Former Employee Heads to Federal Prison for Defrauding Exxon Mobil of More than $5 Million
|Jan. 24, 2014|
HOUSTON – Garry W. Arnold, of Dayton, has been ordered to prison for more than five years following his conviction of defrauding Exxon Mobil, his former employer, and causing a loss of more than $5 million, announced United States Attorney Kenneth Magidson. Arnold pleaded guilty Friday, Sept. 20, 2013.
Today, U.S. District Judge David Hittner, who accepted the guilty plea, handed Arnold a 63-month sentence to be immediately followed by a three-year-term of supervised release. In handing down the sentence, Judge Hittner noted, "this has gone on long enough." He was further ordered to pay $5,548,015.80 in restitution.
Arnold, 62, was employed by the Exxon Mobil Chemical Company from 2004 through 2010 at the company’s Baytown Olefins Plant. His job responsibilities included overseeing the maintenance and repair of numerous large furnaces located at the plant, including ordering replacement parts and coordinating the purchase, delivery and installation of these parts.
Arnold also controlled and was part owner of Metal Blinds Unlimited Inc. During the relevant time period, Metal Blinds had minimal legitimate business operations, had no employees other than Arnold himself and it operated out of his residence.
Beginning in or around January 2004 and continuing through April 2010, Arnold carried out a fraudulent invoicing scheme which caused Exxon to pay more than $5.5 million for furnace parts and fabrication services that were never provided, were provided with materials already owned by Exxon or for which it paid an excessive amount. Arnold and another person shared the proceeds of the scheme by having Exxon send the payment checks to One Source Industrial, a company the other person owned. The other person then caused that company to make payments to Metal Blinds Unlimited, a sham corporation owned by Arnold. The other individual also made payments to Arnold for legitimate work done by One Source Industrial for Exxon and other clients, again by making regular payments by check to Metal Blinds.
In total, the scheme resulted in Exxon creating approximately 78 purchase orders and paying more than $5.5 million to One Source Industrial for work purportedly done by Metal Blinds. Arnold received more than $3.2 million in payments from One Source Industrial in association with these invoices. One Source Industrial also paid approximately $310,253.20 to Arnold as part of the concealed profit-sharing agreement.
Previously released on bond, Arnold was taken into custody following the hearing today where he will remain pending transfer to a U.S. Bureau of Prisons facility to be determined in the near future.
The case was investigated by the U.S. Postal Inspection Service and prosecuted by Assistant U.S. Attorney John Pearson.