October 8, 1998- According to papers filed in federal district court here on Friday (Oct. 2) on behalf of plaintiffs William J. Koch and William Presley, Koch Industries Inc. engaged in a systematic, management-directed scheme to steal crude oil from producers on federal and Indian lands throughout the United States.
Koch, the Wichita-based petrochemical giant, is alleged to have cheated oil producers and royalty owners out of hundreds of millions of dollars by deliberately falsifying measurements on lease tanks, in a whistle blower lawsuit filed by the plaintiff's lawyer Roy Bell, of Miller, Boyko and Bell.
William, who won sailing's America's Cup for the U.S. in 1992, is a former Koch Industries executive and brother of Charles Koch, the company's chief executive officer. Koch is ranked by Fortune as the second-largest privately held company in the country, with estimated annual revenues of over $35 billion. At one time, Koch was the largest purchaser of Indian oil in the United States.
Deposition testimony of dozens of former employees and internal documents obtained from the company show "that Koch field personnel routinely altered observed measurements, and always did so in Koch's favor," in order to ensure that Koch ended up with more oil than it paid for, Bell alleged in court documents.
Documents prepared by Bell showed that Koch profited handsomely from these "overages," at the expenses of U.S. taxpayers, small producers and Indian tribes. In one year alone, the company's internal accounting records show that nearly 40 percent of Koch Oil's pre-tax profits came from crude oil the company took without paying, Bell alleged.