PENDING CRIMINAL DIVISION CASES

United States v. Mark Radley, et al.
Court Docket Number: 4:08-cr-00411

On January 27, 2011, the U.S. Court of Appeals for the Fifth Circuit affirmed the dismissal of all charges against Mark David Radley, James Warren Summers, Cody Dean Claborn, and Carrie Kienenberger, former employees of a subsidiary of BP America Inc. (BP America), contained in the 26-count superseding indictment, filed in January 2009, stemming from a scheme to manipulate and corner the February 2004 TET propane market and to sell TET propane at an artificially inflated index price. The superseding indictment alleged wire fraud and violations of the Commodities Exchange Act (CEA). On September 17, 2009, Judge Gray H. Miller, United States District Judge for the Southern District of Texas, granted the defendants’ motions to dismiss all charges against the four defendants. The case had been transferred from the Northern District of Illinois to the Southern District of Texas, on convenience grounds, in July 2008.

The court had dismissed the price manipulation charges (Counts 2-19) based on its finding that the transactions alleged fit within the exception of Section 2(g) of the Commodity Futures Modernization Act of 2000 (CMFA) and, therefore, were not covered by the CEA. In dismissing the commodity cornering charges (Counts 18-19), the court found that, even if the defendants’ actions had been covered by the CEA, the superseding indictment failed to properly allege the elements of a corner. In dismissing the wire fraud counts (Counts 20-26), the court found that the superseding indictment failed to allege a scheme to defraud because it failed to allege any misrepresentations of material facts.

In affirming the dismissal, the Fifth Circuit found that CEA Section 2(g) covers all aspects of a transaction and that the defendants’ “risky campaign of buying propane futures in the hope that other traders would not detect their efforts was lawful.”  The appellate court also found that neither the defendants’ statements nor omissions constituted wire fraud because the charged antecedent scheme to defraud alleged the same transactions that are exempt under Section 2(g).

Previously, on June 28, 2006, Dennis N. Abbott, a former trader at BP, pleaded guilty to a one-count information charging him with conspiracy to manipulate and corner the propane market. Furthermore, on October 27, 2007, BP America entered into a deferred prosecution agreement in which it accepted responsibility for conspiring to manipulate the price and corner February 2004 TET propane, and paid approximately $303 million restitution as well as criminal and civil penalties.

Updated June 15, 2015