There are two sides competing for money in the Marcellus Shale gas rush: landowners and energy companies. Winner makes money from both. He is an active partner in a law firm that profits from landowners and energy companies involved in natural gas deals.
“You either represent landowners, or you represent the companies because even though it’s not a direct conflict of interest, it’s a kind of philosophical conflict,” says Christopher Denton, an Elmira, N.Y., attorney and Winner’s former law partner.
Winner serves counties overlaying a tremendous store of natural gas, but his involvement in New York gas deals is widely unknown because the state does not require in depth financial disclosures. Winner admits his firm did “a couple real estate transactions” for Fortuna Energy Inc., a company that has aggressively pursued gas leases in his district, but he does not believe that that represents a conflict of interest with his legislative responsibilities. Some of his constituents disagree.
“He is a politician and a lawyer and uses his business ripping everybody off when he is supposed to be representing us,” says Angela Burton, a resident of Winner’s district.
One of Winner’s earliest legislative actions after taking office in the state Senate in 2005 was amending gas drilling laws. He takes campaign contributions from energy interests, and his firm represents competing sides – landowners and energy companies.
“He never has released his client list, and he bristles mightily at suggestions to do that,” says Mayor John Tonello of Elmira, Winner’s political opponent for the 53rd District State Senate seat in 2008.
He says Winner’s campaign contributions are the “best” example that he has close ties to major energy companies. Records show between 1999 and 2009, Winner received approximately $28,000 in donations from the energy sector – including donors like Exxon Mobil Corp., Chesapeake Energy Corp., and the Independent Oil and Gas Association of New York. His largest contributor from the industry and former client, Fortuna Energy Inc., donated $8,000.
Winner’s law firm – Keyser, Maloney and Winner LLP – represented Fortuna Energy Inc., now called Talisman Energy USA Inc., the same year he revised state drilling laws.
“I’ve had people from that area complain to me that Senator Winner is in a law firm that represents some of the companies that are involved in oil and gas exploration,” says New York Assemblyman William Parment (D-NY), who, like Winner, helped revise the state drilling laws. “I think for political purposes it would be better for the situation not to exist.”
Angela Burton and Thomas White, co-owners of about 48 acres in Corning, N.Y., received a letter from Winner’s firm in July 2005 regarding Fortuna Energy, Inc. The letter concerned the division of royalties between Burton, White and Harold Nixon – the previous, now-deceased owner of the property. Burton and White say Winner’s firm stopped their royalty payments for about three months citing conflicts over who owned the mineral rights. Their payments resumed after former Attorney General Eliot Spitzer intervened.
“When they were pulling in with their Cadillacs and their gold rings and gold teeth and said they were going to make us rich, all that showed me was them getting rich and us getting screwed,” says Burton.
According to Burton and White, Jack Dahl, director of the Bureau of Oil and Gas Regulation at New York Department of Environmental Conservation (DEC), required Fortuna Energy Inc. to get all parties to agree on a gas lease before pursuing one since they shared mineral rights. But Burton and White say in May 2005, the company bypassed them and got Nixon, 76 at the time and dying from prostate cancer, to sign a separate lease. After Fortuna got that gas lease, Burton and White say the company convinced them to sign a “royalty division order,” which sparked the battle over who owned the mineral rights on their property.
According to Burton and White, George Beckman, a landman for Fortuna Energy Inc., told them that the DEC required them to sign the “division order” to receive their share of the royalties. They signed the document without a lawyer and later discovered “little by little” that one “little” word in the document altered their land contract with Nixon. To this day, they have not received the deed to their land. Burton confronted Winner about his involvement with Fortuna Energy Inc., but he denied her allegations, she says.
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| VIDEO: Angela Burton comments on State Senator George Winner |
The same summer Winner was amending drilling laws in Albany, Burton and White received the letter from his law firm. Parment says the revisions to the laws were designed to “mostly benefit” property owners and the “real principle” was to protect property owners’ mineral rights.
But some constituents are dissatisfied with part of the industry-drafted revisions that Winner championed in the Senate. That section of the legislation targets landowners who are forced to participate in gas production by a New York law known as compulsory integration. The change in the law increases the amount well operators can recoup before paying royalties to landowners who fail to provide their share of the well construction costs upfront.
Prior to the revision, these landowners waited until the well operator recouped twice the cost of the well from gas production before receiving royalties. Now, operators recoup three times the cost of the well before paying the landowners.
