5 men charged in Philly federal court over scheme to illicitly sell Iranian oil to buyer in China
The conspiracy included meetings in Philadelphia and was expected to generate roughly $28 million a month in profits.
Five men have been charged in federal court in Philadelphia with a scheme to sell oil from Iran, which is under U.S. sanctions, to a refinery in China for millions of dollars in profits, prosecutors announced Tuesday.
The men — four based in Texas and one in New York — were each charged with one count of conspiracy and one count of violating the International Emergency Economic Powers Act related to the economic sanctions against Iran. They were identified as Nicholas Hovan, 33, of New York, and Daniel Ray Lane, 38; Robert Thwaites, 30; Nicholas James Fuchs, 26; and Zhenyu Wang, 39, all of Texas.
If convicted on both counts, each man would face a maximum of 25 years in prison.
Four of the men were arrested in Philadelphia and made court appearances in the city Tuesday, prosecutors said. The fifth was arrested in Texas.
Lane is the president of Stack Royalties, an oil and gas investment firm based in Dallas. Prosecutors say he offered to launder money through his company. Thwaites is listed on the company’s website as a vice president.
Representatives of Stack could not be reached for comment Tuesday.
The 13-page criminal complaint, dated Feb. 7 and initially sealed, chronicles a series of secretly recorded phone calls and in-person meetings, two of which occurred in Philadelphia. The first recording mentioned, provided by a confidential source, is of a meeting in London last June with an unnamed person who said Hovan and a second individual could assist in brokering a deal with U.S. citizens for Iranian oil.
On July 31 in Philadelphia, prosecutors said, the confidential source met with Hovan and the second individual, identified as Person No. 2 in the complaint. During the secretly recorded meeting, Hovan and Person No. 2 claimed to represent major oil buyers in the United States, Panama, and China. Hovan claimed to know the son of China’s minister of energy and said that individual alone could handle six million barrels of oil, prosecutors said.
Hovan, according to the complaint, also said he had other connections and referred to participants later identified as Fuchs, Thwaites, and Wang. At one point, Hovan excused himself to make a phone call, then returned to say his investors had no problem with Iranian oil, quoting their reactions as, “Iran? Whatever, who cares."
At a Sept. 18 meeting in Dallas, Fuchs allegedly said Lane had mercenaries willing to protect the shipment of Iranian oil for approximately $100,000.
In a Nov. 25 call involving Hovan and the other unnamed people, an undercover agent said he had a potential lead for financing based in Philadelphia. That led to a meeting on Jan. 8 at the Hotel Monaco across from Independence Hall.
Hovan and Person No. 2 "pitched the details of the oil deal to the undercover agent posing as an investor, including the oil’s Iranian origin and the Chinese buyers, with the intention of convincing the undercover agent-investor to provide $10 million to finance the deal,” according to the complaint.
In a Jan. 15 call, Thwaites was talking to the undercover agent when he added Wang to the call, and Wang said he would be working on a “fee protection agreement” that for an additional $4 a barrel covered “a politician, the banks, the inspection, and the person signing the contract."
The undercover agent expressed concern that the payment to a politician “looks like a straight ... bribe.”
According to the complaint, “Wang laughed and said, 'It is a bribe.… It is.… I don’t want to sugarcoat it.… It is a bribe.”
The alleged conspiracy, which also involved creating a shell corporation in Poland and obtaining offshore accounts in Antigua, was expected to generate approximately $28 million a month in profits, prosecutors said.
In a statement, U.S. Attorney William M. McSwain said Tuesday: “By devising a scheme to purchase oil from Iran, conceal its origins via a refinery in China, and make tremendous profits, the defendants were attempting to enrich themselves and the nation of Iran — thus jeopardizing the safety and security of the United States and our allies.”
Assistant Attorney General for National Security John C. Demers said in a statement: “The sale of oil is the lifeblood of the Iranian economy. At the same time the United States was increasing its sanctions in order to pressure Iran to stop its malign activities, these defendants put greed ahead of country.”