LAWFUEL – The Law Newswire – Two Businessmen and Two Corporations Plead Guilty to Charges Involving a Scheme to Pay Secret Kickbacks
to the Government of Iraq in Connection with
the United Nations’ Oil-for-Food Program
MICHAEL J. GARCIA, the United States Attorney for the
Southern District of New York, announced the guilty pleas today
of DAVID B. CHALMERS, JR., 53, of Houston, Texas, and two
corporations that he operated — BAYOIL (USA), INC., a Delaware
corporation with principal offices in Houston, TX, and BAYOIL
SUPPLY & TRADING LIMITED, a Bahamian company with principal
offices in Nassau, Bahamas (collectively, the “BAYOIL
COMPANIES”). CHALMERS and the BAYOIL COMPANIES each pleaded
guilty today before United States District Judge DENNY CHIN to
participating in a scheme to pay illegal surcharges to the former
Government of Iraq in connection with the purchase of crude oil
in the United Nations Oil-for-Food Program between mid-2000 and
2003. Judge CHIN also accepted earlier today the guilty plea of
LUDMIL DIONISSIEV, 61, of Houston, Texas, to related smuggling
charges. DIONISSIEV worked with CHALMERS and the BAYOIL
COMPANIES during the course of this scheme to purchase Iraqi oil.
CHALMERS and the BAYOIL COMPANIES each pleaded guilty
to participating in a conspiracy to commit wire fraud related to
the payment of secret illegal surcharge payments to the former
Government of Iraq. DIONISSIEV pleaded guilty to facilitating
the transportation and sale of Iraqi oil in January 2001 despite
knowing that an agent of BAYOIL (USA), INC. had promised to pay
an unlawful secret surcharge to the Government of Iraq in
connection with that oil on behalf of a Russian political figure.
According to the Indictment, the felony Information to which
DIONISSIEV pleaded, and the defendants’ statements during their
guilty pleas:
The Hussein regime in or about mid-2000 began
conditioning the right to purchase Iraqi oil under the Oil-for-
Food Program on the purchasers’ willingness to return a portion
of the profits secretly to the former Government of Iraq.
CHALMERS and the BAYOIL COMPANIES elected to pay these illegal
kickbacks so that they could continue to participate in the
business of selling Iraqi oil under the United Nations’ Oil-for-
Food Program. By participating in this scheme, as described in
detail in Indictment S5 05 Cr. 59, CHALMERS and the BAYOIL
COMPANIES diverted funds that otherwise would have been available
to purchase humanitarian goods for the Iraqi people under the
Oil-for-Food Program. In early 2001, DIONISSIEV helped to
facilitate the export of Iraqi oil by sending a message to a
Russian political figure that an agent of the BAYOIL COMPANIES
had promised to pay an illegal surcharge on the oil.
The defendants are scheduled to be sentenced by Judge
CHIN on November 19, 2007. CHALMERS faces a maximum sentence of
20 years’ imprisonment, as well as millions of dollars in fines
and restitution. CHALMERS and the BAYOIL COMPANIES also agreed
to forfeit a total of $9,016,151.40, which this Office will seek
to transfer to the Development Fund of Iraq (established on May
21, 2003, by United Nations Security Council Resolution 1483) as
restitution for the benefit of the people of Iraq. DIONISSIEV
faces a maximum sentence of twenty years’ imprisonment as well as
a fine of $250,000.
The trial against co-defendant OSCAR S. WYATT, JR., is
scheduled to begin on September 5, 2007. With respect to WYATT,
the charges contained in the Indictment are merely accusations,
and WYATT is presumed innocent unless and until proven guilty.
Mr. GARCIA praised the work of the Federal Bureau of
Investigation, Criminal and Counterintelligence Divisions. He
also expressed appreciation to the United States Treasury
Department, Office of Foreign Assets Control; the United States
Department of State; the United Nations Office of Legal Affairs;
and the former Independent Inquiry Committee into the United
Nations Oil-for-Food Program for their assistance in this
investigation.
Assistant United States Attorneys EDWARD C.
O’CALLAGHAN, STEPHEN A. MILLER, MICHAEL FARBIARZ, and SHARON
LEVIN are in charge of the prosecution.
07-208 ###
