Jan. 21, 2011
OIL TRADERS AND FORMER EMPLOYEE CHARGED IN MULTIMILLION DOLLAR KICKBACK SCHEME AT LYONDELL HOUSTON REFINERY
(HOUSTON) – A former employee at LyondellBasell Industries and two international oil traders have been charged with engaging in a multimillion dollar kickback scheme in a superseding indictment partially unsealed today, United States Attorney José Angel Moreno and Inspector In Charge Gary Barksdale of the United States Postal Inspection Service announced today.
Jonathan Paul Barnes, 55, of Bellaire, Texas; Clyde Meltzer, 64, of Livingston, N.J.; and Bernard Langley, 53, of the United Kingdom, are charged in a 12-count indictment returned under seal on Dec. 7, 2010, with conspiracy to commit wire and mail fraud, wire fraud and conspiracy to and committing international money laundering arising from an alleged kickback scheme to defraud a subsidiary of LyondellBassel Industries of more than $80 million in inflated shipping costs for oil. The indictment, while unsealed as to these three defendants, remains sealed as to others charged but as yet not in custody.
“Houston continues to be a global center in the energy industry,” said Moreno. “Fraud that threatens the integrity of the industry must be rooted out and prosecuted to the full extent of the law. We cannot allow the greed of unethical operators to besmirch an entire industry.”
According to the indictment, Houston Refinery LP is a subsidiary of LyondellBassel Industries and operates a large refinery in Houston. Houston Refinery imports most of its crude oil from Venezuela. The shipping of that oil is a significant expense. In late 2006, Jonathan Barnes became the Marine Chartering Manger at Houston Refinery responsible for entering into agreements and prices with shipping companies. The indictment alleges that from November 2006 through January 2010, Barnes agreed to have Houston Refinery pay more than $80 million above market prices for shipping in exchange for Barnes’s receiving millions of dollars in kickbacks from the entities receiving the inflated payments.
Two of those entities, Camac International Ltd. and Fossil Energy Resources Ltd., were offshore corporations controlled by Meltzer and Langley, who have worked together as international oil traders at numerous entities over the years. The indictment alleges that Meltzer and Langley created the Camac entity using a variation of the name of another Camac company with which they were associated and which would be familiar to Houston Refinery as a player in the oil industry. The indictment also alleges that Meltzer and Langley funneled the kickbacks to Barnes’ domestic bank accounts using a Swiss bank account in the name of another offshore entity in order to conceal that the kickbacks were coming from the entities doing business with Houston Refinery.
“Employees have the inside track and understand how a business works which allows them more opportunity to commit fraud,” said Barksdale. “When criminals use the mail to commit fraud Postal Inspectors will aggressively investigate to obtain justice.”
Barnes, Meltzer and Langley are charged with conspiracy to commit mail and wire fraud, two substantive counts of wire fraud, conspiracy to commit international money laundering and four substantive counts of international money laundering. In addition, Barnes is charged with passport fraud and bulk cash smuggling. The fraud and money laundering offenses carry a prison term of up to 20 years imprisonment on each count, the passport fraud carries a prison term of up to 10 years and the bulk cash smuggling charge carries a prison term of up to five years. All the offenses carry a fine of up to $250,000, except for the money laundering offenses which carry a fine of $500,000 or twice the value of the laundered funds, whichever is greater.
The superseding indictment also contains a notice of intent to forfeit 54 assets that allegedly constitute proceeds of the fraud. The assets listed include eleven Mercedes, a Bentley, a 1957 Cadillac once owned by Frank Sinatra, thirteen items of high-end jewelry, and numerous foreign bank accounts, including a number at UBS AG in Switzerland. Prior to return of the indictment, the United States seized more than a dozen vehicles, a boat and jet skis, jewelry, and more than $8 million from bank accounts pursuant to warrants issued by federal judges. The superseding indictment also provides notice of forfeiture for real property in Bellaire and Houston, Texas, and in Naples, New York. Separate civil forfeiture actions have been filed relating to those properties. Since the return of the indictment, the United States has filed additional civil forfeiture actions relating to real property in Bellaire, Texas, and Delray Beach, Florida, alleging the properties were purchased with proceeds of the scheme alleged in this indictment.
Barnes has been in federal custody since Nov. 12, 2010 when he was arrested on the passport fraud charge. Postal Inspectors arrested Langley and Meltzer on Dec. 9, 2010. Following a hearing on Dec. 15, 2010, United States Magistrate Judge Mary Milloy issued an order to hold Langley and Meltzer in federal custody without bond pending trial upon finding each posed a flight risk. Trial is currently scheduled for May 16, 2011, before United States District Judge Sim Lake.
The charges are the result of an investigation conducted by the United States Postal Inspection Service with assistance from the Internal Revenue Service-Criminal Investigations, the Department of State Diplomatic Security Service and Immigration and Customs Enforcement Homeland Security Investigations. LyondellBassell Industries assisted law enforcement in the investigation. For their invaluable assistance during the course of the investigation, United States Attorney Moreno wishes to expressly thank and recognize the Department of Justice’s Office of International Affairs and the governments of France, Switzerland and the British Virgin Islands. Assistant United States Attorney Gregg Costa is prosecuting the criminal case while Assistant U. S. Attorney Kristine Rollinson is litigating the forfeiture matters.
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