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Energy firm pays $4M for False Claims Act violations

By Michael P. Tremoglie | Jul 6, 2012

WASHINGTON (Legal Newsline) -- A Connecticut-based energy will pay more than $4 million to the federal government for violating the False Claims Act by failing to pay money owed on natural gas acquired from the Department of the Interior.

Louis Dreyfus Energy Services, which is based in Connecticut, sells transports and stores natural gas. According to the Department of Justice, the company made false claims or misleading statements to the Department of the Interior involving contracts to buy natural gas produced from federal oil and gas leases in the Gulf of Mexico from December 2004 to March 2008.

Dreyfus agreed to pay the Interior Department for natural gas based on a price associated with the delivery of the gas at a fixed point along a natural gas pipeline.

The company received a discount for the natural gas obtained under the contracts.

DOJ maintained that the discount was applicable given certain conditions but the company claimed the discounts in absence of those circumstances. Therefore the company was not entitled to the discounts.

"Companies that deal with the United States have to live up to their commitments, whether they relate to the use of the nation's natural resources or to other government programs or benefits," said Stuart F. Delery, Acting Assistant Attorney General for the Justice Department's Civil Division. "The American taxpayers will not tolerate those that claim price discounts from the United States to which they are not entitled."

"Oil and natural gas companies must understand that using false or misleading claims to get a better price is unfair and unlawful. For companies that make such claims, there are significant consequences," said John Walsh, U.S. Attorney for the District of Colorado.

"This settlement is a message to industry and the public that federal government agencies, working together, are focused on the promise that the American taxpayers will get their fair share of all monies owed from public resources," said Mary L. Kendall, Acting Inspector General of the Department of the Interior.

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