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March 11, 2011

FORMER EMPLOYEE OF LYONDELL HOUSTON REFINERY PLEADS GUILTY IN MULTIMILLION DOLLAR  KICKBACK SCHEME

(HOUSTON) - Jonathan Paul Barnes, a former employee at LyondellBasell Industries, has pleaded guilty to multiple fraud and money laundering charges arising from a multimillion dollar kickback scheme, United States Attorney José Angel Moreno announced today.
           
Barnes, 55, of Bellaire, Texas, pleaded guilty to four felony charges at a hearing this morning before United States District Judge Sim Lake. Those charges are conspiracy to commit wire fraud, conspiracy to engage in international money laundering in order to conceal the source and nature of the kickbacks being sent from Swiss bank accounts to the United States, making a false statement in a passport application and bulk cash smuggling. Each conspiracy charge carries a punishment of up to 20 years in prison. The passport charge carries a punishment up to 10 years imprisonment, while bulk cash smuggling carries a maximum punishment of five years incarceration. All of the offenses also carry a fine of up to $250,000, except for the money laundering offense which carries a fine of $500,000 or twice the value of the laundered funds, whichever is greater. 

As part of his agreement with the United States, Barnes has agreed to a forfeiture order and restitution judgment in the amount of $82 million. Barnes also agreed to an order forfeiting numerous assets he obtained with proceeds of the kickback scheme, including more than $8 million previously seized from Barnes’s bank accounts, more than a dozen luxury vehicles - including a 1957 Cadillac once owned by Frank Sinatra - a boat, 14 pieces of high-end jewelry and real estate in Texas and New York. Additionally, Barnes has agreed to cooperate with the government.

According to the factual basis filed as part of the record  in Barnes’s plea agreement, Houston Refinery LP (Houston Refinery) is a subsidiary of LyondellBassel Industries and operates a large refinery in Houston. Houston Refinery imports most of its crude oil from Venezuela and 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. From January 2007 through January 2010, Barnes agreed to have Houston Refinery pay approximately $82 million above market prices for shipping in exchange for millions of dollars in kickbacks from the individuals receiving the inflated payments.  Two of Barnes’ codefendants allegedly controlled two of the bank accounts receiving the inflated payments and paid Barnes approximately $20 million in kickbacks. These co-defendants allegedly funneled the kickbacks to Barnes’s 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. 

The passport fraud and cash smuggling charges are based on events occurring after Aug. 10, 2010, when federal agents served Barnes with seizure warrants for automobiles, jewelry and other items purchased with the fraud proceeds. On that day, Barnes agreed to turn over his passport to law enforcement. A couple weeks later, however, he filed an application for a new passport in which he falsely stated that he had lost the passport. Barnes then used the passport to engage in foreign travel. On Nov. 12, 2010, agents arrested Barnes at Bush Intercontinental Airport for passport fraud when his flight returned from Europe. Barnes failed to declare on the customs form that he had U.S. and foreign currency in his luggage valued at more than $50,000.

Judge Lake has set Barnes’s sentencing for June 12, 2011. Barnes has been in federal custody since Nov. 12, 2010, when he was arrested on the passport fraud charge. The trial of Bernard Langley and Clyde Meltzer, who are charged in this case and presumed innocent unless and until convicted through due process of law, is currently scheduled for May 16, 2011. 

The case was investigated by the United States Postal Inspection Service with assistance from IRS-CIS, Department of State - Diplomatic Security Service and Immigration and Customs Enforcement - Homeland Security Investigations. LyondellBasell Industries also provided assistance to 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 United States Attorney Kristine Rollinson is litigating the forfeiture case.

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