Scammed Newtown Oil Customers To Get Partial Refunds

By Andrew Gorosko

The owners of the now-defunct Newtown Oil Company and the state have reached a lawsuit settlement under which the Newtown Oil owners have agreed to pay $260,000 to oil company customers and the state to settle allegations that the company entered into fraudulent prepaid home heating fuel contracts during the 2002-03 heating season.

State Attorney General Richard Blumenthal announced this week that the settlement, which still requires approval by the Connecticut Superior Court, would resolve the lawsuit that Mr Blumenthal filed against Newtown Oil and its owners Heather Bliss and William A. Trudeau, Jr, in May 2003, on behalf of the state Department of Consumer Protection (DCP).

“The company entered into prepaid contracts with about 1,400 customers knowing that it would be unable to deliver the oil because of severe financial difficulties. Newtown Oil halted operations in December 2002, leaving its prepayment customers without heating oil in the midst of the heating season. The company has since surrendered its home heating oil dealer’s license,” Mr Blumenthal said in a statement.

The state will make $250,000 of the $260,000 settlement available for restitution to approximately 1,400 customers. The remaining $10,000 would be used to pay legal costs.

Because Newtown Oil is out of business, Bliss and Trudeau will provide most of the settlement fees to the state.

Newtown Oil customers who lost money on the prepaid oil contracts will be able to apply for restitution through a process administered by the DCP and the attorney general’s office. Many of those customers paid in advance for oil. Some used credit cards for the purchases.

The $250,000 of restitution represents about 60 percent of what the Newtown Oil customers are owed for undelivered oil during the 2002-03 heating season. The firm was formerly located at 47-49 South Main Street.

“The state was unable to obtain 100 percent refunds because the company went out of business [and] into bankruptcy. The amount received by qualifying consumers will depend on how much undelivered oil is owed them,” according to Mr Blumenthal.

The state will mail letters to affected Newtown Oil customers later this summer with instructions on how to apply for restitution. People with questions about the refund process should contact the attorney general’s office at 860-808-5400.

Newtown Oil Customer

Robert Reynolds of Danbury was one of the many Newtown Oil customers who lost out when Newtown Oil failed to honor its prepaid oil contracts.

Mr Reynolds said this week that he had entered a contract for nearly $1,000 with Newtown Oil to provide oil for his home for the 2002-03 heating season.

Mr Reynolds said he had previously purchased heating fuel elsewhere, but when the prices got very high, he was attracted to Newtown Oil because of its very low advertised price for fuel.

He took out a contract and repeatedly called for oil deliveries, but Newtown oil did not deliver until it eventually brought a very small amount of oil to his home, about five gallons, he said. The firm repeatedly kept putting him off about delivering the amount of oil that he required, he said.

He eventually switched to another oil firm so that he would not run out of fuel, he said.

After learning through newspaper stories of Newtown Oil’s failure to honor its prepaid fuel contracts, Mr Reynolds contacted his credit card company in seeking a refund of the $1,000, but the credit card company told him that he had waited too long to file a claim, so they would not pay a refund to him, he said.

After he explained to the credit card company that the DCP was involved in the case, the credit card company refunded his money, Mr Reynolds said.

Of the state’s efforts to obtain refunds for other former Newtown Oil customers, Mr Reynolds said, “I’m very happy with Blumenthal’s department. He’s done an excellent job.”

Although retail prices for home heating fuel ranged from $1.10 to $1.29 per gallon, Newtown Oil sold prepaid fuel contracts to customers at a price of 89.9 cents per gallon as late as last December 10, 2002, which was four days before the firm closed for business.

“Despite this enforced repayment, the Newtown Oil debacle remains a strong reminder about the need to detect and deter such scams before they happen — and prevention is still the best cure. Refunds are often less and later than we seek. But Newtown Oil helped foster reforms in heating oil prepaid contract protection for consumers that will help stop future failures,” Mr Blumenthal said.

DCP Commissioner Jerry Farrell said, “Fuel dealers can no longer sell prepaid contracts without the product and financial resources to back them up. We continue to actively monitor fuel contracts and companies, and to educate consumers about their rights and responsibilities when purchasing fuel.”

In a separate case unrelated to the Newtown Oil scandal, in July 2003, Trudeau was sentenced in US District Court in Hartford to a 22-month federal prison term, plus restitution and fines, following his guilty pleas to federal tax and financial fraud offenses.

Trudeau was ordered to pay $458,000 in restitution to the victims of his financial frauds, plus a $25,000 criminal fine.