Ex-oil traders get prison terms for kickback scheme
HOUSTON (Reuters) - Two former oil traders convicted of helping an ex-LyondellBasell shipping manager bilk the company of tens of millions of dollars in a kickback scheme were sentenced on Friday to federal prison.
U.S. District Judge Sim Lake in Houston sentenced Bernard Langley, 55, and Clyde Meltzer, 65, to five and four years in prison, respectively. Both had pleaded guilty to conspiracy to commit wire fraud in the scheme that Lake called "pure and simple fraud," U.S. Attorney Kenneth Magidson in Houston said in a statement.
The shipping manager, Jonathan Barnes, 56, was sentenced in January to seven years in prison for taking about $20 million in kickbacks from Langley and Meltzer when he was Lyondell's marine chartering manager from 2007 to 2010. In that capacity, Barnes was in charge of entering into shipping agreements and prices with shipping companies.
According to court papers, Barnes overcharged Lyondell about $82 million to ship oil to its $280,390 barrels-per-day (bpd) Houston refinery from Venezuela after agreeing to use Langley and Meltzer's companies to transport the crude on tankers. The traders agreed to pay Barnes one-third of their profits, which gave Barnes incentive to ensure Lyondell paid more than the market rates.
Lyondell discovered the scheme through an internal audit, fired Barnes, and turned over records to the U.S. Justice Department.
Barnes cooperated with authorities, who arrested Langley and Meltzer in December 2010 after a meeting with Barnes that was recorded.
During the scheme, Langely and Meltzer spent lavishly on luxury and classic vehicles including a 1957 Cadillac once owned by Frank Sinatra and real estate. Meltzer alone bought jewelry valued at $1 million, Magidson said.
Authorities have recovered assets valued at about $25 million from all three men, Magidson said.
A fourth defendant, Venezuelan shipping broker Alireza Etessami, is awaiting trial in June on conspiracy charges stemming from his alleged role in the scheme.
(Reporting By Kristen Hays; Editing by Bernard Orr)