Catch of the Week — Bottini Fuel Busted for Illegal “Family and Friends” Scheme

Bottini Fuel, a fuel and heating company based in New York, has agreed to a $3.3M settlement to resolve allegations that it defrauded customers by keeping rather than returning overpayments. For over a decade, the company used the ill-gotten gains to pay the fuel expenses of company employees, family members, and friends. The whistleblower who brought the fraud to light in a case filed under the New York State False Claims Act will receive an award of $491K for exposing the scheme. The company also pleaded to a criminal misdemeanor of falsifying business records.

When a customer overpays for heating oil, the provider generally is supposed to credit the overpayment to the account (and offset the amount to future bills) or  refund the customer the amount of the overpayment. Bottini, however, transferred the overpayments to dummy accounts of fictional customers to benefit company employees, family and friends. Bottini defrauded customers out of $1.8M in credits using this scheme, with $600K of that coming from government accounts. In addition to coughing up these stolen funds, the company must pay $1.5M in damages and penalties, resulting in the total settlement amount of $3.3M.

The New York State False Claims Act allows whistleblowers who know of violations of the law to file a “qui tam” lawsuit. The Act covers many types of fraud against the state. In this case, several of Bottini’s customers were government entities such as school districts, jails, and local government offices. The company also defrauded thousands of private consumers with the same scheme.

This settlement is particularly notable for two reasons. First, it demonstrates that a False Claims Act suit can trigger enforcement actions and recoveries outside of the specific fraud against the government. This whistleblower complaint led to a $1.2M recovery on behalf of private individuals and businesses, as well as a criminal plea. That $1.2M will now be distributed by the New York Comptroller’s Office directly to the defrauded consumers. Second, the whistleblower is receiving a robust 23% share of the entire recovery amount, including what was recovered on behalf of private consumers.  This reward not only is a win for this particular whistleblower, but also serves to encourage more whistleblowers to come forward about fraud that harms not only the government but also consumers.

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