“I think that somebody drilled their pockets on that one,” says Ashur Terwilliger, a chairman of the Chemung County Gas Coalition and a resident of Winner’s district. “Would you stand up in the Assembly or the Senate and say, ‘Yeah, that’s a good idea’?”
Winner’s former law partner, Denton, represents Burton and White and neighborhood coalitions pursuing deals with energy companies. The coalitions he represents consist of about 5,000 families with combined acreage of around 300,000 spread across five different counties.
Winner and Denton ended their law partnership in December 1994. Denton says he tends to represent “lots of everyday people,” and Winner tends to represent “lots of corporate money people.” According to Denton, Winner likely left their practice because his corporate clients disliked that Denton represented many “non-money” people. Denton says gas companies have asked him to represent them because he does so much oil and gas law for landowners, but he has turned down their requests.
Winner’s new firm represents both corporations and landowners involved in natural gas deals. During confrontations with Burton and White, Winner’s current law partner John Maloney represented Fortuna Energy Inc. Richard Keyser, Winner’s other partner, represents George Poley, a self-employed electrical contractor from Horseheads, N.Y. Poley, also a resident of Winner’s district, has a Talisman-operated – formerly Fortuna-operated – well on his property.
Before Poley purchased the property, the previous owner, Mildred Allington, who died in February at the age of 98, signed a gas lease with East Resources Inc. The company never pursued gas beneath her property. Poley says when he purchased the property, he never had the “foggiest idea” there would later be a gas well, especially one so close to his house.
“I’ve always been a lousy gambler,” he says. “Thousands of acres up here, what’re the chances of them showing up on a piece of property you buy?”
About three months after Poley bought the property, East Resources Inc. drilled a stake in the barren field about 500 feet away from his house – claiming the spot for a well. According to Poley, after the well was completed in May 2008, the company turned operations over to Fortuna Energy Inc. He says East Resources Inc. and Fortuna Energy Inc. made some sort of agreement before the well was drilled that does not pertain to him. Poley says he is unaware of Winner’s firm representing Fortuna Energy Inc., and Keyser, his lawyer and former classmate, is “as honest as anybody” he has ever met.
“We’ve been very careful to ensure that we do not represent landowners in oil and gas transactions where we have represented or where anyone in our law firm has represented an oil and gas company,” says Keyser, Winner’s law partner.
When asked about the law firm’s clients Poley and Fortuna Energy Inc., a landowner and energy company both involved in gas production, Keyser says the company was not a client when they represented Poley. Keyser says they do not have to disclose to clients their prior involvement with the competing side if they do not represent the gas company and the landowner at the same time. But after discussing this matter with Keyser, Poley – retracting his former claim – told DCBureau unsolicited that his lawyer had told him that Fortuna Energy Inc. was a former client.
Winner’s press secretary, Jim Meddleton, turned down repeated requests for an on camera interview with DCBureau claiming the senator had a very busy schedule. But two weeks ago, after a failed attempt to reach Winner in person at his district office in Elmira, two DCBureau reporters traveled down a winding, unsigned road shaded by lush trees to his large, brick home. Winner’s wife answered the door. She said her husband was at the local news station.
Nearly an hour later, Winner left WETM TV 18 and headed toward his SUV. When asked about his involvement with Fortuna Energy Inc., Winner admitted his firm did “a couple real estate transactions” for the company in 2007. But Winner failed to mention their work in 2005 when Burton and White received the letter from his firm. He claims he has not represented Fortuna Energy Inc. since 2007.
Tompkins County lawmaker Pamela Mackesey (D-Ithaca), who is pursuing Winner’s 53rd District State Senate seat in the November election, says she does not know if Winner has represented energy companies. But if he has, it is a “huge conflict of interest,” she says.
Lawmakers who are attorneys are not required to report their individual clients to New York State Legislative Ethics Commission, but they must describe the nature of their business dealings on annual financial disclosure statements. Records fail to mention Winner’s involvement with the gas industry, except to reveal he owns stock in XTO Energy Inc. and National Oilwell Varco Inc.
New York legislators drafted a bill earlier this year that would require lawmakers to reveal additional information on extraneous income and business transactions, but Gov. David Paterson vetoed the bill earlier this year.
UPDATE: After DCBureau disclosed today Republican State Senator George Winner’s involvement with Fortuna Energy Inc., WETM-18 News announced that he will not seek re-election this fall. Winner’s press secretary did not return a call for comment.
