American Mobile Systems Inc. said it has suspended its president, William J. Young, pending an investigation by its board of $4.1 million of "unauthorized transfers" from company bank accounts, transfers "directed and approved" by Young.
The Woodland Hills-based provider of radio-dispatch and mobile-telephone services said last week that its vice chairman, Richard G. Somers, was named acting president and chief executive pending the investigation's conclusion.
In an interview, Somers said the $4.1 million was transferred to the accounts of other businesses controlled by Young. Somers also said Young has provided the company with a $4.1-million secured note, or IOU, but that the company did not yet know the value of the collateral backing the note.
Somers declined to elaborate further about the transfers or the note.
But the company said that as a result of the transfers, it might be afoul of certain terms covering its bank debt. American Mobile and the lender, a Finnish bank named Kansailis-Osake-Pankki, are holding talks to "resolve issues which may arise," the company said.
Somers also said he did not expect the transfers to have a long-term effect on American Mobile, unless Young "is not able to repay the note and then we find that the security doesn't have the value we believe it does. That would have some effect."
Young, who also owns between 5% and 6% of American Mobile's stock, did not return calls requesting comment.
American Mobile's stock quickly plunged 23% after the announcement last week.
But the stock has since recovered, closing Monday at $6.50 a share in over-the-counter trading.