Fracking Royalties Fraud: Is it Better to Wait If You’re a Victim?

Fracking Royalties Fraud: Is it Better to Wait If You’re a Victim?

Warren-Center11No doubt you have been following in the news all the recent accusations that big energy companies have been cheating Pennsylvania landowners out of fracking royalties.

Big energy corporations bought rights to extract natural gas from beneath land owned by Pennsylvania property owners. The companies promised to pay the landowners at least one-eighth of the value of all natural gas obtained by hydraulic fracturing, or “fracking.”

Now accusations are flying that the energy companies have used deception to avoid paying the landowners what they are due. If these accusations are true, then there’s a word for this corporate behavior: fraud.

Energy company officials could be prosecuted for mineral royalties fraud under Pennsylvania law, and face huge fines and possible imprisonment. It gets even more complicated, however. Because these energy companies are out of state, it’s possible that they may face federal criminal fraud charges. The federal government has exclusive power to regulate interstate commerce.

That naturally leads to the following questions: If you are a landowner who may have been swindled in a case of fracking royalties fraud in Pennsylvania, should you wait for state or federal criminal prosecution? Will a criminal investigation improve your chances of recovering the money you are owed? Or should you file a civil claim now, even before government officials finish their investigations?

State and federal prosecutors get to decide whether to bring criminal charges against someone for fraud. Their goal—if they choose to seek a criminal conviction—is to uphold society’s values by identifying and punishing the guilty. A civil lawsuit has a different goal: to repair a wrong done to the victim. In cases of fraud or bad faith, this would involve compensation to landowners to replace the royalties they were supposed to receive.

There is one obvious advantage to waiting for the criminal trial: a verdict against the defendant in the criminal case may make it easier for you to prove wrongdoing in a civil suit. The evidence that was introduced in court becomes part of the public record, and may help your fracking royalties fraud lawyer strengthen your claim against the energy company.

However, we believe you should not wait for the criminal case to conclude. Our advice is to file a civil lawsuit promptly, but also to cooperate with the authorities conducting the criminal investigation. There are at least six reasons:

  1. Your rights to a civil recovery may expire earlier. The limitations period for your Pennsylvania tort or breach of contract case can be between two to four years.
  2. Jurisdictional squabbles can delay the prosecution. State and federal officials may end up arguing over who has priority in bringing the case to trial. This can delay the criminal proceedings even more.
  3. You have no leverage over the course of the criminal action. Sure, the prosecutor will be grateful if you are willing to testify in the criminal case, but they won’t give much weight to your needs in deciding whether to settle the case with a plea bargain.
  4. There is no assurance of a financial recovery from a criminal case. If the defendant is convicted, the judge may decide not to require restitution as part of the sentence, or may impose a fine that is not enough to pay you back for all your losses. In a civil case, you can seek full compensation and even punitive damages for fraudulent conduct.
  5. The rules are more in your favor in a civil case than a criminal case. The standard of proof to convince a jury that a crime occurred in a criminal case is “beyond reasonable doubt”. For civil trials, the burden is merely a preponderance of the evidence. With this burden of proof, you need only prove that the weight of your evidence would is slightly greater. This is why O.J. Simpson won his criminal case, but lost the civil case filed against him by the family of Nicole Brown Simpson.
  6. You don’t want to be last in line for compensation. Big companies are surprisingly crafty at hiding their assets. If they are sued by a number of people at once, it’s possible that the early claims will get full recoveries. Later plaintiffs may get nothing.

You can’t expect to get a recovery without help

Chesapeake Energy has been in lawsuits over this royalty issue in at least four other states. Like most large energy companies, it has a highly skilled set of attorneys to fight hard against these lawsuits and protect big corporate interests. Who do you have?

You should have Jon Ostroff and his team at Ostroff Godshall Injury and Accident Lawyers standing by your side. Our fracking fraud attorneys in Montgomery County aggressively fight on behalf of landowners’ rights against the arrogance and abuses of the large energy companies.