Oil and Gas Fraud Whistleblowers
Whistleblowers can help stop oil and gas fraud…
Whistleblowers can help stop oil and gas fraud…
The oil and gas industry – and the energy sector in general – is one of the most highly-regulated industries in America. It involves everything from property rights and pollution to securities and taxes. As such, the industry sees its fair share of fraud.
If you’re thinking of blowing the whistle, it’s important to understand what kind of fraud you’re looking at and what laws can be used to try and stop it – as well as when to talk to an attorney. Some types of fraud are more common than others.
Four laws enable whistleblowers to call attention to and try to halt fraud against the government in the energy sector. You do not need to understand which law applies. In essence, regardless of the type of fraud, location, company disposition, or timing, a whistleblower may be able to call out fraud in the oil and gas industry. If it feels wrong, it very well might be, so if you see something, act on it. Just contact us, and we’ll work through it with you.
False Claims Act – The origin of whistleblower actions in the United States, this act enables whistleblowers to report fraud in government programs or contracts or fraud that prevents the government from collecting money owed to it. Some examples include bid-rigging and skimming royalties.
Dodd-Frank Act – This act enables whistleblowers to report fraud involving securities and commodities, which are regulated. Under this act, anything from the simplest crude oil scams to more elaborate forms of oil and gas investment fraud could rise to a whistleblower’s attention.
IRS Whistleblower Law – The Tax Relief and Healthcare Act of 2006 contained provisions for whistleblowers to report tax fraud. Taxation in the oil and gas industry is highly complex, making it a target for fraud. Not paying the government its due can also violate the False Claims Act, often classified as “reverse False Claims” because the fraudster is keeping money from the government rather than obtaining it.
Foreign Corrupt Practices Act – Among many other things, this law enables whistleblowers to report bribery and corruption. It does not matter where a company or person calls home. What matters is that they defrauded the U.S. government, and if you are aware of this fraud, you can blow the whistle.
You can, but how do you know it’s the best “first move?” A consultation with an energy industry whistleblower lawyer may give you additional insight into your situation and help prepare you for what’s to come. There may be a more suitable agency to whom to report or that may offer a better chance for investigation. The process of a whistleblower case is different. Call an attorney and get your bearings. We can handle the details for you.
Because of the many laws that combine to regulate the energy industry, companies can overcharge or short-change the government in many ways. Some types of companies and activities may carry additional risk:
Of course, giant corporations have their fingers in every part of the oil and gas industry, but there are numerous smaller companies in the field as well. And while intentional fraud is certainly a problem, unintentional fraud can do damage as well – and can also be the basis of a qui tam case.
Oil companies are among the most powerful entities globally from a financial and influence standpoint. Whistleblowers in this industry are taking the fight for justice to those with incredibly deep pockets and robust legal defense measures.
Drilling for oil in the United States often involves leasing land from the government or Native American tribes. These leases generally include a royalty provision where the companies must pay the government royalties for the oil produced from wells on these leased lands. In one case, a group of whistleblowers blew open an alleged nationwide conspiracy across several oil companies to underpay those royalties to the government.
Result: Between the companies, they settled with the government for nearly half a billion dollars, and the major contributing whistleblowers received around $15 million each.1,3
A whistleblower filed an action against two companies, stating that the companies rigged bidding for mineral rights obtained through the Bureau of Land Management. The companies allegedly agreed not to bid against each other to keep the costs down and share in the profits after the fact. The whistleblower in this case alleged that this was collusion to obtain land leases from the government without paying the fair value of the land.
Result: The companies agreed to pay fines for violations of the Sherman Act and the relator’s attorney’s fees, and the allegations were resolved.1,3
Importing and exporting goods is big business, and in the energy industry, there’s more coming and going than just crude oil. Equipment and materials cross the border constantly. One whistleblower alleged that a company intentionally misclassified imported materials to avoid tariffs.
Result: The company agreed to a hefty settlement with the government, and the whistleblower received approximately $3.7 million for their contribution.1,3
Whistleblower laws don’t just prevent and punish fraud. They also have protections for whistleblowers – because doing the right thing shouldn’t be punished. In 2016, an energy company agreed to settle a case with the government due to its alleged retaliation against an internal whistleblower and attempts to prevent employees from reporting fraud.
One employee was in charge of engineers who managed part of the company’s drilling program and was concerned with how the company was calculating its reserves. The company fired the employee and allegedly tried to enact agreements that would silence and prevent whistleblowers from coming forward.
Result: The company agreed to pay $1.4 million in penalties. The internal whistleblower did not bring the case to the government’s attention, however, and did not share in the proceeds.3
In one of the infamous disasters in recent memory, the BP Deepwater Horizon platform tragedy got plastered on the front page and across the American consciousness. Many deaths resulted from improper or insufficient safety measures, and the company’s claims regarding safety helped it obtain the lease to the area in which it was drilling. These alleged misrepresentations are against the False Claims Act.
Result: In addition to the very human tragedy, BP had to pay $82.6 million to settle False Claims Act allegations.3 Had a whistleblower stepped forward early on, they may have partaken of an award – and prevented many deaths.
We’ve seen many examples of good people trying to do the right thing and getting the short end of the stick. They call their company’s attention to a problem or report it to an internal fraud hotline. Then, they get ignored, demoted, transferred, disciplined, or even fired.
Even calling a government whistleblower hotline may not be the best move. Do you call the Department of Justice line? The Securities and Exchange Commission line? Just contact our experienced team of whistleblower attorneys online or at 1-888-292-8852.
We know the risks that many whistleblowers are taking. Our You-First Policy tries to ensure that your best interests are served. Your call is just between us, and there’s no obligation to hire us. If you choose to retain a Carolina Whistleblower Attorney, it won’t cost you anything out of pocket, guaranteed.2 We are only paid a fee if we get you an award.
“Bill has the ability to ‘think outside the box’…which makes him extremely effective as an advocate for his clients.” 1 — Attorney who previously worked with Bill
If you’re wondering if it’s a good idea to speak with a whistleblower lawyer about what you know, let us set the record straight.