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Archive for Saturday, October 28, 2000

Kochs end family feud

Wealthy sons likely to settle oil-buying case

October 28, 2000

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— A truce is apparently at hand in the long-running feud among the wealthy sons of Koch Industries' founder.

After years of legal fighting, the siblings are talking peace in light of a pending settlement in a federal oil-buying case in Tulsa. Another lawsuit concerning a sale of the company ended earlier when the U.S. Supreme Court declined to consider an appeal.

Bill Koch successfully sued Koch Industries in federal court in northern Oklahoma last year, accusing the Wichita, Kan., energy company of stealing oil from federal and Indian lands.

Bill Koch's brother, Charles, is chairman of the company and brother David is executive vice president. A fourth Koch brother, Frederick, was not a party to the Tulsa case but had teamed up with Bill Koch in the other dispute.

Their late father, Fred C. Koch, founded the company in 1940.

"I'm glad to say that my brothers and I have put our differences behind us," Bill Koch said in a statement. "It's time to close the rift that has divided our family for so long and live in peace."

A company statement issued Friday was also conciliatory.

"We're encouraged by Bill's statement and totally agree with his express desire to live in peace," company spokesman Jay Rosser said.

U.S. District Judge Terry Kern has agreed with both sides to cancel a penalty hearing set to begin Monday as the two sides work on getting government approval for a settlement in the oil-buying case. Kern has asked that a status report be filed before Dec. 1.

Bill Koch sued the company on behalf of the government under the federal False Claims Act, a move requiring the U.S. Justice Department to sign off on a settlement.

The government declined to participate in the lawsuit, as did the Osage tribe.

A group of Osage has filed a separate lawsuit concerning the company's oil-buying practices.

A Tulsa jury in December found Koch Industries underreported the amount and quality of oil purchased between 1985 and 1989 from federal and Indian leases.

Jurors recommended the company pay the government $553,504 in compensation, but that figure could have been tripled under federal statute. Kern also could have considered meting out as much as $214 million in penalties on 24,587 claims jurors deemed to be false.

The U.S. Supreme Court declined two weeks ago to consider the appeal of a separate case in which brothers Bill and Frederick had unsuccessfully sued Charles and David.

Bill and Frederick Koch received $1.1 billion in the sale of Koch Industries in 1983.

In an 11-week trial in Topeka in 1998, they claimed Charles and David had shortchanged them by at least $340 million by misleading them about the company's profitability.

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