payment and the fact that Knight Oil did not return the aircraft to its owners, threw the lease into default, the suit claims. Path Air is suing for “stipulated loss value” of $19.6 million and another $363,215 in unpaid rent, unpaid sales taxes and unpaid property taxes. Path Air filed the lawsuit Dec. 28. On Dec. 3, Knight Oil removed the jet from the company hangar at Lafayette Regional Airport and returned it to its owner.
The company also is fighting federal court claims by ex-employees in Louisiana and Texas that Knight Oil did not properly pay them overtime. Both lawsuits seek to add other Knight Oil employees who believe they were improperly denied overtime pay.
In July, former employee Rusty Provost filed a suit in Lafayette U.S. District Court claiming Knight Oil told him he was being promoted from shop hand in the company’s fishing tools division to dispatcher. As a shop hand, Provost was paid an hourly wage and was due overtime pay for any time worked over 40 hours per week. Provost’s attorney, Kenneth St. Pé, said in court papers that after Provost was reclassified as a dispatcher, he was paid a salary that did not include extra pay for hours over 40 worked each week even though he regularly put in 70 or more hours each week. St. Pé also said the promotion to dispatcher also was fiction.
“Despite his title as ‘Dispatcher,’ (Provost) never dispatched and instead his job duties consisted primarily of operating a forklift, cleaning and painting tools, answering the phone and monitoring security cameras during the night and weekends,” St. Pé wrote.
Answering Provost’s lawsuit, Knight Oil attorney Gregory Guidry denied much of the claims and said the company had complied with the rules of the federal Fair Labor Standards Act.
In Corpus Christi, Texas, U.S. District Court, former Knight Oil employee Marcos Montemayor filed a similar complaint eight days after Provost’s suit was filed. It alleges much of the same — that Knight Oil improperly classified Montemayor as an exempt, or salaried, employee even though he and other like-classified employees performed the tasks of hourly workers. Michael Josephson, Montemayor’s attorney, claimed his client’s work week often consisted of 84 hour work weeks without time-and-a-half pay for working beyond 40 hours in a week.