A New Mexico businesswoman is facing charges of defrauding the U.S. government and two Native American tribes of taxes and royalties related to oil and gas extraction from leased federal and tribal lands. Teresa McCown, the owner of M&M Production & Operation Inc. and Shoreline Oil & Gas Company, has been indicted on wire fraud charges and violations of the Federal Oil and Gas Royalty Management Act.
According to federal prosecutors, McCown is accused of underreporting oil and gas production from lands leased from the federal government, the Navajo Nation, and the Jicarilla Apache Nation over a period of several years starting in 2017. The indictment, filed in late January, revealed that her companies held more than 30 leases in northwestern New Mexico's San Juan Basin.
This case comes on the heels of another recent incident involving Hilcorp San Juan L.P., an oil and gas company that agreed to pay over $34 million to settle allegations of underpaid royalties on oil and gas extracted from federal lands. Authorities found that Hilcorp San Juan had made payments based on estimated volumes and prices without adjusting for actual values in subsequent months.
The development of energy and mineral resources contributes over $10 billion annually to the federal Office of Natural Resources Revenue, making it a significant source of non-tax revenue for the U.S. government. All producers, including M&M and Shoreline, are required to accurately report oil and gas extraction data to determine royalty payments.
Following a review by federal officials, it was discovered that over 400 incorrect reports had been filed between January 2017 and July 2021. Despite receiving notices of noncompliance and civil penalties exceeding $1.7 million, McCown allegedly failed to address the inaccuracies in her reports.
If convicted, McCown could face up to 20 years in prison and fines of up to $300,000. As a condition of her release, she is prohibited from working as a record-keeper or reporter in any industry subject to state or federal reporting requirements, including oil and gas companies.
