Crystal Stroud claims Rees-Jones' firm contaminated her drinking water. John LoomisRees-Jones was raised in University Park, an affluent Dallas suburb where BMWs outnumber pickup trucks. His father was an oil and gas attorney and a member of the prestigious Idlewild Club, his wife the daughter of a regional manager for a pharmaceutical firm. Still, it was his own grit, luck, and cojones that lifted Rees-Jones into the ranks of Texas' superwealthy. After a brief stint as a bankruptcy lawyer, he tried his hand as a wildcatter, or speculative driller. In the mid-'90s he raised close to $200,000 from four investors to tap a Dallas-area gas field, a play that paid off thanks to a technique called horizontal fracking.
Anyone paying attention at the time knew this innovation was key to unlocking West Texas' energy-rich Barnett Shale. "I am not taking anything away from Chief, but I don't think he was a visionary," says Sanford Dvorin, an engineer who has used the method. "To his credit, he was early to the table. Anybody could do it if they had the financing."
By 2003, Chief, named after Rees-Jones' Labrador retriever, was worth $138 million, and Rees-Jones convinced two of his original investors, D. Bobbitt Noel Jr. and Robert B. Allen, to cash out, arguing that the company had exhausted its best finds. In fact, given the latest fracking advances, Chief was sitting on a proverbial gold mine. Months earlier, one of its competitors, XTO Energy, had paid a small fortune for drilling rights in an area where Chief had substantial holdings. "If these numbers are right, you guys are knocking on the door of a billion," a business associate had emailed Rees-Jones. "YEE HA!!!!!!!"
That was an understatement. Within two years, Chief had sold off its Barnett Shale assets for $2.6 billion. Rees-Jones turned around and partnered with Ross Perot Jr., son of the Dallas billionaire and former presidential candidate, to develop a new shale play near Fort Worth, grossing another $1.3 billion. He then jumped headlong into Pennsylvania's booming Marcellus Shale, making Chief one of the state's largest drillers. "He made a gazillion dollars," Dvorin says. "And more power to him!"
The investors who'd sold out weren't happy about being played for suckers. Both ultimately sued Rees-Jones, claiming he'd tricked them into selling their shares for pennies on the dollar. In March, a jury ordered Rees-Jones to fork over $116 million to compensate Noel, who had originally sold for $6.5 million. The Allen case is still pending. "When it comes to business he plays for blood, but once it's five o'clock and he's punched out, that's all over," says an employee of a major Dallas-based oil company who is familiar with Rees-Jones' local reputation. "He views it as a game. These other people, it's their job to do their homework, and if they get screwed, it's their fault."
The grandson of a Presbyterian minister, Rees-Jones wasted little time before pouring some of his hefty profits into philanthropy. In 2006, he and his wife, Janice, set aside $290 million to establish the Rees-Jones Foundation, which they presented as an extension of their Christian values; according to the foundation's literature, its mission "is one of compassion designed to serve God by serving others, sharing his word and resources with those in need." Since 2008, it has given $111 million to more than 200 groups, from Habitat for Humanity to the Dallas Christian Women's Job Corps, doing much to soften Rees-Jones' tough-guy business image.
Rees-Jones' 60th-birthday celebration this past August featured the Eagles, the Blues Brothers, and Heather Locklear.
To get a feel for his good works, I headed to a South Dallas neighborhood of tractor trailers and junkyards, hooking a right just past the concertina wire of a state juvenile facility. A man waved me into a complex of squat brick buildings where I met Jerry Silhan, a former record label guy who runs Youth Village, a rehabilitation program for young offenders. Funding from the Rees-Jones Foundation enabled Youth Village to reestablish an innovative training program that teaches troubled teens to train unwanted dogs. "We've got throwaway dogs and throwaway kids, to kind of oversimplify it," Silhan explained. "And they are working on a lot of the same issues. It's kind of magical."
Inside a gym, two teenagers in white shirts and khakis were trying for the fifth time to get a puggle named Mosby to stay. Mosby held still a little longer than before and earned a handful of dog treats. "I know the program will help me in the future," said an earnest young dog trainer in Chucks and thick glasses. "I want to get a job at a pet shop—as soon as I can stop being in trouble." When it came time for me to leave, Silhan addressed me nervously. "I don't know what your spin will be," he said. "But I know what he and his family and foundation have meant for the guys out here. It's huge."
For Rees-Jones and his wife, the foundation helped provide entry into an orbit of fabulously wealthy and politically connected Texans, where alliances are forged among givers to the same cherished causes. (See chart, "How to Win Friends and Influence Elections.") While riding in a golf cart with ExxonMobil CEO Rex Tillerson, who serves as president of the Boy Scouts of America, Rees-Jones agreed to donate $25 million to the Scouts' Dallas chapter. He also gave $25 million to the Perot Museum of Nature and Science and another $25 million to Parkland Memorial Hospital, a favorite of old-line GOP money men like Harold Simmons—a major backer of Gov. Rick Perry, Rove's American Crossroads, and the John Kerry-vanquishing Swift Boat Veterans for Truth. Janice Rees-Jones, who has a Dallas animal shelter named in her honor, was invited to join the board of the John Goodwin Tower Center for Political Studies at Southern Methodist University, where she serves alongside a who's who of Texas politicos and business leaders. The Rees-Joneses aren't politically active "by nature," according to Jim Francis. They never speak publicly on political issues. Then again, with their connections, they needn't.
The couple has even enlisted a few celebrities to cement their newfound cachet. They flew Jon Bon Jovi to their central Texas ranch for one recent bash, a mere warm-up to Trevor's 60th-birthday celebration this past August, featuring the Eagles, the Blues Brothers, and Dynasty star Heather Locklear—Rees-Jones had a major crush on her, Francis told D CEO magazine. Dozens of private jets touched down on the ranch runway. Among the 900 guests were Perot Jr., T. Boone Pickens, and the billionaire GOP political player Robert Rowling.
A few hours after meeting with Crystal Stroud in Towanda, I walk over to the granite-walled Bradford County Courthouse for a chat with County Commissioner Doug McLinko. An affable man with a quick grin, he keeps a large framed photo of Ronald Reagan on his desk. Who needs big government, McLinko figures, with all these generous gas companies around? Chesapeake, Chief, East, Range, Fortuna: They've trucked off debris from a recent flood, repaired streets, and bankrolled dozens of local charities and community events.
More than many extraction firms, Chief projects a friendly image. "Responsibly drilling and producing clean natural gas," its website proclaims. The company describes good corporate behavior as a core value and spreads cash goodwill all around—in 2009, for example, it gave $8,000 to the local Salvation Army unit McLinko chairs. But Chief's charity doesn't make him softer on the industry, McLinko insists. He has twice toured the Barnett Shale gas fields with industry reps and came away thinking that Texas' "environmental standards are a hell of a lot more lax than ours are." He's sure he'd know about any problems in Bradford County. When I ask about Stroud's contamination claim, he leans forward in his chair. "That proved to be false," he says. "The water has been bad there forever."
Indeed, the DEP concluded that Stroud's water was in a "restricted flow zone" where methane and barium naturally accumulate from the surrounding soil, adding that its technicians found the same contaminants in several local wells. But Ron Bishop, a geology expert and lecturer at the State University of New York who has scrutinized the case, says the DEP appears to have simply replaced one assumption (that the drilling was a likely culprit) with another (that the well was contaminated naturally)—without presenting much evidence. "Which way does the aquifer run from the [gas] well? What is its depth? There are any number of things that would be easy to show that nobody has even alluded to," he says. "I find it very troubling that the case was closed."