By Bob Weaver

A major lawsuit claiming fraud has been filed against one of the state's largest gas producers.

A class action suit against Columbia Natural Resources claims the company violated covenants in lease agreements, according to Spencer attrorney George Scott, whose firm is representing about 8,500 royalty holders.

The suit says Columbia used a self-serving advance sale of natural gas that cost the roytalty owners up to 50% of what they should have been paid.

It claims the company sold gas collected from the wells at less than market value to their own subsideraries, cheating the royalty owners.

"This class-action lawsuit is seeking total regress from Columbia Gas Resources for several violations of lease holder agreements. These violations have been going on for years," said attorney Scott.

The suit suggests multi-millions of dollars have been skimmed from royalty holders by "common fraud," using several mechanisms to increase corporate profits.

In what seems to be an elaborate plan, Columbia is accused of using gathering charges or processing fees to take money from the royalty holders, including charging royalty holders with company operating expenses.

A few months ago the West Virginia Supreme Court denied Columbia's effort to stop the suit.

Some of the alleged problems surfaced early-on around CNR's deep well drilling in Roane's Geary District.

Columbia denies any wrongdoing.

The suit is expected to go to court by July, 2005.

Read LAWSUIT CLAIMS COLUMBIA GAS COMMITTED COMMON FRAUD - Class Action Suit Says Company Cheated Leaseholders (7/28/2004) on Hur Herald.