Freepoint Commodities LLC: Buying the Other Side’s Bid

The Freepoint Commodities LLC FCPA case involved a $61 million civil penalty imposed by the Commodity Futures Trading Commission over bribes for oil-trading information. Under its December 2023 criminal deferred prosecution agreement, Freepoint admitted paying an intermediary who passed money to officials at Petrobras, Brazil’s state-controlled oil company. For someone on a trading desk or in accounts payable, the telling connection is between what a consultant was paid and what the trader suddenly knew.

Freepoint was a commodities merchant based in Stamford, Connecticut. Its admitted scheme ran from approximately 2012 through 2018 and bought confidential pricing and competitors’ bids. This foreign-bribery case reaches inside the business of buying and selling oil: who knew the customer’s position, who supplied that knowledge, and how the payment reached the official.

What the Confidential Information Bought

Under its criminal deferred prosecution agreement, Freepoint admitted that a Petrobras trader supplied information about the company’s pricing, negotiating strategy and competing bids. In an August 2015 negotiation described in the criminal agreement, the intermediary passed that information to Freepoint traders, who used it in their discussions with another Petrobras official. The intermediary also warned a Freepoint trader against revealing knowledge that could not have come from the market.

The physical oil business gives those disclosures their value. As the Commodity Futures Trading Commission explains in its order, oil moves among producers, refiners, shipping and storage facilities, and customers, while traders use derivatives to manage price exposure. The commission alleged that Freepoint obtained advance shipment information, fuel-oil quality and quantity, competitors’ bids, and the state oil company’s negotiating and commercial plans. It described purchases for delivery in the United States, some of which Freepoint hedged on U.S. futures exchanges.

That combination lets an insider connect information to a particular commercial decision. A bid file shows the price offered. An earlier message can show what the trader knew before making it. We see the unfairness in the head start: a competitor had to price its offer while Freepoint was buying access to information held on the other side of the negotiation.

Bids That Were Meant to Lose

Freepoint admitted in its criminal agreement that its agent advised traders to bid on cargoes they knew they would not win to conceal the scheme. The related superseding indictment quoted the agent’s instruction in an August 2017 email:

The commission separately alleged that the consultant told traders to bid even when Freepoint did not want the cargo or had received no confidential information. Losing bids helped disguise the advantage behind the winning ones. For someone who knows a desk’s trading decisions, the apparently uninteresting bid can be part of the explanation.

How Consulting Fees Funded the Bribes

In its criminal agreement, Freepoint admitted paying approximately $3.9 million in corrupt consultancy fees and commissions associated with about 124 Petrobras transactions. It knew a portion would fund bribes to Brazilian officials. The agreement puts Freepoint’s profits from the corruptly obtained business at approximately $30.5 million. We see the bargain: a commission expense bought access to a much larger trading return.

The relationship arrived with people who already knew how it worked. Freepoint admitted that, after a senior oil trader moved from another trading company in June 2012, he caused Freepoint to contract with Albatross Shipping Consultants, a Liberian company controlled by the intermediary. The arrangement provided a monthly consultancy fee of about $10,000 and commissions calculated by the barrel. The trader knew that money paid under the agreement would continue funding bribes.

Those consulting invoices passed through identifiable companies and bank accounts. In one example from the admitted facts, Freepoint wired about $88,364 from Connecticut to Morgenstern Energy Trading’s account in Switzerland in June 2016. The intermediary then caused Morgenstern to send bribe payments totaling about $61,687 to a company account in Uruguay for a Petrobras trader’s benefit.

The agreement also describes bribes paid in cash in Brazil and money held at the intermediary’s companies for later payment to the official. An employee who knew whose money the intermediary was holding could explain a benefit that the consultancy description concealed.

Cargo Resale Profits Supplied Another Payment Channel

Freepoint’s criminal deferred prosecution agreement describes a second method involving Oil Trade & Transport S.A. That company bought fuel-oil cargoes from Petrobras and resold the same cargoes to Freepoint at a higher price. It then paid the intermediary purported profit shares against sham invoices, and the intermediary used part of the money for bribes.

