HOUSTON (CN) – Two oil traders who paid $20 million in kickbacks to bring oil from Venezuela to Houston were sentenced to federal prison.
Bernard Langley, 55, of the United Kingdom, was sentenced to 4 years, and Clyde Meltzer, 65, of Livingston, N.J. and Houston, to 5 years, by U.S. District Judge Sim Lake who called their scheme “flat out fraud,” the U.S. Attorney’s Office said.
The men paid the kickbacks to a manager of a LyondellBassell subsidiary, according to the U.S. attorney’s statement.
Houston Refining is a LyondellBassell Industries subsidiary that runs a big refinery in Houston, and imports most of its crude oil from Venezuela.
“In late 2006, Jonathan Barnes became the marine chartering manager at Houston Refining responsible for entering into agreements and prices with shipping companies,” prosecutors said in the statement. “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.”
Prosecutors said Judge Lake cited a letter from Houston Refining during the sentencing hearing, noting that Langley, Meltzer and Barnes took most of the money after LyondellBassell’s U.S. subsidiaries, including Houston Refining, had filed for bankruptcy.
“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,” Lake said.
Meltzer and Langley used the money to buy fancy cars, real estate in Florida and Texas and interest in a Houston sports bar, and Meltzer bought more than $1 million worth of jewelry, prosecutors said.
“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,” prosecutors said.
Langley and Meltzer agreed to forfeit the assets they got from the kickbacks.
“Combined with assets recovered from Barnes, assets valued at approximately $25 million have been forfeited to the United States in this case,” prosecutors said.
Langley and Meltzer were also ordered to pay $57 million in restitution.
“Another co-defendant, Alireza Etessami, a Venezuelan citizen, was arrested in Miami on Nov. 25, 2011, and is scheduled for trial on June 11,” prosecutors said.