Legendary trader Clyde Meltzer, along with British trader Bernard Langley, on Thursday pleaded guilty to one count each in US District Court in Houston to charges of defrauding LyondellBasell in a scheme to inflate shipping costs.
The one count is a sharp drop from the original 12-count indictment filed in December of 2010 against Meltzer, Langley and Jonathan Barnes, the Lyondell Basel shipping manager who reportedly cooperated with the government to lead to the Meltzer and Langley arrests.
Meltzer was a long-time associate of Marc Rich, and was indicted in the early 1980s case against Rich and Pincus Green, which eventually led to Rich's and Green's flight from the US, and the pardon of those two by President Bill Clinton as he got ready to leave office.
According to the closely worded plea agreements in the LyondellBasell matter, Meltzer and Langley each agreed to plead guilty to one count of wire fraud, "by engaging in a scheme in which he paid millions of dollars in kickbacks to an employee of a Houston refinery (Barnes). The kickbacks were made in return for favorable treatment for companies in which the defendant had a financial interest and which were involved in the shipment of oil from Venezuela to the Houston refinery."
According to the original indictment, Langley and Meltzer at the time were working out of two trading companies with incorporation and base activities in Switzerland and the British Virgin Islands, Fossil Energy Resources and Camac Energy Resources. Camac Energy Resources is a variation of the name of another Camac company doing business in Houston, with which Meltzer and Langley were associated.
Meltzer, Langley and Barnes all have been held without bail since their arrests. Barnes pleaded guilty in March to four charges.
According to the formal statement released by the US Attorney for the Southern District of Texas, "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 (charter) above market rates for the shipping."
The scheme went on from 2007 through late 2009, and it ended with an arrest in December 2010 at the Galleria mall in Houston after a conversation between Barnes, who was wearing a wire, and Meltzer and Langley. "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," the statement said.
Barnes will be sentenced December 8. Langley and Meltzer face sentencing on January 26.
A spokeswoman for the US Attorney said the charge carries a possible prison term of 20 years, a fine of up to $250,000, and restitution near $57 million. There has also been a forfeiture of a large number of luxury assets, ranging from cars to watches to interests in sports bars.
