How Many People Does It Take To Steal $4.3 Million?
Allegedly, one. Justin Foust of Oklahoma faces eight counts of wire fraud, two counts of aggravated identity theft and one money laundering charge as of January 2018. While this may not be your typical oil and gas investment scam, this corporate fraud scheme was well-orchestrated from inside of a $7.8 billion-dollar oil and gas company with over 3,200 employees.
Oil and Gas Accounting Fraud
Chesapeake Operating, Inc. employed Justin Foust from 2002 to 2011. During 2011, Foust formed a company, Platinum Express, LLC. Platinum became an approved vendor and was contracted to transport waste water. Apparently waste transportation was too dirty a business for Foust. Instead he produced fake invoices from Platinum Express, generally for amounts less than $5,000. Invoices for under $5,000 required a lower level of approval, making the oil and gas accounting fraud scam easier. Foust allegedly forged a Chesapeake approval signature to get invoices approved for payment. Click here for more details from the Justice Department.
Third Party Accounting Processor
As an added step of “security,” Foust submitted the Platinum Express work invoices to Chesapeake’s third-party processing company, Oildex. Foust submitted over 1,100 invoices for payment to Platinum Express. It is not clear if Oildex faces any commercial litigation or demand for reimbursement from Chesapeake as a result.
Recovering Your Losses
We are all too familiar with people like Justin Foust. As oil and gas litigation lawyers, we obtained a nearly one-million-dollar verdict in a jury trial for our client in a similar scam (Zemer Energy, LLC, et al. v. Billy Don Johnson, et al.). In that case the defendants created numerous false invoices and charged our clients for services defendants did not perform.
Prevention is the Best Medicine
As an oil and gas investor, when you are provided with monthly expense statements, consider reviewing the back-up documents to confirm the expenses are legitimate. It never hurts to do a little digging into the legitimacy of vendors as well.
Experienced Oil and Gas Accounting Fraud Lawyer
If you do find yourself with questions regarding a potential oil and gas matter, or you need an oil and gas accounting fraud attorney.
Mark A. Alexander. P.C. is here to help. Call us today at (972) 544-6968.
