This legal threat coincided with another attack from Bill Koch: O’Reilly and De Llosa, “The Curse”; Burrough, “Wild Bill Koch.”
the federal investigation . . . federal prosecutor named Nancy S. Jones: Nancy Jones, Timothy Leonard, Elroy, interviews by author, 2014–18; details of the investigation are also based on the FBI case file, released for the first time in 2018 to the author, with minor redactions, including several hundred pages of internal FBI memos and interview transcripts.
Jones was skeptical, at first: Nancy Jones, interviews by author, 2015–2016. During interviews for this book, Jones refused to discuss what the grand jury learned, or the specific evidence presented to it, due to confidentiality rules. She refused to say whom the jury called as witnesses, or what documents it might have obtained. But the confidentiality rules allowed her to discuss her strategy in the case and how the case progressed over the months.
As Jones pressed her case from the US Attorney’s office: United States of America ex rel. William I. Koch and William A. Presley, Plaintiffs, v. Koch Industries, Inc., et al., Defendants, Order, August 6, 1998, 7.a.
Koch Industries responded by circling the wagons: United States of America ex rel. William I. Koch and William A. Presley, Plaintiffs, v. Koch Industries, Inc., et al., Defendants. Order, August 6, 1998.
The standards of conduct said: Ibid., 5.a–c.
On July 11, 1988, Koch’s president, Bill Hanna: Ibid., 5.d.
Bill Koch only fed into the company’s sense of embattlement: Elroy, Dubose, interviews by author, 2014–15; FBI internal memorandum, “Koch Industries Incorporated, Wichita, Kansas; CRIME ON AN INDIAN RESERVATION—THEFT; RACKETEERING INFLUENCE AND CORRUPT ORGANIZATION,” July 26, 1989; Burrough, “Wild Bill Koch.”
Charles Koch did more than circle the wagons: “Before the Special Committee on Investigations, Select Committee on Indian Affairs, United States Senate: Statement by Koch Industries, Inc.,” submitted June 7, 1989.
But when faced with . . . Koch redirected his political efforts: Howell, interviews by author, 2015–16; Phillip L. Zweig and Michael Schroeder, “Bob Dole’s Oil Patch Pals,” Bloomberg Businessweek, April 1, 1996.
Koch’s first tactical goal . . . issue of oil theft: Howell, interviews by author, 2015–16; Zweig and Schroeder, “Bob Dole’s Oil Patch Pals.”
One of the primary victims . . . Osage tribe in Oklahoma: Charles O. Tillman, interview by author, 2015.
Tillman and other Osage leaders went public: “Osages Deny Tribe Swindled in Oil Deals,” Tulsa Tribune, March 21, 1990; Bob Vandewater, “Osage Royalties Probe Calls Oil Payments Fair,” Daily Oklahoman, March 21, 1990.
Koch Industries deepened its relationship with Kansas senator Bob Dole: Bob Dole, interview by author, 2016; Zweig and Schroeder, “Bob Dole’s Oil Patch Pals.”
Dole helped Koch delegitimize the issue: “Investigation of Indian Oil Purchase,” Bob Dole submission to US Congressional Record, March 26, 1990.
As senators fought . . . Koch put another piece of its plan into place: Howell, interviews by author, 2015–16; John J. Fialka, “How Koch Industries Tries to Influence Judicial System,” Wall Street Journal, August 9, 1999.
Michael Corrigan attended a Koch-sponsored seminar: Fialka, “How Koch Industries Tries.”
The Law & Economics Center claimed: Law & Economics Center website, https://masonlec.org.
Jones and Elroy . . . Koch’s internal documents: Nancy Jones, Elroy, interviews by author, 2014–16.
Nicastro was no ordinary document courier: David Nicastro, deposition with US Senate investigators, transcript, April 24, 1989; United States of America ex rel. William I. Koch and William A. Presley, Plaintiffs, v. Koch Industries, Inc., et al., Defendants, Order, August 6, 1998, 45.b.i.
When the Oklahoma grand jury . . . Nicastro apparently made a special trip: Nancy Jones, interviews by author, 2015–16. David Nicastro declined to be interviewed. He left Koch Industries after these events and became president of Secure Source International, an independent corporate security firm. On his website, Nicastro claims to be able to penetrate even the most sophisticated corporate security systems, as a way to show clients how those systems are vulnerable.
Then something happened that punctured a hole in the case: Elroy, Nancy Jones, interviews by author, 2014–15.
In Elroy’s absence . . . Koch’s favor: FBI “302” reports summarizing interviews with Koch gaugers in in Oklahoma and Texas, 1990; FBI internal memorandum, Subject: “Koch Industries,” August 20, 1990; FBI internal memorandum, 196B-OC-48271: “[L]eads assigned in June 1991 have been put on hold until further notice.”
one gauger was interviewed in a Dairy Queen parking lot: FBI 302 report (REV. 3-10-82), June 18, 1991.
The FBI was searching . . . shakeup at the US Attorney’s office: Nancy Jones, Leonard, Don Nickles, interviews by author, 2015–2018; Zweig and Schroeder, “Bob Dole’s Oil Patch Pals.”
She said there was lukewarm enthusiasm . . . the Koch case: This account is based on Nancy Jones’s recollection of events. Arlene Joplin refused to discuss the meeting or anything having to do with the Koch Industries investigation.
In April of 1991 . . . Nickles nominated Timothy Leonard: Nancy Jones, Leonard, Nickles, interviews by author, 2015–18.
Leonard’s decision raised suspicion: Zweig and Schroeder, “Bob Dole’s Oil Patch Pals”; Mayer, Dark Money, 133–34.
The FBI’s case file . . . not to file charges: FBI internal memorandum, Subject: “Koch Industries,” August 20, 1990. The memo states, in part: “During this sixty (60) day period the writer has received eighteen (18) FD-302’s from interviews of Oklahoma guager, relief gaugers and gauger/drivers. All of these interviews, with the exception of one, have been negative concerning alleged violations. The only positive information . . . attributes this practice to laziness on the part of the gauger.” FBI internal memorandum, 196B-OC-48271: “[L]eads assigned in June 1991 have been put on hold until further notice.”
it was assistant US Attorney H. Lee Schmidt: FBI internal memorandum, Subject: “Koch Industries, Inc., Wichita, Kansas’ Fraud by Wire,” February 12, 1992.
During an interview in his home: Leonard, Nickles, interviews by author, 2018.
case went to trial in Tulsa in late 1999: “Judge Finds Sufficient Evidence to Take Koch Lawsuit to Trial,” Associated Press, August 10, 1999.
During the trial, Koch officials admitted: Ruble, “Koch Brothers Head Back to Federal Court in Latest Squabble.” Story included the statement “Koch Industries officials concede the company made about $10 million in profit per year from the overages. But they say that was only a small amount of the company’s overall intake.”
Jack Crossen, a district gauger for Koch: Ruble, “Former Employees Testify at Federal Trial of Koch Industries,” Associated Press, October 5, 1999, and October 6, 1999.
Ricky Fisher said he rationalized stealing oil: Renee Ruble, “Former Measurement Supervisor Takes Stand,” Associated Press, October 12, 1999.
The fines for Koch could have been enormous: Danny M. Boyd, “Penalty Against Koch Approaches Settlement,” Associated Press, October 26, 2000; United States of America ex rel. William I. Koch and William A. Presley, Plaintiffs, v. Koch Industries, Inc., et al., Defendants, Verdict Form 1, Verdict Form 2, December 23, 1999.