Federal Jury Convicts in Multi-Million-Dollar Oil and Gas Fraud
OKLAHOMA CITY – A jury has convicted JUSTIN LANE FOUST, 42, of Sulphur, Oklahoma, of wire fraud, money laundering, and aggravated identity theft in connection with fraud against Chesapeake Energy, announced Robert J. Troester of the U.S. Attorney’s Office.
According to an 11-count indictment filed on January 16, 2018, Foust was employed by Chesapeake Operating, Inc., a wholly owned subsidiary of Chesapeake Energy Corporation, from April 2002 until September 2011. In July 2011, Foust formed Platinum Express, LLC, which became an approved vendor for Chesapeake Operating in October of that year. The indictment alleged that from October 2011 until July 2014, Chesapeake Operating contracted with Platinum Express primarily to transport waste water to disposal facilities in western Oklahoma.
Trial began on January 28, 2019. Over the course of six trial days, the evidence showed Foust defrauded Chesapeake Operating by causing Platinum Express to submit false invoices for services it did not perform. In particular, he created fraudulent work tickets for steam cleaning, dirt berm work, plating tanks, hauling rock, repairing fence, supplying sand separators, and other services. He generated many fraudulent invoices for amounts just under $5,000, which he knew from his prior work with Chesapeake Operating required a lower level of approval for processing and payment. The trial evidence established he forged the signature and employee identification number of certain Chesapeake Operating employees to ensure Chesapeake Operating’s accounting department would process the invoices. He further caused these work tickets and invoices to be submitted through interstate wire communications to Oildex, the Denver, Colorado, company that processed the claims on behalf of Chesapeake Operating.
Alleging eight counts of wire fraud, the indictment stated Foust was responsible for over 1,100 fraudulent invoices, which generated over $4.3 million in Chesapeake Operating payments to which Platinum Express was not entitled. Foust was also charged with two counts of aggravated identity theft based on his alleged use of the names and employee identification numbers of other people without their consent. Finally, he was charged with one count of laundering money by transferring $43,857.09 to pay for Platinum Express payroll, after at least $10,000 of that transfer had been derived from wire fraud.
Today the jury returned guilty verdicts on six counts of wire fraud, one count of aggravated identity theft, and one count of money laundering. It was unable to reach a unanimous verdict on the two remaining counts of wire fraud and the other count of aggravated identity theft.
Sentencing will take place in approximately ninety days. Foust could be imprisoned for a maximum of twenty years on each of the wire-fraud convictions, to be followed by three years of supervised release. Aggravated identity theft carries a mandatory minimum sentence of two years in prison, in addition to any other sentence of imprisonment. The money-laundering conviction could result in a sentence of ten years in prison, followed by three years of supervised release. Foust could also be fined up to $250,000 on each count and would be subject to mandatory restitution and to a forfeiture money judgment in the amount of the proceeds of the fraud, which the indictment alleges to be $4,345,619.00.
This case is the result of an investigation by the Oklahoma Economic and Identity Crimes Task Force, which is composed of the United States Secret Service, the FBI, IRS–Criminal Investigations, Homeland Security Investigations, the U.S. Postal Inspection Service, the Oklahoma Highway Patrol, the Oklahoma City Police Department, the Edmond Police Department, the Moore Police Department, and the Norman Police Department. The case agents hail from FBI and IRS–Criminal Investigations. Assistant U.S. Attorneys Jessica L. Perry, Amanda Green, and Tom Snyder are prosecuting the case.
Reference is made to court filings for further information.