The case was initiated by whistleblower Harrold Wright under the whistleblower provisions of the False Claims Act, which allow private citizens to file actions on behalf of the United States and share in any recovery. Because Mr. Wright is deceased, his heirs will receive $12,303,787.88, plus interest, as part of this settlement.

Each month, companies are required to report to the Minerals Management Service the value of the natural gas produced from their federal and Indian leases and pay a percentage of the reported value as royalties. This settlement resolves claims by the United States that the Chevron, Texaco and Unocal companies systematically under reported the value of natural gas they took from federal and Indian leases from March 1988 to November 2008 and so paid less in royalties then they owed.

Specifically, the companies were alleged to have 1) improperly deducted the cost of boosting gas up to pipeline pressures, 2) used affiliate transactions to fraudulently reduce the reported value of gas taken from federal and Indian leases, and 3) improperly reported processed gas as unprocessed gas to reduce royalty payments.

“This settlement successfully ends long-standing litigation and ensures that taxpayers receive their fair share of royalty revenues from energy production on federal and American Indian lands,” said Interior Secretary Ken Salazar. “Most of the $45 million settlement will be disbursed to appropriate federal, state and American Indian accounts that were affected by Chevron companies’ underpayment of natural gas royalties and improper deductions.”

The suit brought by Mr. Wright alleges that a number of companies systematically underpaid royalties due for their production of natural gas from federal and Indian lands. The Justice Department previously settled with Burlington Resources Inc. for $105.3 million, Shell Oil Company for $56 million and Dominion Exploration and Production Company for $2 million.

If you are seeing fraud on the government, contact us by calling 800-377-1812 for strictly confidential advice from experienced counsel, with no fee obligation.

Over the course of his distinguished career as an auditor for the Interior Department, he recovered hundreds of millions of dollars from oil companies that were routinely and consistently underreporting royalty payments to the federal government. He was so successful at making the oil companies toe the line that he was eventually promoted to a position where he was supervising 120 people.

You’d think that someone who had been praised by the Secretary of the Interior as recently as 2003 for their outstanding job performance and leadership skills would have at least a little job security, but Bobby Maxwell recently found out that this isn’t always the case.

You see, Mr. Maxwell may have been fantastic at his job, and it would seem that he was trying to do the right thing by saving the government money, but it turns out that he recently may have stepped on a few toes by blowing the whistle on an oil company who has been accused of defrauding the government of millions of dollars. And, exactly one week after the lawsuit he is involved in became public knowledge, he was informed that his job was being eliminated in a “reorganization”.

The lawsuit, filed by Mr. Maxwell against the Kerr-McGee Corporation, accuses them of cheating the government out of millions of dollars in royalty payments. The Kerr-McGee Corporation is supposed to pay royalties for the oil that they pump out of public lands, and Bobby Maxwell was disappointed after reporting these underpayments and alleged fraudulent activities to the Interior Department. The Department did nothing.

So Bobby Maxwell decided to take matters into his own hands. He took the evidence that he had accumulated over the course of his investigations to his attorneys, and they filed suit against the Kerr-McGee Corporation in June 2004. The case was unsealed (became public knowledge) in January of 2005; a week later, he was informed that his position had been eliminated.

These are the risks that whistle-blowers are faced with in this modern age. By rocking the boat, Bobby knew that he was putting his career at risk. Even though there are ways to minimize the dangers involved in coming forward with their stories, whistle-blowers are sometimes caught in situations in which there are no easy answers. There is a tremendous amount of pressure by employers, even the Federal government, to prevent employees from becoming involved in lawsuits. But even though Bobby Maxwell was simply trying to save the government money, and trying to get Kerr-McGee Corporation to pay their fair share of what was owed, he still suffered by losing his job.

However, he knew the stakes, and although the risks were high, the reward is possibly even greater. If Bobby Maxwell eventually wins his case against the Kerr-McGee Corporation, the Federal Government will receive the majority of the money recovered – that’s how the False Claims Act works – but he will also collect a portion of the money recovered. Private citizens like Bobby Maxwell can sue under the False Claims Act on behalf of the government, which gives whistleblowers and people who have observed fraud against the government the means to reclaim money from the guilty party.

Because it is so difficult to successfully follow cases such as this one through the court system, and because it takes a large amount of time and effort, not to mention legal talent and expert witness fees, the False Claims Act has special provisions that generously reward the private citizen who has gone to such great lengths to stop these types of fraud from taking place. In Bobby Maxwell’s case, the stakes are enormous: Kerr-McGee Corporation could be forced to pay over $50 million dollars in penalties and unpaid royalties.

And, if he wins this case against Kerr-McGee and recovers that money for the government, the Federal False Claims Act states that these heroic citizens should share in the reward for their noble efforts: Bobby Maxwell would be eligible to keep up to 30 percent of the money recovered. That’s somewhere in the neighborhood of $16 million dollars! Of course, a portion of that money will then be used to cover his court fees, legal fees, and expert witness fees, but even so, by being brave enough to come forward and take a stand against Kerr-McGee, Bobby Maxwell stands to be amply rewarded for his trouble.

Would you be that brave, if you knew of fraud against the government? Would you take a stand, even though the risks were so great? I’d like to think that I would, but I’m not sure if I have the guts to be one of the Bobby Maxwell’s of this world.

If you or someone you know has witnessed fraud against the government, and you would like more information about how you can help stop these activities which costs taxpayers millions of dollars per year, please contact us for more information.

- Robert P. Christensen

www.rpcmnlaw.com