Oil Exec Pleads Guilty to Wire Fraud Conspiracy

David Chalmers, a Houston oil executive, pleaded guilty Friday, Aug 18, to conspiracy to commit wire fraud in a plan to defraud the United Nations oil-for-food program out of millions by bribing to Saddam Hussein's Iraq regime.^[1]

Chalmers was the sole shareholder of Bayoil USA Inc. in Houston, was set to go on trial next month on charges he used a comfortable relationship with Iraq in the 1980s to secure oil contracts, and paid millions in kickbacks between 2000 and 2003 to ensure his participation in the oil-for-food program.^[2]

Ten people and five companies have been charged so far in connection with the plan to cheat the UN program of millions that should have been used for humanitarian aid.^[3] The oil-for-food program, which ran from 1996 to 2003, was created to help Iraqis cope with U.N. sanctions imposed after Saddam Hussein’s 1990 invasion of Kuwait.^[4] It let the Iraqi government sell oil primarily to buy humanitarian goods.^[5]

Chalmers told the judge that he allowed money to be illegally wired to Iraq through another agent at his company in the spring of 2001.^[6] He said that letters faxed to the UN during the same period did not disclose the illegal payments.^[7]

After Chalmers pleaded guilty, he also agreed to pay more than $9 million in restitution; his two companies, Bayoil USA and the Bahamas-based Bayoil Supply & Trading Ltd., also admitted to conspiracy to commit wire fraud.^[8]

He could have faced more than 60 years in prison if convicted and a maximum of 20 years for the conspiracy charge. Under the plea agreement, prosecutors will recommend a 37- to 46-month term when he is sentenced Nov. 19.^[9]

Federal criminal defense attorney Douglas McNabb has previously discussed the federal crime of wire fraud in this blog; these posts can be found here.

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^[1] Amy Westfeldt, Texas Exec Plea Deal in Iraq Oil Scheme, Associated Press Newswire, August 18, 2007, available at available at LEXIS, News Library, Wire News Services File.
^[2] Id.
^[3] Id.
^[4] Id.
^[5] Id.
^[6] Id.
^[7] Id.
^[8] Id.
^[9] Id.