Citing "unrepentant arrogance" of Koch-owned company, District Judge refuses to approve False Claims Act-related antitrust settlement

by Ben Vernia | December 17th, 2012

On December 12, District Judge Richard P. Matsch in Colorado denied a motion by the United States to approve a proposed settlement of a big-rigging suit, U.S. v. SG Interests I, Ltd. the Government had brought against Gunnison Energy Corporation, which is owned by billionaire William Koch. The case originated in a qui tam suit, and the Government proposed a global settlement that included an overall payment of $550,000, with $180,000 of that sum to go to the qui tam whistleblower and his attorney. The Government’s civil antitrust suit was brought under the Sherman Act, and the Government filed a competitive impact statement as required in advance of a public comment period pursuant to the Tunney Act. In the case, the whistleblower alleged that the defendants colluded in bidding on federal natural gas leases.

Several dozen individuals and groups submitted comments to the Court. The authors criticized the proposed agreement as inadequate to cure the alleged violation, or disproportionate to a criminal sentence handed out to an environmental activist in Utah who had submitted bids he had no ability or intention to pay for. Others argued that the agreement permitted the defendants to retain the leases they had improperly won, and that the damages related to only four of the 22 leases the whistleblower had alleged were tainted by the collusion (the Government responded that there were legal bases for agreements among the defendant on the 18 other leases.)

It was the defendant’s own response to these comments, however, which convinced Judge Matsch to reject the agreement:

GEC filed a statement responding to the public comments in a manner that demonstrates that this defendant considers this antitrust action to be meritless and the settlement to be nothing more than a payment to be rid of this nuisance. (Doc. 16-7). The unrepentant arrogance of this defendant is so self-evident that a copy of the statement is attached as Exhibit A. It is not in the public interest to approve a final judgment that permits a defendant to leave its civil action in such a smirking, self-righteous attitude.

In a footnote, he also questioned the size of the proposed whistleblower’s share, but noted that the qui tam suit was assigned to a different judge.

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