Government Royalty Fraud

1. How is reporting Government Royalty Fraud covered by the False Claim Act?

Government Royalty Fraud is covered under the “reverse” false claim liability provision of the False Claims Act, 31 U.S.C. § 3729(a)(1)(G).

2. Generally, what kind of conduct is at stake in this context?

Typically a company under reports the quantity or value of natural resources it has extracted from federal or American Indian owned land, or federal offshore lands on the Outer Continental Shelf, in order to pay lower royalty amounts to the Government than are actually due under the company’s lease with the Government or American Indian Tribe.

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3. How does this qualify as a False Claim Act violation?

The report submitted to the Government is a false claim or statement made in support of a false claim. Section 3729(a)(1)(G) of the False Claims Act creates liability where a person knowingly makes, uses, or causes to be made or used, a false record or statement material to an obligation to pay or transmit money or property to the Government, or knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the Government.

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