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Fighting Mad

Tycoon Jack Grynberg says the energy industry has stolen millions from him -- and billions from the government. What if he's right?

Grynberg contends that the fraud is far greater than most people realize. And in addition to his private legal battles, he's pursued the mother of all False Claims Act cases, accusing the industry of cheating on royalties on public and tribal lands in several states, using many of the techniques for undervaluing production that he discovered at his own wells. Originally filed in 1995, the complaint has expanded over the years to encompass 73 cases and more than 300 defendants -- a virtual who's who of the oil and gas industry. Grynberg says he's spent more than $20 million out of his own pocket on the case, but the potential payoff is huge. He calculates the amount of underpayments at $35 billion. With triple damages, and the possibility of collecting up to 30 percent of any settlement, a victory could make him one of the wealthiest men in the world.

The federal government can intervene in a False Claims Act case it deems sufficiently promising, but it has not done so in Grynberg's action. Last month, a federal judge in Wyoming overrode the recommendations of his own special master and dismissed most of the 73 cases, ruling that Grynberg's claims don't meet the exacting specifications of the False Claims Act. Grynberg, who's had a fair record of getting unfavorable lower-court decisions reversed by higher-ups, has vowed to appeal.

The ruling is just one more bump in a long road that has tested his tenacity and shaped his combative nature, going back to his childhood in eastern Europe during the Holocaust and an adolescence spent partly as a soldier in Israel. His high-stakes battle with his own industry is far from over.

"Grynberg is a David taking on a whole host of Goliaths," says Jim Moorman, president of the False Claims Act Legal Center. "The oil and gas industry is very good about procedural confusion, but the court should be looking at whether he's right or wrong on the facts."

Several industry sources declined to comment on the record about Grynberg, citing his litigiousness. But in private, they dispute his motives and his conclusions, suggesting that he's exaggerating problems stemming from outmoded "legacy equipment" and other issues in pursuit of his own gain. "I don't think anyone is opposed to accurate measurement," says one industry observer. "We get paid on that."

Yet his long-running lawsuit is only one prong of Grynberg's current attack. He's assisted state and local officials mounting their own legal battles against energy companies, from Alabama to Aspen, and all without pay. He's pushed for changes in federal law to correct what he sees as inequities in the False Claims Act. He's met with lawmakers seeking to change the way business is done at MMS. And he's been a major force behind a proposed bill that could have a profound impact on standard practices in the American gas industry.

"I'm optimistic," he says cautiously, "that a number of things can be set straight."

W ildcatters rise or fall depending on their ability to stick to a few simple principles. Luck has something to do with it, to be sure, but probably not as much as gut feelings and a solid grasp of geology. In the case of Jack Grynberg, a keen instinct for survival and a fascination with science have served him well.

Grynberg was born in Brest, Poland, in 1932. He was in his second year of grade school when the Nazi invasion ended his education. Grynberg's mother served as a doctor in the partisans; by age twelve, young Jack was toting a rifle and guarding German prisoners in the woods of Belarus. After the war, he and his parents attempted to flee the new Communist regime, only to be caught by Czech state police and sent back. They spent two weeks in prison, were released and fled again.

After a year of high school in Scotland, Grynberg went to Palestine in 1947 and joined the Irgun, an irregular militia outlawed by the British. "I was a terrorist," he says with a slight smile. "A blond, blue-eyed kid who spoke with a Scottish accent." He was there for twenty months during Israel's war of independence, when the Irgun was folded into the regular Israeli army.

A scholarship from the Colorado School of Mines brought him to the United States at the age of seventeen. He completed a chemical engineering degree in two and a half years, worked briefly in research and development at Conoco, then launched his own consulting business. His knowledge of Russian led to a stint in the U.S. Army's radioactive-warfare section in Maryland in the mid-1950s ("worked as a scientific spy," his resumé explains). While stationed there he met a college senior, Celeste Bachove, and soon married her. The couple has three grown children.

Grynberg returned to Colorado and began prospecting as an independent oil and gas man in the early 1960s. He reworked a Wyoming gas field that had been written off by a previous operator and soon struck it rich. His company, Oceanic Exploration, went public and began exploration on an international scale. In the 1970s, a court battle broke out between Grynberg, the company's largest stockholder, and company management; in 1981, Grynberg took over Oceanic's offices in downtown Denver and locked out its corporate executives. He sold his interest in the company a few months later.

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