A federal judge has forced defendants in a supply dispute to hold at least $2.75 million in a bank account, after a Georgia fuel distributor sued seeking roughly $4 million for unpaid deliveries.
Mansfield Oil of Gainesville filed the federal suit on Aug. 19, alleging that businessman Syed Kazmi and his company KRSM obtained more than 1.1 million gallons of fuel from a Pennsylvania terminal between May and July. Mansfield says it invoiced the shipments in July for about $4 million, and that the bill went unpaid.
The complaint contends KRSM moved a portion of that fuel into retail channels, and it alleges some of the unpaid product reached stations in the Freedom Fuel Network. The suit does not name Freedom Fuel Network as a defendant, and it does not accuse the chain of wrongdoing.
Mansfield told the court the unpaid deliveries helped make possible the steeply discounted retail pricing that drew national attention in July. The lawsuit states, "KRSM was able to sell such fuel for such low prices and garner such publicity because it never paid Plaintiff for such fuel." In early July, Freedom Fuel sold gas at $3.47 a gallon at 25 stations in Pennsylvania and New Jersey, an event publicized by national figures.
On Aug. 28 the judge partially granted Mansfield's request for a preliminary injunction, directing the defendants to maintain a bank account balance of at least $2.75 million while the case proceeds. The complaint does not state how much of the $4 million worth of fuel was routed to Freedom Fuel stations, nor does it establish whether the stations had a formal business relationship with KRSM or Syed Kazmi.
At least six Freedom Fuel locations in New Jersey are managed by Shamikh Kazmi, who is identified in court filings as the brother of defendant Syed Kazmi. KRSM's lawyer, Mauro Tucci, called the dispute an accounting disagreement, saying, "KRSM disputes the allegations in this case, which is an accounting dispute over fuel invoices mis-priced by Mansfield Oil." He added the company would not comment further on pending litigation.
White House officials told CNBC they have had no contact or dealings with the defendants. Freedom Fuel Network did not respond to requests for comment. The litigation now proceeds under the preliminary injunction, with the parties set to litigate the underlying accounting and tracing of the fuel shipments.
