Harold Wright, the man who blew the whistle on natural gas fraud died before he ever saw his case against Mobil Natural Gas Inc., Mobil Exploration & Producing U.S. Inc. and their affiliates come to an end. But yesterday his family learned that they will receive nearly a million dollars for his bravery in coming forward. For years Wright witnessed the Mobil companies systematically under-reporting the amount and value of natural gas taken by them from federal and American Indian tribal properties. According to DoJ:

The Minerals Management Service (MMS) of the U.S. Department of the Interior is responsible for overseeing the collection of royalties on federal and American Indian leases, as well as federal offshore lands on the Outer Continental Shelf. Each month, companies are required to report to MMS the value of the natural gas produced from their federal and American Indian leases and to pay a percentage of the reported value as royalties.

As a qui tam relator under the federal False Claims Act, Wright alleged that the Mobil companies “used transactions with affiliated entities to falsely reduce the reported value of gas taken from federal and American Indian leases, to claim excessive deductions for the cost of transporting that gas, and to otherwise understate the value they reported each month for their natural gas production.” These tactics resulted in the Mobil companies paying less in royalties than they actually owed — a “reverse false claim” under the federal false claims act, subject to treble damages and significant penalties.

To resolve the claims, the Mobile companies will pay $32.2 million, which will be “disbursed to appropriate Federal, state and American Indian accounts that were affected by the underpayment of royalties.”

To report government fraud & abuse, contact Frohsin & Barger.