Local Business Owner Indicted For Defrauding Exxon Mobil Of More Than $5 Million
HOUSTON – R. Scott Jordan, 52, of Houston, has surrendered to authorities following the return of an indictment alleging he defrauded Exxon Mobil and caused a loss of more than $5 million, announced United States Attorney Kenneth Magidson.
The indictment was returned under seal March 23, 2015, and unsealed today as he made his initial appearance before U.S. Magistrate Judge Mary Milloy.
As outlined in the indictment, Jordan owned and operated a company called One Source Industrial, which operated in the Houston area providing welding services. Exxon’s Baytown Olefins Plant (BOP) was One Source Industrial’s primary client. The indictment alleges that from 2004 through 2010, Jordan conspired with Garry W. Arnold, 63, of Dayton, who was employed by Exxon Mobil, to deprive Exxon Mobil of both its money and property and its right to Arnold’s honest services. The indictment also alleges four substantive counts of mail fraud.
According to the indictment, Arnold’s 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 allegedly controlled and was part owner of Metal Blinds Unlimited Inc. The indictment alleges that during the relevant time period, Metal Blinds had minimal legitimate business operations, had no employees other than Jordan and operated out of his residence.
Beginning in approximately January 2004 and continuing through October 2010, Jordan and Arnold allegedly carried out a fraudulent invoicing scheme which caused Exxon to pay at least approximately $5.5 million for furnace parts and fabrication services that were never provided, were provided with materials already owned by Exxon or for which they paid an excessive amount. The indictment alleges Jordan and Arnold shared the proceeds of the scheme by having Exxon send the payment checks to One Source Industrial, after which Jordan caused that company to make payments to a sham corporation owned by Arnold. According to the indictment, Jordan 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, Jordan and Arnold allegedly caused Exxon to create approximately 78 purchase orders and pay at least $5.5 million to One Source Industrial for work purportedly done by Metal Blinds. The indictment alleges Arnold received at least $3.2 million in association with these invoices through his sham corporation. Jordan also allegedly paid more than $300,000 to Arnold as part of the concealed profit-sharing agreement.
A conviction for conspiracy to commit mail fraud or substantive mail fraud carries as possible punishment a maximum penalty of 20 years in federal prison and a $250,000 maximum fine or twice the pecuniary gain or loss.
Arnold has already pleaded to his role in the scheme was sentenced to 63 months in federal prison to be followed by three years of supervised release.
The case is being investigated by the U.S. Postal Inspection Service and prosecuted by Assistant U.S. Attorney John Pearson.
An indictment is a formal accusation of criminal conduct, not evidence.
A defendant is presumed innocent unless convicted through due process of law.