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Koch Court Fight Continues

Koch Court Fight Continues

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A multimillion-dollar lawsuit against one of the nation's largest

independent crude oil buyers continues to work its way through the


A 6-year-old suit by Tulsa-based Precision Co. and its founders,

William Koch and William A. Presley, charges Koch Oil Co. with

stealing millions of dollars of oil and natural gas from Native

Americas and the federal government. The plaintiffs claim there is

a potential $400 million in federal and Indian royalties at stake.

William Koch sold his stake in the family-built Koch empire

years ago.

Koch company officials have said repeatedly the suit has no


U.S. Magistrate Sam Joiner in U.S. District Court for the

Northern District of Oklahoma on Oct. 6 denied the Koch company's

request to dismiss the suit. He did, however, dismiss Precision

claims that Koch under-reported the oil purchases from Indian


Wichita, Kan.-based Koch Industries Inc. is the second-largest

oil purchaser in Oklahoma. Last year, the company bought more than

14.7 million barrels -- more than 16.2 percent of all the oil

bought in Oklahoma, according state Corporation Commission figures.

Koch officials recently lost a similar case involving claims

that Koch under-reported the oil it purchased. Koch Oil Co., a Koch

Industries subsidiary, will pay nearly $1.1 million to settle

15-year-old North Dakota claims that it did not pay taxes on oil it

purchased, the North Dakota Supreme Court ruled in September.

The North Dakota Tax Department said Koch owed $409,744 in

taxes, $123,182 in penalties and $539,115 in interest. Precision

was not involved in that case.

Presley said Friday that Precision was formed to find fraud in

the oil industry, specifically mismeasurement of oil purchased.

According to the False Claims Act, anyone proving fraud would

receive 10 percent to 30 percent of any recovered funds.

William Koch is the major stockholder for Precision. Its lone

employee, Presley, serves as company president and lives in Boston.

"He hired me to find if we could recover damages from any past

mismanagement in the industry," Presley said. "In the beginning, we

had a much broader focus."

In 1988, he said the focus narrowed to one company when Presley

uncovered what he claimed was fraudulent reporting by Koch Oil.

"Our sole business is the management and progression of this

lawsuit," he said. Assuming a $400 million settlement, Precision's

reward would be between $40 million and $120 million.

Presley said Joiner "slam-dunked" Koch Oil and he is sure the

case will go to trail. No date has been set.

Koch officials said a lot was left unresolved.

"There are still several procedural matters up in the air," said

Ron Howell, Koch director of state affairs. "There was neither a

victory or defeat."

Howell said a decision might come "in the next three to four

weeks" on whether the case moves forward.


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