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 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.

If you do find yourself with questions regarding a potential oil and gas matter, or you need an oil and gas fraud lawyer, we are here to help.

Mark Alexander
5080 Spectrum, Suite 850E
Addison, Texas 75001
Ph: 972.544.6968
Fax: 972. 421.1500

E-Mail: mark@markalexanderlaw.com
www.oilandgasfraudlawyer.com
www.commerciallitigationtexas.com

 

View Original Source
Photo of Mark Alexander Mark Alexander

Mark Alexander is the principal of the Firm. In 1979, he earned his undergraduate degree at Wayne State University in Detroit, Michigan, and his law degree at Thomas M. Cooley, Lansing, Michigan, in 1985 (Academic Dean’s List).

Mr. Alexander is licensed to practice law by the Supreme Courts of the States of Texas (1985) and Michigan (1988), and holds licenses before the following courts: Supreme Court of Texas; Supreme Court of Michigan; United States Court of Appeals for the Fifth and Sixth Circuits; United States District Courts for the Northern, Southern, and Western Districts of Texas; and the Eastern and Western Districts of Michigan. In addition he has been admitted in several other Federal and State Courts to represent Texas clients, who have been engaged in significant litigation in those jurisdictions.

Courts have appointed Mr. Alexander to serve as a receiver, and facilitator in complex litigation lawsuits. Additionally he has been a frequent lecturer for organizations on a variety of business law matters.  Mr. Alexander has also served as an Adjunct Professor of Business Law at Henry Ford College in Dearborn, Michigan. Significantly, Mr. Alexander is AV-rated by Martindale-Hubbell, the highest rating an attorney can receive.

Additionally, due to the complex nature of its practice, the Firm has an on-going relationship with a legal group that provides litigation support services. This group is comprised of a team of attorneys, whose combined capabilities allow the group to provide nearly 24-hour coverage at crucial times for any case. This arrangement is but one example of the innovative, cutting-edge approach that the Firm provides to its clients in order to improve representation at reduced legal fees.