Oil Traders Sentenced In Multimillion Dollar Kickback Scheme
|April 27, 2012|
Assets Valued at $25 Million Recovered in Case to Date
HOUSTON – Oil traders Bernard Langley, 55, of the United Kingdom, and Clyde Meltzer, 65, of Livingston, N.J. and Houston, have been sentenced to prison for their role in a multimillion dollar kickback scheme, United States Attorney Kenneth Magidson announced today.
Calling their actions “flat out fraud, “ U.S. District Judge Sim Lake sentenced Meltzer and Langley to 60 and 48 months, respectively, at a hearing which concluded just short time ago.
According to the plea agreements and other public documents in this case, Houston Refinery LP is a subsidiary of LyondellBassell Industries and operates a large refinery in Houston. Houston Refinery imports most of its crude oil from Venezuela, the shipping of which 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. Langley and Meltzer were longtime associates from the international oil trading business who had a number of companies incorporated in the British Virgin Islands and elsewhere, including Fossil Energy. In exchange for Barnes agreeing to use their companies to transport the oil on tankers from Venezuela to Houston, Langley and Meltzer agreed to pay Barnes one-third of the profits they received. As a result, Barnes’ incentive was to authorize Lyondell, from which the conspirators concealed the kickback arrangement, to pay above market rates for the shipping. From 2007 through late 2009 when new management at Lyondell discovered the overcharges, Langley and Meltzer used Swiss bank accounts to pay Barnes more than $20 million in kickbacks.
In handing down the sentence, Judge Lake also cited a letter from the victim in the case, noting that much of the money taken by the defendants in the case occurred after LyondellBasell's U.S. subsidiaries filed for Chapter 11 bankruptcy protection. “So at a time when many employees lost years of deferred compensation, benefits and even their jobs, creditors and credit relationships of the company were harmed, and the remaining employees worked tirelessly to save the company …Meltzer, Langley, and Barnes used this money to live lavish lifestyles …adding insult to the substantial injury that they caused.” Judge Lake also noted that the defendants bought fancy automobiles and Meltzer purchased more than $1 million in jewelry as a result of their “pure and simple fraud.” Both defendants were also ordered to serve a three-year-term of supervised release upon release from prison and to pay restitution in the amount of $57 million.
Langley and Meltzer have been in custody since Dec. 9, 2010, when they were arrested at the Galleria in Houston after a recorded meeting with Barnes. Langley and Meltzer had also previously agreed to orders forfeiting numerous assets obtained with proceeds of the kickback scheme, including luxury and classic automobiles, jewelry, funds at bank accounts in Switzerland and Monaco, real estate in Texas and Florida and investments in a Houston sports bar. Combined with assets recovered from Barnes, assets valued at approximately $25 million have been forfeited to the United States in this case.
Another co-defendant, Alireza Etessami, a Venezuelan citizen, was arrested in Miami on Nov. 25, 2011, and is scheduled for trial on June 11, 2012. He is presumed innocent unless convicted through due process of law.
The case was investigated by the United States Postal Inspection Service with the assistance of LyondellBasell Industries. For their invaluable assistance during the course of the investigation, United States Attorney Magidson wishes to expressly thank and recognize the Department of Justice’s Office of International Affairs and the governments of the British Virgin Islands, France, Monaco, Panama and Switzerland. The case is being prosecuted by Assistant United States Attorneys Gregg Costa and Jason Varnado. Forfeiture matters are being handled by Assistant United States Attorney Kristine Rollinson.