Two oil traders were sentenced to four and five years in prison for illegally paying more than $20 million to a LyondellBasell Industries NV (LYB) executive in return for oil-tanker charters to the company’s Houston refinery.
U.S. District Judge Sim Lake in Houston imposed a four-year sentence today on Bernard Langley, 54, of the U.K. Clyde Meltzer, 66, of Houston and Livingston, New Jersey, was given a five-year sentence.
They pleaded guilty last year to paying kickbacks into Swiss bank accounts controlled by LyondellBasell’s Jonathan Barnes, a shipping manager, from 2007 to 2009. Langley and Meltzer were also sentenced to three years of supervised release.
Barnes agreed to pay above-market shipping rates to tanker companies controlled by the men to transport Venezuelan crude oil to Houston, in exchange for one-third of the profit the traders received, prosecutors said. Barnes, 56, pleaded guilty and was sentenced to seven years in January and ordered to pay restitution of $82 million to the Rotterdam-based company.
Langley, who, along with Meltzer, was shackled in the courtroom, apologized to the judge and the company, saying he had never been in trouble until he got involved in the scheme.
“During that time, right and wrong in my personal life became very blurred,” Langley said.
“I just want to apologize to the court and to my family and friends,” Meltzer said in court. “I should never have done the things I did, and I take full responsibility for them.”
Langley, Meltzer and Barnes agreed to forfeit more than $57.3 million in assets, including cash from bank accounts in Switzerland and Monaco, luxury and classic cars, jewelry, real estate in Texas and Florida, and an investment in a Houston sports bar, according to court papers. Among the items already seized by the government were a 1957 Cadillac once owned by Frank Sinatra and more than $1.4 million in jewelry surrendered by Meltzer’s wife.
Langley and Meltzer each faced as much as 20 years in prison. The two men have been in federal custody since December 2010, when they were arrested in Houston after a recorded meeting with Barnes.
The judge said he agreed to lesser sentences recommended by the government for both men and refused an additional clemency request by Meltzer’s lawyer in consideration of his age.
“That would overlook the serious nature of this crime,” Lake said.
He read from LyondellBasell’s letter that pointed out the thefts came in large part during a period when the company’s U.S. subsidiaries were in bankruptcy and employees were losing jobs and benefits.
The defendants’ “lavish lifestyles,” funded with kickback proceeds, added “insult to that substantial injury,” the judge said.
“The kickback scheme was uncovered during an internal audit, which raised questions about certain marine chartering costs which appeared to deviate from the industry norm,” David Harpole, LyondellBasell’s Houston spokesman, said in an e-mail.
When an internal investigation pointed to kickbacks, the company “took immediate steps to address the matter,” including firing Barnes and referring the matter to the Justice Department, Harpole said.
A fourth defendant, Alireza Etessami, 37, a Venezuelan, is under modified home detention in California on $2 million bail as he awaits trial in June.
Three other Venezuelan oil traders charged in the scheme are fugitives in South America, according to prosecutors.
The case is U.S. v. Barnes, 4:10-cr-0787, U.S. District Court, Southern District of Texas (Houston).
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