Bad News for Kerr-McGee as Feds Seek Time to Intervene in False Claims Act Case Post-Verdict
21 Corporate Crime Reporter 16, April 11, 2007

It’s been a bad news, good news, bad news year for Kerr-McGee.

In January, a federal jury in Denver handed the oil company some bad news.

The jury agreed with former Interior Department auditor Bobby Maxwell that the company cheated the federal government out of $7.5 million in royalties on oil extracted from public waters in the Gulf of Mexico.

With triple damages and statutory fines, Kerr-McGee faced a $30 million judgement.

And Maxwell, as a whistleblower under the False Claims Act, stood to reap up to 30 percent of that.

Kerr-McGee, which was acquired last year by Anadarko Petroleum, appealed to the trial court judge.

And earlier this month, good news for Kerr-McGee – Judge Phillip Figa threw out the jury verdict, ruling that Maxwell didn’t qualify to bring the case under the False Claims Act because the wrongdoing had already been disclosed to a state of Louisiana government auditor.

Now, bad news for Kerr-McGee.

Up until today, the Justice Department has refused to intervene in the case.

But today, the Department filed papers indicating that the government may want its hands on the millions of dollars the jury said were defrauded from the government by Kerr-McGee.

The Department called on Judge Figa to not enter a judgement of dismissal in the case for 30 days while it considers whether or not to intervene.

“The Supreme Court has instructed that where a court dismisses a relator because he is not an original source, the court nonetheless retains subject matter jurisdiction if the United States intervenes,” government attorneys argued. “Thus, if the United States intervenes in this case, the court will retain jurisdiction despite its March 30, 2007 order that it lacks jurisdiction over Maxwell’s allegations.”

Attorneys for Maxwell filed papers with the court arguing that the jury’s verdict belongs “to the United States of America.”

“Because this case proceeded through trial to a favorable jury verdict, it was transformed from a lawsuit merely alleging that the United States of America was defrauded to a verdict establishing that the United States of America was in fact defrauded,” they argued.

Holland & Hart partner Scott Barker, an attorney for Kerr-McGee, said he hadn’t had a chance to review the government’s filing and didn’t know whether the government would intervene or not.

But Patrick Burns of Taxpayers Against Fraud said the government’s intervention is bad news for Kerr-McGee.

“It would be bizarre, if a few days before taxes are due, the government decides to turn its nose up at $30 million,” Burns said. “They should have intervened earlier. Now they might. Better late than never.”


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