The Tennessee Valley Authority Inspector General and the Dept. of Justice have announced a settlement in excess of $25 million for an alleged violation of the civil False Claims Act.

Three Kinder Morgan limited partnerships are alleged to have defrauded the TVA and other private companies for whom they supplied coal handling and transport services. The Kinder Morgan companies are alleged to have taken coal from their customers’ stockpiles and sold it under the name of “Red Lightning” from 1997 through 2001.

The coal was weighed by certified scales before it was shipped to Kinder Morgan terminals but was weighed by barge draft when it was shipped from the terminals to the customers. The barge draft method usually weighed two to three percent heavier than the certified scales, resulting in less coal being shipped from the terminal than received.

TVA’s portion of the $25 million recovery will be nearly $8 million, making it the largest total recovery in the history of the TVA OIG. The Treasury will receive $12 million in penalties, with the rest of the settlement going to private customers.

IG Richard Moore said, “This case was initiated based on information provided from a concerned individual,” but the article in the November 28, 2007 Chattanoogan did not mention a relator’s share.

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