U.S. v. Soudan

• Decision Date: 15 December 1986
• Docket Number: No. 85-2349,85-2349
• Citation: 812 F.2d 920
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Frederick Ed SOUDAN, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 920

812 F.2d 920

UNITED STATES of America, Plaintiff-Appellee, v. Frederick Ed SOUDAN, Defendant-Appellant.

No. 85-2349.

United States Court of Appeals, Fifth Circuit.

Dec. 15, 1986.

Wm. W. Burge, Houston, Tex., for defendant-appellant.

Henry K. Oncken, U.S. Atty., James R. Gough, Asst. U.S. Atty., Houston, Tex., Robert M. Twiss, Trial Atty., Washington, D.C., for plaintiff-appellee.

Appeal from the United States District Court for the Southern District of Texas.

Before GARZA, DAVIS and JONES, Circuit Judges.

PER CURIAM:

This case arises from an international shell game involving a number of players and millions of dollars. The proof at trial showed that appellant Soudan and several other individuals, with no oil, no money, and no oil tanker, bought a tanker on credit, loaded it with oil that was not theirs, sold the oil to South Africa, and sunk the tanker in the hope of recovering the insurance proceeds. The appellant grossed $4.25 million from the scheme and then failed to declare the income to the Internal Revenue Service. Soudan also perjured himself before the grand jury. Chief among the various assignments of error advanced by appellant is the claim that Soudan was denied the effective assistance of counsel at trial. Finding no merit to Soudan's claims on appeal, we affirm the convictions entered below.

I

In 1979, appellant went to Europe in search of an oil deal for his company, American Polamax, Inc. He made contact with a Greek ship captain, Nicholas Mitakis, who could supply six 200,000 ton shipments of Saudi Arabian oil at a low price if the oil could be sold to OPEC-boycotted countries. Anton Reidel, a Dutch commodity trader who worked for the Beets Trading Company, was the broker for Mitakis. Soudan began to arrange a deal to find a South African buyer ¹ for Mitakis' oil. Soudan was referred to James Shorrock and John Austin, partners in the South African brokerage firm of Haven International. Soudan told Shorrock that Polamax had available oil as a result of his connections with influential Arabs; Shorrock and Austin then made a formal offer to SFF, the South African oil company, for a spot cargo of crude oil.

Soudan reported this offer to Reidel, but in order to disguise the fact that Saudi oil was being delivered to a blacklisted country, Soudan devised a cover-up. The plan was to discharge the bulk of the oil in Durban, South Africa, and then discharge the remainder in Corpus Christi, Texas. Appellant told SFF that he had a close relationship with a refinery that would certify receipt of a full tanker load in Texas, thus disguising the South African sale. Soudan traveled to South Africa and met with SFF officials, who were doubtful about appellant's financial capabilities. Soudan made numerous representations to SFF officials which were not true in order to allay their fears. ² Soudan also explained that although he already owned an oil tanker, he wanted SFF to assist him in buying another ship to transport the oil, for which he would furnish the crew. Soudan consummated this transaction with SFF by signing as an agent of "American Polamax International and Seeking Engineering," a company which appellant said was controlled by Polamax, and agreeing to provide 214,000 metric tons of Saudi Arabian light crude at $33 per barrel between February 5th and 10th, 1980. Naude, signing for SFF, agreed to provide a letter of credit to the Swiss Credit Bank of Zug, Switzerland, in favor of American Polamax International and Seeking Engineering. The letter authorized payment to Polamax immediately upon completion of discharge at Durban and receipt of certain documents to prove the sale.

Soudan now needed the ship. With the help of a London ship broker, appellant located a tanker called the SOUTH SUN. Without inspecting the ship, appellant agreed to the offeror's initial asking price of $12.3 million. Then, telling Shorrock that his own vessel had blown a turbine, appellant sought to parlay his SFF oil contract into a loan for the purchase of the SOUTH SUN. Soudan once again went to South Africa. Shorrock introduced appellant to officials of the international division of Merca Bank. At the Merca Bank, appellant told Mr. Manie DuPlessis that Polamax was a well-financed U.S. corporation and repeated the financial misrepresentations made earlier to SFF. DuPlessis asked why a substantial company like Polamax needed help in financing for a $12,000,000 vessel. Soudan explained that because independent carriers do not permit their ships to sail to South Africa, he needed a vessel financed by a third party in order to conceal Polamax's sale of oil to South Africa.

