Gas marketer, owners agree to pay over $4 million to settle gas royalty case

by Ben Vernia | May 2nd, 2019

On May 1, the Department of Justice announced that a gas marketing company and its two owners had agreed to pay $4.375 million to settle allegations that the company underpaid mineral royalty payments. According to DOJ’s press release:

Gas marketer B. Charles Rogers Gas Ltd. (BCR), which operated in the San Juan Basin area of New Mexico and southern Colorado, and its owners Billy Charles Rogers Jr. and Wynon Rogers, of Fort Worth, Texas, have agreed to pay $3.575 million to resolve False Claims Act (FCA) allegations that they caused reduced mineral royalty payments to the United States, the Department of Justice announced today. In addition, Thomas R. Lutner III, of Katy, Texas, who worked with BCR while employed as a gas supply manager at a natural gas distributor based in Houston, Texas, has agreed to pay $800,000 to resolve FCA allegations relating to his role in BCR’s alleged royalty fraud.

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The United States alleged that, while operating as a gas marketer in the San Juan Basin, BCR, at the direction of Mr. and Mrs. Rogers and Mr. Lutner, issued to producers false transaction statements in connection with BCR’s gas purchases. Those transaction statements allegedly underreported the volume and value of the natural gas liquids that BCR purchased. The United States alleged that many of the producers had federal gas leases, and that BCR’s fraudulent conduct caused those producers to underpay royalties owed to the United States on gas removed from those leases. BCR, Mr. and Mrs. Rogers, and Mr. Lutner have admitted and accepted responsibility for making and using, or causing to be made and used, false records that were material to producers’ obligations to pay royalties to the United States.

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The case apparently arose from a government investigation, and not from a whistleblower’s qui tam lawsuit.

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