The U.S. Attorney’s Office in Houston and the Commodity Futures Trading Commission have charged former Pacific Summit Energy President Matthew Clark with operating an illegal scheme involving insider trading of natural gas futures and financial kickbacks.
A federal grand jury in the Southern District of Texas indicted Clark on Thursday on multiple counts of wire fraud, insider trading and making illegal commodities transactions. If convicted, he faces 130 years in federal prison.
At the same time, federal commodities regulators filed a lawsuit Thursday in Houston charging Clark with revealing his company’s confidential information on natural gas futures orders to an energy broker in exchange for a share of the brokerage commissions.
The 36-page CFTC complaint filed in the U.S. District Court in Houston states that Clark “engaged in a fraudulent scheme to misappropriate material, nonpublic information from his employer, where Clark initiated a tipping chain that enabled others to trade on the basis of this material, nonpublic information, and to enter into fictitious trades at non-bona fide prices.”
Clark involved his wife and half-sister in the alleged scheme, according to the CFTC.
While the CFTC lawsuit strangely does not identify Clark’s employer, his LinkedIn page states that he worked at Pacific Summit Energy for more than nine years, including his 2017 to 2019 as president. He is 54 and lives in Spring, Texas.
Court documents show that Jones Walker partner Dan Cogdell of Houston is representing Clark in both matters. Neither Cogdell nor Clark responded to requests for comment.
The CFTC claims that Clark, who was a long-time energy trader with Dominion Resources, Credit Suisse and American Electric Power, improperly disclosed his company’s block trades in natural gas futures to a Houston energy broker named Matthew Webb with Classic Energy.
The federal lawsuit states that Clark knew that Webb would share the confidential details with Puerto Rico-based trader named Peter Miller with Omerta Capital.
“Clark also devised and engaged in a fraudulent scheme in which he extracted a portion of the brokerage commissions … paid to Classic as a kickback for sending [Pacific Summit Energy’s] business to Classic and Webb,” the CFTC states. “From 2009 through 2019, Clark and Webb had an arrangement whereby Webb would pay Clark a percentage of the brokerage commissions paid by [Pacific Summit] to Classic. In turn, Clark would direct [Pacific Summit’s] natural gas block trading business to Classic and instruct other [Pacific Summit] traders to do the same. “
The CFTC complaint alleges that Clark “concealed his receipt of kickback payments in several ways.”
For example, the CFTC states that Clark “demanded that Webb hire his fiancée and later wife as a ‘marketer’ and pay her a percentage of the commissions Classic earned from trades brokered for Clark” from 2009 to 2012.
“Beginning in 2012, Classic paid kickbacks to Clark through Green Mountain Energy, an entity first owned by Clark’s wife, and later his half-sister, that was controlled and used by Clark to receive these payments,” the lawsuit states.
The CFTC permanently banned Webb as a registered trader and Webb has pleaded guilty to one count of conspiracy to commit commodities fraud and one count of wire fraud.
The federal agency sued Miller in December for his role in the scheme. Miller pleaded guilty Thursday to conspiracy to commit commodities fraud and will be sentenced in May.
SDTX U.S. Attorney Jennifer Lowery, deputy chief U.S. Attorney Suzanne Elmilady and assistant U.S. Attorney Zahra Fenelon are leading the criminal prosecution. Houston FBI Acting Special Agent in Charge Richard Collodi and IRS Special Agent in Charge Richard Gross of Houston led the investigation.