Former President of Energy Company, Matthew Clark, Pleads Guilty to $5.5M Illegal Kickback Conspiracy and Commodities Insider Trading Scheme
Needville, TX (STL.News) The former president of a Texas energy company, Matthew Clark, pleaded guilty last week to an illegal kickback scheme and a commodities insider trading scheme involving natural gas futures contracts.
According to court documents, Matthew Clark, 56, of Needville, Texas, conspired with others to direct his employer’s trades to Classic Energy LLC, a brokerage firm owned and operated by Matthew Webb, 54, of Tiki Island, Texas, in exchange for illegal kickbacks. Expressly, Clark accepted more than $5.5 million in illegal kickbacks, which were generated from commission fees paid by his employer to Classic Energy.
“Matthew Clark steered his company’s commodities trading business to a broker in exchange for over $5.5 million in illegal kickbacks. He also misappropriated confidential information about his company’s planned commodities trades and used that information to enrich himself and his co-conspirators,” said Principal Deputy Assistant Attorney General Nicole M. Argentieri, head of the Justice Department’s Criminal Division. “When corporate insiders engage in insider trading and other deceptive trade practices for their own financial gain, they don’t just harm the company — they undermine the integrity of our financial markets. This groundbreaking investigation was the first to result in criminal convictions for commodities insider trading. It will not be the last.”
“Matthew Clark made millions trading in natural gas commodities, but unlike most Houston traders, he made his money illegally through the use of kickback schemes involving associates, relatives, and his employer’s proprietary insider information,” said U.S. Attorney Alamdar S. Hamdani for the Southern District of Texas. “The natural gas futures contract market is an integral part of Houston’s economy, and to preserve the integrity of that system, it is important that commodity traders who buy and sell those contracts not engage in illegal and unfair practices. That’s why my office is committed to holding those accountable, like Clark, who use kickbacks and inside information to enrich themselves at the expense of the public’s trust in the U.S. markets.”
Clark also misappropriated his employer’s material nonpublic information and engaged in prohibited commodities transactions. Webb, through Classic Energy, brokered Clark’s natural gas futures trades with counterparties who were identified in advance of executing the trades. The predetermined counterparties included John Ed James, 54, of Katy, Texas, and Peter Miller, 49, of Puerto Rico. Clark, Webb, James, and Miller then shared the net profits generated from these illegal prearranged trades.
“The FBI and its partners will continue to relentlessly pursue those who engage in illegal kickback schemes,” said Assistant Director Michael Nordwall of the FBI’s Criminal Investigative Division. This plea should make it known to others who participate in illicit activity that threatens the integrity of our financial systems that there are consequences to their actions.”
“The FBI Houston Field Office is proud to have spearheaded this first-of-its-kind criminal commodities insider trading case,” said Special Agent in Charge Douglas Williams of the FBI Houston Field Office. “Securities and commodities fraud may be a non-violent crime, but it’s certainly not victimless – it damages the public’s confidence in the U.S. markets and stacks the deck against fair traders and investors.”
Matthew Clark pleaded guilty to one count of conspiracy to commit honest services wire fraud, one count of prohibited commodities transactions, and one count of commodities insider trading.
He is scheduled to be sentenced on June 24 and faces a maximum penalty of 20 years in prison for the honest services wire fraud conspiracy count and 10 years in prison on each of the prohibited commodities transaction and insider trading counts. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
Webb pleaded guilty in June 2021 to conspiracy to commit commodities fraud and wire fraud and to violate various provisions of the Commodity Exchange Act; James pleaded guilty in February 2021 to conspiracy to commit commodities fraud and wire fraud; and Miller pleaded guilty in February 2022 to conspiracy to commit commodities fraud. Miller is scheduled to be sentenced on June 20. Webb and James are scheduled to be sentenced on July 1.
In two other related cases, Marcus Schultz, 44, of Houston, and Lee Tippett, 64, of Jacksonville, Florida, pleaded guilty in July 2020 and August 2021, respectively. Schultz pleaded guilty to conspiracy to commit wire fraud and to violate various provisions of the Commodity Exchange Act, and Tippett pleaded guilty to conspiracy to commit commodities fraud and honest services wire fraud. Tippett was sentenced on Feb. 20 to two years and nine months in prison, followed by three years of supervised release. Schultz is scheduled to be sentenced on July 1.
The FBI Houston Field Office is investigating the case.
SOURCE: DOJ
