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OCTOBER 27, 2000

Koch Industries is ready to settle a lawsuit brought against them for cheating the government and primarily Osage Nation tribal members out of oil monies.

The Kansas-based Koch, the second-largest privately held company in the United States, was sued for under-reporting the amount and quality of oil it took from federal and Indian lands. In December of 1999, a jury found Koch guilty of falsifying some 24,587 claims and issued a $553,504 judgment against the company.

The case didn't end there, however, since the lawsuit was filed under the False Claims Act. The whistle blower law allows the government to penalize companies for each false claim filed and as much as $214 million could be collected from Koch. The law also allows the whistle blower to collect 15 to 30 percent of award, depending on the case.

US Chief District Judge Terry Kern of the Northern District of Oklahoma was set to proceed with a penalty hearing next Monday. But on Wednesday, Koch and the two plaintiffs in the case, filed papers in court indicating they have reached a settlement.

The main plaintiff and whistle blower in the case is Bill Koch, the younger brother of Charles Koch, CEO. The brothers have fought one another in court over the years and even some members of the Osage Nation took sides.

During the trial, Chairman Charles Tillman supported Charles Koch. But other members of the tribe, some of whom picketed the trial, believed the company cheated them out of royalties.

Of the false claims filed, about 43 percent involve leases on land owned by Osage tribal members. Many have been receiving royalty payments for decades.

In March, the tribe filed a lawsuit of its own, but not against Koch. They are suing the Department of Interior and the Bureau of Indian Affairs for $2.5 billion for alleged mismanagement of oil and gas royalties.

Related Stories:
Oil royalty case settled (Enviro 10/25)
Judge upholds Indian oil ruling (Tribal Law 07/12)

Relevant Links:
The Osage Nation of Oklahoma - www.osagetribe.com
Koch Industries - www.kochind.com
The False Claims Act - www.taf.org/taf/docs/quitam.html
The Qui Tam (False Claims) Online Network - www.quitamonline.com