
As in every year, in 2024 the grinches of law enforcement brought financial and corporal misery to bad guys in energy. Here is a review of the crimes of only a few of the convicted, admitted and alleged bribsters, swindlers and liars who plagued the industry during last year. These acts came with a pronounced Spanish accent. Frequent losers were governments citizens of corrupt Latin American governments.
CREDIT WHERE ITS DUE
Michael Volkov is a white collar defense lawyer in Washington D.C. I often consult his informative blog for my bad-guy posts. Check it out.
OIL AND WATER DON’T MIX
Perp: Dennis James Rogers, II, Dallas, TX
Crime: Pled guilty to two counts of securities fraud.
How he did it: Solicited $10 million from an investor, purportedly to purchase fuel. After a promise of a 50 percent return the investor handed over the funds, which Rogers diverted to a private jet service, a custom home builder, a law firm, an investment account, and credit card and other personal expenditures.
Ten months later, he solicited $6.3 million from new investors, telling them that a large fuel company was exiting a position in Brownsville, Texas, and planned to dispose of its fuel via an exclusive, invitation-only auction. The company never held an auction and had no relationship with Rogers. He diverted that money to fund an unrelated investment account, purchase real estate, and pay personal expenses.
Avarice unabated, he then collected $11 million for a purported water-rights deal associated with a dairy farm in New Mexico. He told investors he had an account worth $5 million that could be used as collateral. He never had a relationship with the dairy farmer, the account had no collateral value, and there was never a contract for water rights.
Sentence/penalty: 70 months in prison, $200 fine, $16MM in restitution.
MARK TWAIN KNEW CONGRESS
Alleged Perps: Congressman Enrique Roberto Cuellar and wife Imelda.
How the government says they did it: This is only an indictment. The Cuellars allegedly accepted $598,000 in bribes from foreign entities, including an oil and gas company owned by the government of Azerbaijan and a Mexico City bank. In exchange, Enrique allegedly performed official acts to benefit these entities, such as influencing legislative measures to benefit Azerbaijan and manipulating legislative activities to favor the Mexican bank.
Sentence/penalty: None yet, if any; potentially lots of years imprisonment.
IF ITS VENAL ITS VENEZUELA
Perp: Luis Fernando Vuteff, a financial manager from Argentina.
Crime: Pleaded guilty to conspiracy to commit money laundering.
How he did it: Admitted that he and another asset manager were retained to launder over $200 million of proceeds of a foreign currency exchange scheme using loan contracts with Venezuela’s national oil company, PDVSA, that exploited Venezuela’s fixed foreign currency exchange rate and that were obtained via bribes and kickbacks. More than $9.5 million was transferred to bank accounts in the United States.
Sentence/penalty: 30 months in prison and forfeiture of $4+ million in unlawfully obtained assets, including real estate in Miami, Paraguay, and Spain.
IF ITS VENAL … X2
Perps: Swiss-Portuguese banker Paulo Casquiero Murta and former PDVSA official César David Rincón Godoy
Crimes: Money laundering and bribery of, yep, a Venezuelan official.
How they did it: Accepted bribes from Florida and Texas business owners and paid them to Venezuelan government officials in exchange for assisting those businesses in receiving payment priority and additional PDVSA contracts, then laundered the proceeds through a series of financial transactions, including wire transfers to accounts in the United States and Switzerland. The Fifth Circuit affirmed a dismissal of claims against Murta on procedural grounds but remanded to a different district court judge to determine whether the dismissal should have been with or without prejudice.
Sentence/penalty: Time served, amid allegations that the government deliberately delayed trial and resolution.
IF ITS VENAL … X3
Perp: Fernando Ardila-Rueda, business partner of Abraham Jose Shiera-Bastidas
Crime: Guilty plea to one count of violating the FCPA and one count of conspiracy to violate the FCPA by paying bribes to officials at (again) PDVSA.
How he did it: While sales director, manager, and partial owner of several of co-conspirator Shiera’s companies, Ardila provided entertainment and offered bribes to PDVSA officials based on a percentage of the value of contracts the officials helped to award. Several PDVSA officials went down as well.
Sentence/penalty: For Aridia-Murta, time served, $100,000 fine, forfeiture of $4.4 million and forfeiture of another $1 million+.
IT TAKES A VILLAGE …
Perp: Siemens Energy Inc.
How they did it: To build a gas turbine plant, Dominion Energy held a closed bid process and received bids from Siemens and others. All bidders executed NDA’s. A Dominion insider improperly passed sensitive, confidential information on competitors’ bids to a Siemens account manager, who was aware it was confidential. The manager sent it to another Siemens employee for a comparative analysis. Upon discovering that it had submitted a less competitive bid, Siemens resubmitted a more competitive bid. Alas, Siemens won!
Siemens’ conduct resulted in losses of between $65 million and $150 million to the victims of the scheme.
Sentence/penalty: Agreed to pay $104 million. Several employees also pled guilty and were fired.
BRAZIL – KEEPING UP WITH THE VENAL
Perp: Trafigura Beheer BV, Swiss-based international commodities trading company.
Crime: Pled guilty to conspiracy to violate anti-bribery provisions of the FCPA.
How they did it: Paid bribes totalling $19.7 million for the benefit of several officials of Petrobas, Brazil’s national oil company, to secure business, earning $61 million in illicit profits. The bribes were five to ten cents per barrel of oil sales. Agreed-upon price levels were arrived via sham negotiations. Used shell companies and intermediaries to facilitate the payments.
Sentence/penalty: Forfeiture of $46 million+, fine to Brazil, and fine of $53 million+ to the United States.
BRAZIL – KEEPING UP WITH THE VENAL X2
Perp: Gary Oztemel, a Connecticut-based oil and gas trader.
Crimes: Convicted of conspiracy to violate the Foreign Corrupt Practices Act, conspiracy to commit money laundering, and two counts of money laundering.
How he did it: He, and others paid over $1 million in bribes to officials at Petrobras, the Brazilian state-owned oil and gas company, to secure lucrative contracts. Used his companies to conceal the proceeds of the scheme. The conspirators used coded language, personal email accounts, fictitious names, and encrypted messaging applications in furtherance of their scheme.
Sentence/penalty: Two years of probation and $310,000 in fines and forfeiture.
NO STATE LEFT BEHIND – ECUADOR AND MEXICO
Perp: Javier Aguilar, former Vitol oil and gas trader in the Houston office.
Crime: Violation and conspiracy to violate the FCPA via a “complex” money laundering scheme, as well as Travel Act and money laundering violations.
How he did it: Engaged with officials at state-owned oil entities in Latin America seeking to win lucrative contracts for Vitol. Targeting a $300 million contract with Petroecuador, he arranged to bribe senior officials. In order to circumvent Petroecuador’s restriction against working with private entities, he arranged for the bribes to be paid through a Middle Eastern state-owned intermediary. Following a change in leadership after the 2017 Ecuadorean presidential election, he bribed incoming administration officials as well.
In Mexico, he employed a series of fake contracts, phony invoices, and shell companies incorporated in jurisdictions like Curaçao, Panama, and the Cayman Islands to funnel approximately $600,000 in bribe payments to two Pemex officials. In turn, he secured Vitol contracts worth hundreds of millions.
A scheme to pay bribes to procurement managers at PEMEX Procurement International, Inc. (PPI), a subsidiary of Mexico’s state-owned oil company PEMEX, to secure business advantages.
Sentence/penalty: He agreed to forfeit $7.1 MM. Vitol paid a combined $135MM to US and Brazilian agencies. Co-conspirators forfeited $63MM.