Noel Corcoran, the former president of the Irish Taxation Institute who is best known as Sir Anthony O'Reilly's tax adviser, has been sued by the American biofuels company he once chaired and stands accused of fraud, negligent misrepresentation, civil conspiracy and intimidatory behaviour in a North Carolina court.

These extraordinary claims are the culmination of Corcoran's 14-month involvement with NewGen Technologies, a little-known player in the struggle to develop a viable biofuels refining and distribution system in the US.

A spokesman for Corcoran said he was not able to comment as the matters were sub judice.

Like many American biofuels operations, NewGen is long on vision but short on cash.Founded in 2004, the Charlotte, North Carolina-based company boasts that it plans to raise $1 billion (€747 million) to create "America's first vertically-integrated biofuels company". However, it has raised less than $40 million from investors and trades as a penny stock on the lightly regulated over-the-counter market.

Its assets include four mothballed fuel terminals in America's rural southeast and a pair of patent claims (since withdrawn) for biofuel refining technologies. With cumulative losses of $21.1 million and a working capital deficit of $7 million, NewGen's most newsworthy activity to date has been an abortive $30 million takeover attempt of Appalachian Oil, a major petrol distributor in the American southeast.

NewGen has also been plagued by hostility and strategic disagreements among its board members, senior management and investors. Current board member Scott Deininger sued the company for breach of contract. NewGen settled out of court for $357,000, one million share options and a guarantee of future equity.

Investor Douglas Brown is suing the firm for the delivery of 3.7 million shares, which he alleges were promised to him for lending $1 million to a NewGen acquisition target. NewGen denies the claim.

Finally, former chairman and chief executive John King sued after being ousted in a January 2006 boardroom coup, receiving 75,000 share options and $638,636 worth of convertible debentures.

Corcoran joined NewGen as a director at the same board meeting which saw the end of King, becoming chairman in May 2006. Within weeks of that date, the cash-starved company was forced to begin paying creditors with stock and convertible warrants, and Corcoran began making a series of loans to the company to meet day-to-day expenses.

These loans, made through the summer of 2006 and totalling more than $3.1 million, were unsecured and based on oral agreements. NewGen agreed to repay the funds within a year at 10 per cent annual interest.

Corcoran also introduced a new short-term lender to NewGen: Indexia Holdings, the Sir Anthony O'Reilly-controlled investment vehicle. Like Corcoran, Indexia made an unsecured loan based on oral agreements, lending NewGen $1 million in June 2006 at 10 per cent interest for one year.

With the company unable to redeem or pay interest on the debts, Corcoran and Indexia converted the loans to stock on December 2nd, 2006, receiving 13.6 million and 4.6 million shares respectively, at 23 US cents per share.

The dilution effect of adding 20 per cent to the volume of NewGen shares in issue caused the company's share price to dip to 18 US cents per share.

Corcoran subsequently assigned his shares to Donmay, an Irish company in which Corcoran and his wife, Dublin Institute of Technology social sciences lecturer Carmel Gallagher, each hold a 15 per cent share. The remaining shareholding is split equally among their five children.

NewGen put a brave face on the loan conversion, describing it as "a $6 million investment in the future of biofuels" in a press release and congratulating Corcoran for backing the company with his own funds. No mention was made in the public relations documents about the defaulted loans.

Throughout this period, Corcoran was negotiating for NewGen to acquire Appalachian Oil, a Tennessee-based chain of petrol stations whose sales network and distribution system seemed an ideal fit for NewGen. On January 16th, 2007, he succeeded, and the company entered into a stock purchase agreement with Appalachian which would see NewGen pay $30 million in cash for the company and assume $7.3 million of Appalachian's long-term debt. The deal was to be completed by February 28th last. The deal announcement lifted NewGen's stock to new highs, topping $1.15 per share for the first time in more than a year.

However, NewGen found itself unable to raise the purchase price. It lacked cash on hand to do the deal, and negotiations to raise the money from outside investors had not yet succeeded. On February 28th, NewGen obtained a series of extensions on the purchase date from Appalachian, paying $250,000 in "good-will money" and offering to make further payments each month until the deal could be financed.

Although Corcoran led the search for financing, the extension did not help. On March 9th, NewGen said it had terminated negotiations with BioFuel Investments LLC, the proposed backer, and that it would look elsewhere for funding.

On March 13th, Corcoran resigned as chairman and resigned from the board the next day.

NewGen has since abandoned the attempt to acquire Appalachian, which is to be sold to Titan Global Holdings, which, in turn, has reimbursed NewGen for $1.3 million in bid costs, hired the company as a biofuels consultant for $600,000 a year, and agreed to use NewGen as a biofuels supplier if the company can begin production.

The failure of the Appalachian acquisition and the quality of Corcoran's relations with fellow board members are the subjects of the lawsuit.

According to documents filed by NewGen with the North Carolina state court in Mecklenburg, Corcoran "made repeated misrepresentation to NewGen that he had obtained financing" for the Appalachian acquisition. It also claims that, "as a result of Corcoran's actions and misrepresentations, NewGen was precluded from finding significant outside financing or a new source of revenue, resulting in NewGen's failure to pay debts owed to a number of third parties".

NewGen alleges Corcoran abused his position as chairman to obtain "unjustly favourable" terms for the conversion of his loan notes to shares and that "using his leverage over NewGen as chairman . . . he engaged in self-dealing by imposing on NewGen an onerous, short-term repayment term for his personal loan with full knowledge that NewGen would default on the loans".

The suit alleges Corcoran employed a consultant, Thomas C Plummer, also a defendant, who was simultaneously working as Corcoran's personal business agent. It also alleges that he "exerted relentless pressure, including threatened litigations against individual directors" to obtain an option to buy NewGen's fuel terminals as part of the debt settlement, an option which he elected not to take up.

A trial date has not yet been set. While Corcoran awaits his day in court, he is free to trade the shares he obtained in the debt settlement, as is O'Reilly.