Two oil traders with ties to former international fugitive Marc Rich have been indicted in a multimillion-dollar kickback scheme that includes allegations of wire fraud and money laundering.
Clyde Meltzer, of Houston, and Bernard Langley of the United Kingdom appeared in Houston federal court Wednesday to plead not guilty and seek release on bail. They have been in federal detention since Dec. 9.
The bail hearing included testimony about recorded conversations in a Galleria steak restaurant that mentioned bribes to foreign officials, and about seized computers that an investigator said recorded Swiss bank transactions moving millions of dollars to accounts around the world.
Magistrate Judge Mary Milloy denied bail, saying both defendants could be flight risks considering what prosecutors claim is millions of dollars in overseas accounts and the alleged relationship with Rich, who was a fugitive from tax fraud changes in the U.S. for more than a decade before he was pardoned by President Bill Clinton in 2001.
The scheme alleged in the indictment involved overcharging chemical company LyondellBasell for the cost of shipping oil via tankers from Venezuela to its refineries. A portion of those excess charges were kicked back to former LyondellBasell employee Jon Barnes, while Meltzer and Langley kept the rest, prosecutors said in the hearing.
The three men pocketed about $55 million, prosecutors said, while Barnes may have skimmed $25 million more in similar transactions with others yet to be named.
A LyondellBasell spokesman had no immediate comment on the matter.
Meltzer indicted before
The 12-count indictment, which remains under seal but was detailed in court, accuses the men of conspiracy to commit wire and mail fraud, wire fraud, conspiracy to commit international money laundering and money laundering. Barnes is also accused of passport fraud and smuggling cash into the United States.
Meltzer also was indicted in 1983, with Rich and colleague Pincus Green, in connection with tax evasion and fraud.
According to prosecutors at the time, Rich’s oil trading firm evaded paying many millions in U.S. income taxes by reporting that it paid more for oil than it actually had.
Rich and Pincus fled the country, but Meltzer stayed and in 1984 pleaded guilty to one count of issuing false invoices. He was sentenced to probation. Rich and Green later were pardoned.
Meltzer continued to work in the oil-trading business, including helping start up an operation for famed Houston oilman Oscar Wyatt in 2002 and serving as a director for Houston-based Camac International.
Defense attorneys argued in court that the two men were involved in legitimate oil transactions that regularly require payments of money well in excess of the value of the actual oil being shipped.
They said their ties to Rich were not as strong as prosecutors allege and that their families — Meltzer has a wife, two children and eight grandchildren in the U.S., Langley has a wife and two teenage sons in the U.K.- were motivation enough for them not to flee.
“This indictment doesn’t have anything to do with Marc Rich,” argued Bill McMurrey, an attorney for Meltzer. “That name shouldn’t be anywhere in this courtroom right now.”
Langley’s attorney, Wendell Odom, said his client thought he and Meltzer were doing legal, legitimate transactions.
Audit found irregularities
The alleged scheme was discovered by an internal audit at LyondellBasell, which found shipments arranged by Barnes appeared to include transportation charges well above market rates. The company turned the information over to authorities, who seized assets from Barnes last summer and arrested him, according to testimony Wednesday from U.S. Postal Service Agent Matthew Boyden.
Barnes agreed to cooperate with investigators and wore a recording device to two meetings with Meltzer and Langley at Houston restaurants.
The taped conversations included topics other than just the alleged kickback scheme.
During a Nov. 1 lunch meeting at Del Frisco’s Double Eagle Steak House in the Galleria, Meltzer allegedly discussed his frustration with trying to get a ship he owned and its crew released by Venezuelan authorities. He described having to pay nearly a million dollars over the previous six months to lawyers and to bribe prison guards to keep them from torturing the crew, according to testimony. He was also negotiating with a Venezuelan judge to make the case “go away.”
Meltzer allegedly joked “it would probably be cheaper to kill the judge than pay the fee,” according to court testimony about the conversation, and said he could have the job done for as little as $150,000.
Shortly after the second meeting, on Dec. 9, the Galleria-area offices of Meltzer and Langley’s company, Tuscan Petroleum, were raided by agents who seized documents and computer hardware.
A data drive recovered in the raid allegedly contains records of more than 460 faxes sent to transfer many millions of dollars into accounts all over the world with the help of a Swiss bank, Boyden said.
“I’ve never seen money moved around like this,” he said. “Just the volume of data all in one place was huge.”