Sulphur Man Charged with Over $4 Million in Fraudulent Oil and Gas Invoices
Oklahoma City, Oklahoma – A federal grand jury has charged JUSTIN LANE FOUST, 41, of Sulphur, Oklahoma, with defrauding Chesapeake Energy of more than $4 million through fraudulent invoices, announced Mark A. Yancey, U.S. Attorney for the Western District of Oklahoma.
According to an 11-count indictment unsealed this afternoon, 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 alleges that Chesapeake Operating contracted with Platinum Express primarily to transport waste water to disposal facilities in western Oklahoma.
Foust is charged with defrauding Chesapeake Operating by causing Platinum Express to submit false invoices for services it did not perform. In particular, the indictment alleges he created fraudulent work tickets for steam cleaning, dirt berm work, plating trucks, hauling rock, repairing fence, supplying sand separators, and other services. He allegedly 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. According to the indictment, he either forged or electronically copied and pasted the signature and employee identification number of certain Chesapeake Operating employees to ensure that 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.
The indictment alleges Foust submitted over 1,100 fraudulent invoices, which generated over $4.3 million in Chesapeake Operating payments to which Platinum Express was not entitled.
In addition to eight counts of wire fraud, Foust is charged with two counts of aggravated identity theft and 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 fraud.
If convicted, Foust could be imprisoned for a maximum of twenty years on each of the eight wire-fraud counts, to be followed by three years of supervised release. Each of the two counts of aggravated identity theft would carry a mandatory minimum sentence of two years in prison, followed by a year of supervised release. The money-laundering count could lead to a sentence of ten years in prison, followed by three years of supervised release. He could also be fined up to $250,000 on each count and would be subject to mandatory restitution.
The public is reminded these charges are merely accusations and that Foust is presumed innocent unless found guilty beyond a reasonable doubt by a unanimous jury.
This case is the result of an investigation by the Oklahoma City Economic and Identity Crimes Task Force, which is composed of the United State Secret Service, the Federal Bureau of Investigation, IRS–Criminal Investigations, Homeland Security Investigations, U.S. Postal Inspection Service, Oklahoma Highway Patrol, the Oklahoma City Police Department, the Edmond Police Department, the Moore Police Department, and the Norman Police Department. Assistant U.S. Attorney Jessica L. Perry is prosecuting the case.
Reference is made to court filings for further information.