Texas U.S. Attorney: Former Energy Company President Convicted in $5.5M Illegal Kickback Conspiracy and Commodities Insider Trading Scheme

HOUSTON, Texas, March 19 -- The office of the U.S. Attorney for the Southern District of Texas issued the following news release:

The former president of a Texas energy company has pleaded guilty to an illegal kickback scheme and a commodities insider trading scheme involving natural gas futures contracts.

Matthew Clark, 56, Needville, entered his plea March 15, admitting he conspired with others to direct his employer's trades to Classic Energy LLC in exchange for illegal kickbacks. Specifically, Clark accepted more than $5.5 million in illegal kickbacks, which were generated from commission fees his employer paid to Classic Energy. Classic Energy is a brokerage firm Matthew Webb, 54, Tiki Island, owned and operated.

"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. "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."

"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."

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, Katy, and Peter Miller, 49, 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 that participate in illicit activity that threatens the integrity of our financial systems that there are consequences to your actions."

Clark pleaded guilty to one count of conspiracy to commit honest services wire fraud, one count of prohibited commodities transaction and one count of commodities insider trading. He is scheduled to be sentenced 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.

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, while James admitted in February 2021 to conspiracy to commit commodities fraud and wire fraud. Miller entered his plea in February 2022 to conspiracy to commit commodities fraud. Miller is set for sentencing June 20, while Webb and James are scheduled for July 1.

In two other related cases, Marcus Schultz, 44, Houston, and Lee Tippett, 64, of Jacksonville, Florida, were convicted 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. Tippett entered his plea to conspiracy to commit commodities fraud and honest services wire fraud and was sentenced to 33 months in prison.

The FBI conducted the investigation.

Assistant U.S. Attorney Grace Murphy is prosecuting the case along with Assistant Chief Leslie S. Garthwaite and Trial Attorneys Della Sentilles and David Hamstra of the Criminal Division's Fraud Section.

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Original text here: https://www.justice.gov/usao-sdtx/pr/former-energy-company-president-convicted-55m-illegal-kickback-conspiracy-and