Dudley Whitehorn, another Osage chief who worked with Tillman, also became disillusioned. Several years after the Daily Oklahoman article appeared, Whitehorn was sitting in a local auto shop waiting for his car to be repaired. A former Koch Industries oil gauger sat down next to him and struck up a conversation. Whitehorn said the gauger eventually told him: “We did steal from you.” The man seemed contrite. Whitehorn didn’t dwell on it. He didn’t want to carry a grudge against Koch.
The Osage chiefs might have felt duped later on, but their public comments in the early 1990s achieved an important goal. The government suddenly looked overzealous and unfair. This fed into Koch’s broader efforts. While Howell was reshaping the story in Oklahoma, Koch was working to do the same thing in Washington, DC.
Charles Koch understood now that he needed a political operation in Washington. Up until that point, he operated as if he could stay out of the miasma of the nation’s capital, staying true to his libertarian beliefs and focusing his efforts on the business in Wichita. This left Koch vulnerable. When Ken Ballen was conducting his investigation, he was contacted frequently by high-paid attorneys and experts who worked for companies like Exxon and Chevron. They defended their clients and even helped focus attention on Koch Industries. Koch had no such presence. This would change in the early 1990s.
Koch Industries deepened its relationship with Kansas senator Bob Dole. The Kochs already contributed to his campaigns and political causes, giving $245,000 between 1979 to 1994. David Koch would abandon the Libertarian Party to become the vice chairman of Dole’s presidential campaign against incumbent Bill Clinton in 1996. By that time, the family would become Dole’s third-largest financial supporter, according to an investigation later published in Businessweek magazine.
Dole helped Koch delegitimize the issue of oil theft. Dole submitted the story from the Daily Oklahoman into the Senate record, and said that he was concerned that the Senate had rushed to judgment to condemn Koch. Koch amplified his concerns by helping to draw other senators into the fight, including Nancy Kassebaum of Kansas and David Boren and Don Nickles from Oklahoma.
During a speech on the Senate floor in 1990, Dole criticized the committee’s work, saying: “Several senators, including myself, Senator Kassebaum, Senator Boren, and Senator Nickles, had very real concerns about some of the evidence on which the special committee was basing its findings, concerns we raised with the committee in successive letters before the report was issued. It now looks like those concerns were well founded.”II
As senators fought against the findings of their own committee, Koch put another piece of its plan into place. The biggest threat wasn’t emanating from the Senate but from the courts and the US Attorney’s office, two institutions that could not be influenced by campaign donations or lobbyists. In response, Koch initiated a long-term plan to reshape America’s judiciary system.
Ron Howell founded an obscure nonprofit group called Oklahomans for Judicial Excellence. It did something unheard of: it started grading local judges based on their fealty to free-market economic theory. The group created scorecards for state judges, measuring how well their verdicts conformed with the teachings of Hayek and von Mises. The group publicized these rankings with public opinion articles published in places like the Daily Oklahoman. The grading system created a way to embarrass judges in the local press by publicizing their low scores. Koch Industries also offered them a way to escape this embarrassment: the company sponsored a series of free seminars that judges could attend if they received poor grades from Koch’s rating system. The seminars were not held in stuffy classrooms. Koch Industries paid for judges to travel to a ski resort in Utah or a beachfront condominium, among other locations, relaxing places where the judges might be more open to Koch’s message. The company held lectures that emphasized the importance of market forces in society, and warned against the consideration of things like “junk science” that plaintiffs often used to prove corporate malfeasance. The seminars were well attended, sometimes by more than sixty judges at a time. A Kansas state district court judge named Michael Corrigan attended a Koch-sponsored seminar at the Sundial Beach Resort in Sanibel, Florida, and another at the University of Kansas; in between these seminars he handled two cases involving Koch Industries without disclosing the potential conflict of interest, according to an account later published in the Wall Street Journal.
The junkets that it organized might have been disclosed or even regulated if they were enjoyed by other public officials, such as members of Congress. But there were no such restraints on treating judges to all-paid vacations, perhaps because no one had thought to organize such events on such a large scale before. Koch’s efforts to sway judges evolved over many years. By 2016, it had transformed into a new program that offered free seminars to judges called the Law & Economics Center, which was housed at George Mason University in Fairfax, Virginia, along with Koch’s free-market think tank, the Mercatus Center. The Law & Economics Center claimed to have hosted more than four thousand state and federal judges from all fifty states at its seminars. It offered up to a dozen events a year.
This long-term effort would do little to solve Koch’s immediate problem, which emanated from the office of Nancy Jones. She and Jim Elroy were making strides in the case. They believed they were close to proving that Koch’s oil theft was directed from the highest levels.
Then they hit a wall.
* * *
Jones and Elroy had zeroed in on one particular set of Koch’s internal documents they felt would show how the oil theft was directed from Koch’s senior leadership. They had subpoenaed those documents, and were waiting for Koch Industries to supply them to the grand jury. Then Nancy Jones got a letter from Koch’s lawyer. The company could not provide the documents Jones had requested. Those documents had been accidentally destroyed, the letter said.
This was puzzling to Jim Elroy. He knew that Koch Industries kept backup copies of its corporate documents in an underground storage area; the kind of place where company papers were treated carefully. Elroy said the documents in question were kept under lock and key in the storage area. Elroy later discovered that the documents had been checked out of the storage unit, in the same way books are checked out of the library. The man who took custody of the documents was named David Nicastro.
Nicastro was no ordinary document courier. He was head of Koch Industries’ security operations and had been deeply involved in the company’s response to allegations of oil theft. He had also been dogged by accusations of document destruction. Back in 1988, Nicastro traveled to Koch’s far-flung oil gauging offices and collected documents that might have described the Koch method of oil measurement. Nicastro later told investigators that he’d simply collected the documents and copied them. But a Koch employee named Stephen Marshall testified in an unrelated court case that Nicastro ordered employees to destroy documents. Nicastro strenuously denied the allegation in court, and the judge ruled there was not enough evidence to prove the claim. The judge also pointed out that Marshall had asked to be paid for his testimony and that he found Marshall’s testimony “not credible.”
When the Oklahoma grand jury requested documents from Koch, Nicastro apparently made a special trip to the underground storage unit to retrieve them. He then reported that the papers had been accidentally destroyed. Koch Industries informed Nancy Jones that the documents in question had not been converted into digital files, as had many other corporate documents.