DuPlessis agreed to provide a letter of credit financing appellant's ship purchase. ³ In response, appellant assured DuPlessis that he had already paid for the oil, so that the SFF payment would indeed be available for repayment of the Merca Bank's loan. DuPlessis telexed to SFF to verify the existence of Soudan's contract of sale and Soudan executed a formal letter on behalf of Polamax stating agreement to DuPlessis' conditions. Satisfied with appellant's bona fides, DuPlessis arranged for a letter of credit in the amount of $12.3 million to be issued upon presentation of the documents necessary for the sale of the SOUTH SUN. Thus, by November 23, 1979, appellant was able to obtain 100% financing for a tanker, saying he would give as collateral the oil which he had convinced SFF and the Merca Bank was his to sell. Having arranged for the sale of the oil and the procurement of the vessel, the schemers drew up an agreement between Polamax and Beets Trading, Reidel's commodity brokerage, formalizing their plan. In return, Beets promised to finalize the oil sale between Beets and SFF and pay Polamax approximately $4.5 million of SFF's payment to Beets.

Now the shell game moved from financial misrepresentation to the actual oil itself. On November 29, 1979, the Italian oil company Pontoil chartered the SOUTH SUN, now renamed the SALEM, to transport 200,000 tons of oil from Kuwait. Pontoil had contracted to sell this Kuwaiti oil to Shell International. Pontoil's chartering of the SALEM presented the conspirators with a problem: they had promised Saudi oil to South Africa. Soudan told Naude that there were loading problems in Saudi Arabia and that the oil was being purchased in Kuwait. Appellant then met with Reidel, Naude and others on December 19, 1979, to prove ownership of the oil cargo and demonstrate the oil was already enroute to South Africa. Reidel produced the masters copy of the bill of lading with the name of the consignee Pontoil and the port of discharge, Italy, obliterated. Soudan had seen the bill of lading before this information showing the oil's ownership and destination was concealed. The SFF officials, demanding even more substantial proof of ownership than the altered bill of lading, insisted that they be given a statement of title and an indemnity letter which Soudan then furnished.

The SALEM left Kuwait on December 10th and arrived in Durban, South Africa, on December 27, 1979. While enroute, the Italian company Pontoil sold the SALEM's cargo to the Shell International Trading Company, a subsidiary of Royal Dutch Shell. Shell agreed to pay $56 million for the oil due upon Shell's receipt of the bill of lading and the other ownership documents from Pontoil. On December 28, 1979, the oil tanker moored at Durban and began discharging its cargo. A $12 million payment was made by SFF to the Merca Bank, and 90% of the balance on the oil sale, approximately $32 million, was paid to Beets Trading.

On January 17, 1980, when the SALEM should have already been at Gibralter, the captain and crew of the British merchant ship TRIDENT spotted the SALEM without any name painted on its bow slowly sinking off the coast of Senegal. Despite the protestations from the crew that the vessel had suffered numerous explosions and fire damage, the captain of the TRIDENT saw no such evidence. Further investigation revealed that the SALEM was deliberately sunk by opening its valves and allowing sea water to flood the engine room. The obvious inference raised by the evidence was that the ship was deliberately sunk without any oil, in order to cover up the fact that the Kuwaiti oil had already been sold to South Africa.

On January 23, 1980, two days before Shell International learned that its oil was not at the bottom of the sea, but rather in South Africa, Shell paid Pontoil the contract price of $56 million. As the result of subsequent law suits between Shell, SFF, and Lloyds (Shell's and Pontoil's insurer), Shell's ultimate loss was $15 million; SFF's loss was $30 million; and Lloyds' loss was $10 million. Merca Bank did not suffer a financial loss because it was paid upon discharge of the oil. If the SALEM had failed to arrive in Durban, however, Merca Bank would have lost $12 million because appellant had failed to give Merca Bank a lien on the vessel's insurance. The appellant made approximately $4.25 million from this complicated series of transactions.

Once in possession of the proceeds from the scheme, Soudan attempted to launder his ill-gained funds. Among the transactions was a purported distribution of $650,000 from Soudan to James Shorrock. Soudan told Shorrock that it was necessary to provide invoices to support this alleged payment, so Shorrock provided Soudan with blank Haven International stationery which appellant used to prepare invoices and receipts for Shorrock's signature. ⁴ To prepare his 1980 federal income tax returns, Soudan hired an accountant and told him that Polamax had no income from the SALEM transaction. The $4.25 million from the SALEM transaction ostensibly belonged to a "financing group" which had financed the SALEM, and Polamax was allegedly only a conduit to receive and spend funds on behalf of this group. Based on this information the accountant prepared a 1980 income tax return showing that...