Law360 (November 25, 2020, 3:17 PM EST) -- A Houston energy executive already facing criminal fraud charges related to what jurors determined was infringement on Chevron's trademark has now been accused of duping an Australian state into paying $317 million for non-existent N95 face masks.
Arael Doolittle, 55, is the president of Sariel Petroleum LLC and Sariel Enterprises LLC. The Sariel companies and Doolittle were hit earlier this year with a $15.6 million civil judgment for infringing Chevron's trademark, and Doolittle was indicted in October for allegedly defrauding oil and gas investors into doing business with him by lying about his relationship with Chevron.
He and Paschal Ngozi Eleanya, 46, are now accused of fraud related to their allegedly thwarted scheme to sell 50 million masks to New South Wales, Australia. Charges against them were unsealed Tuesday, and they were indicted Nov. 19.
According to the indictment, Doolittle and Eleanya, alongside unnamed alleged co-conspirators, began looking for buyers of the masks in March, and on March 31 reached an agreement to sell 50 million N95s at a price of $5.50 each to New South Wales, the capital of which is Sydney. The indictment notes that 3M's listed price for the masks both before the pandemic and now is $1.27 each.
According to the terms of the deal, no money was to change hands until the masks were presented for inspection. So on April 2, Eleanya sent an email as proof with a video attached titled "3M face mask factory" that showed 3M boxes stacked on pallets, with one box open and several face masks visible.
"Based on the lot number visible on the masks, the masks depicted in the video were manufactured by 3M in 2006 and would have exceeded their shelf life in approximately 2011," the indictment alleges. "This video had been sent to Eleanya from Doolittle by email on March 31, 2020."
On April 3, according to prosecutors, New South Wales wired the money. But before the transfer was completed, "the U.S. Secret Service intervened, and the deal was terminated."
Both Doolittle and Eleanya are each charged with one count of wire fraud and two counts of conspiracy to commit wire fraud. Wire fraud carries a maximum penalty of 20 years in prison, while the conspiracy charge is punishable by a maximum of five years in prison.
Doolittle was indicted Oct. 22 on eight counts of wire fraud and four counts of money laundering for allegedly defrauding 21 oil and gas investors into doing business with Sariel by misrepresenting he had standing relationships with Chevron and Citgo that would allow him to purchase petroleum products, like fuel, for resale.
Those criminal charges followed a civil trial in which jurors heard evidence that Doolittle's Sariel companies used bogus letters, phony email addresses and what appeared to be a legitimate bank account under the name of a Chevron-affiliated company to dupe other companies into doing business with it. Doolittle was a defendant alongside his former business partner, Alvin Diaz — whom Chevron alleged misrepresented himself as a Chevron distillates trader.
U.S. District Judge David Hittner entered final judgment against Doolittle in May for $15.6 million, finding Chevron USA Inc. and Chevron Intellectual Property LLC presented ample proof that Sariel had profited at least $3.2 million from the infringement. Judge Hittner tripled the damages to $9.6 million and ordered another Sariel entity and two other individual defendants who were hit with default judgments before trial to pay Chevron $2 million each.
Counsel for Doolittle and Eleanya did not return messages seeking comment Wednesday.
Doolittle is represented by William B. Underwood III of Underwood Jones Scherrer and Malouf PLLC. Eleanya is represented by Ijeoma Ihuaku Opara of the Law Office of I.I. Opara & Associates.
The government is represented by Justin R. Martin of the U.S. Attorney's Office in Houston.
The case is USA v. Doolittle et al., case number 4:20-cr-00621, in the U.S. District Court for the Southern District of Texas, Houston Division.
--Editing by Philip Shea.
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