There’s money coming into Texas—the Eagle Ford Shale is creating a booming business for oil and gas companies in the San Antonio area and bringing with it jobs and economic development for the area. But it’s also bringing in some less-than-ideal issues, like housing struggles for some and allegations of fraud for others. The Houston Chronicle’s story that one Houston-based oil and gas company, Apache Corp., suffered “massive fraud” at the hands of oil field services in in the Eagle Ford Shale sheds light on how the booming business is not just for the oil companies, but for oil and gas lawyers in San Antonio getting in on the action, too.
Apache Corp. is claiming that principals of two San Antonio companies have stolen more than $1 million through schemes that include false billing invoices and hiding behind subcontractors to get more money out of Apache. Oil and gas lawyers in San Antonio like Mike Hancock acknowledge that anywhere there’s a boom, con artists are bound to follow. FBI spokeswoman Michelle Lee reported to the Chronicle that she didn’t know of any fraud cases investigated there, so it’s difficult to say how extensive the fraud problems around Eagle Ford might be. But Apache is saying the problems are not only there, they’re rampant.
One of the oil and gas lawyers in San Antonio representing Apache commented that the “Eagle Ford is really hot right now, and a lot of oil field services companies are stretched to the limit.” Those conditions can make easy pickings for fraudsters who want to take advantage of the chaos and flurrying activity say industry attorneys like Hancock. The defendants in the case filed by Apache Corp. have either declined to comment or denied any wrongdoing.
The claims Apache has filed are unique and indicate an intricate—and personal—attempt to pull one over on the Houston-based oil and gas company. Including involvement by former high school classmates and ex-spouses, the allegations range from unsubstantiated invoices from internally generated sources and manipulating workers’ hours to charging for unsupported overtime rates and billing employees at higher than appropriate rates.
Apache is seeking damages in an unspecified amount from no less than five defendants in the suit, but Apache is the only one talking to the press. Its oil and gas lawyers in San Antonio have commented that they’re in possession of the documentation that implicates all five of the defendants, although that is something that will have to be determined by a court in Bexar County. Stag Energy Services (now defunct); James C. Mann who worked at Stag; his estranged wife and Stag’s part Owner, Robbie L. Ward; and Chad Walker, a one-time Apache construction foreman will come before the Bexar County District Court in the coming months.
Some of the interested parties wonder whether the lawsuit itself is just a billing dispute disguised as a fraud claim for Apache to accumulate even more money from the Eagle Ford Shale business, but again, that’s something to be decided in a courtroom.