The real cargo gave the transactions a commercial setting. The deception sat in what happened to the resale profit and what the invoices claimed the intermediary had earned. Someone familiar with the purchase price, resale price and payment approval could connect the oil trade to the money routed toward an official.

A Worksheet Too Useful to Leave in View

The corporate agreement describes a spreadsheet tracking corrupt back-to-back trades. The related criminal indictment quoted the intermediary explaining why that convenient business record also needed hiding:

Freepoint admitted using personal and alias email accounts, encrypted messages, coded language and sham negotiations to conceal the scheme. The commission’s order also alleged that participants called bribes “breakfast” and that the consultant instructed traders never to use his name with the state oil company’s personnel. We see a useful distinction here: the people running the scheme needed accurate records for themselves while keeping the explanation out of ordinary view.

What the Civil Order Required

The Commodity Futures Trading Commission’s order also required Freepoint to give up $30,551,150 in gains from the conduct. The civil obligations allowed credits for payments under the parallel Justice Department resolution.

The Justice Department’s announcement credited Freepoint with analyzing financial information and trade data for more than 4,000 transactions during the FBI’s investigation. That work connects this case to the records a trading or finance employee would recognize: the trade data and payments had to be examined together.

Controls Had to Reach Beyond the Agent’s Contract

Freepoint’s agreement credited changes to third-party due diligence and oversight, including ongoing monitoring, fewer intermediaries, and agent onboarding and tracking. It also described a process for reporting and investigating misconduct. The commission recorded the company’s representation that it had enhanced trading surveillance.

The operational question runs through the life of the relationship. A signed consultancy agreement identifies the supposed service. The transactions show what the company paid for and who benefited. The industry distinction between screening an agent and checking actual performance matters here because the bribes were funded through repeated payments tied to oil trades.

Payments Returned Through a Connecticut Company

The owner of Oil Trade & Transport signed a separate plea agreement filed in June 2024. In its account of his conduct, he admitted that cargo resale profits helped fund corrupt payments to the intermediary’s accounts in Switzerland and elsewhere. Part of the money went to Petrobras officials in exchange for information that gave the trading companies an improper advantage.

His agreement also described money moving back toward a Connecticut company he controlled, Petro Trade Services. The intermediary sent corrupt funds from Uruguay to Petro Trade’s U.S. account and prepared fake invoices for the payments. That is a distinct part of the payment trail: the same intermediary who passed money toward officials also sent proceeds to a participant’s company.

The Pattern Across Oil-Trading Cases

Gunvor admitted in its guilty plea that consultant compensation largely depended on per-barrel volume fees and that portions funded bribes to Ecuadorian officials. Its admitted facts also describe payments continuing despite repeated failures to supply requested documentation. As at Freepoint, the intermediary’s fee was tied to the oil traded. The people approving those payments could see the recurring expense behind the business.

In Vitol’s criminal deferred prosecution agreement, the company admitted using sham consulting and market-intelligence invoices to buy trading information and a last look at competing bids. Freepoint’s case exposes the same commercial advantage from another desk: information about the counterparty’s position and competitors’ offers, funded through payments presented as business expenses.

What a Trading or Finance Insider Can Connect

The useful foreign-bribery evidence connects a decision to the information, payment and people behind it. Here, that can mean the message preceding a bid, the cargo reference behind a commission, the account named on an invoice, or the worksheet explaining a resale profit. Your knowledge of why a transaction happened can connect records that appear unrelated to someone outside the business.

A trader may recognize information that could only have come from inside the counterparty. A finance employee may know which invoice, approval or beneficiary belongs to the same transaction. A compliance employee may know what the agent was supposed to provide and what happened when questions were raised. We build that account with you, connecting the commercial advantage to the evidence of who knew and who paid.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. That is a separate program from the agency actions described here. For information about corrupt commodities trading, we assess the CFTC whistleblower program with you alongside the transaction evidence.

You Know What Changed the Bid

If you saw a consultant’s payment turn into information from inside a state oil company, speak to one of our Whistleblower Experts about what changed the trade. We build the case around your knowledge of the bids, cargoes and payments, and bring in foreign-bribery whistleblower lawyers with experience in commodities transactions and international money flows. We stay beside you to build your strongest foreign-bribery whistleblower case.