Venezuelan forex scheme leads to US money-laundering charges, forfeiture actions, guilty plea

A US case involving an international cohort accused of laundering money embezzled from the Venezuelan government through bribery and fraud began when a banker reported extremely suspicious banking activity, court documents said.

So far, there has already been a guilty plea in the case, a politically connected Venezuelan television tycoon has been implicated, and there has been a forfeiture action against a condominium unit in the high-profile Porsche Design Tower near Miami.

The US Department of Justice this month obtained an indictment of Venezuelan, Portuguese, Colombian and Uruguayan men on charges of laundering money they obtained by defrauding the Venezuelan state-owned oil company Petróleos de Venezuela SA through a foreign exchange scam.

Among those indicted were two Venezuelan ex-officials: Carmelo Urdaneta, former legal counsel for the Ministry of Oil and Mining; and Abraham Edgardo Ortega, former director of finance at PDVSA. Other unnamed and unindicted Venezuelan officials are referenced in court documents.

A former Julius Baer banker, Matthias Krull, last week pleaded guilty to conspiracy to launder money.

Money-laundering scheme

The charges revolve around the defendants' alleged attempts to launder the money into Miami through the services of an unidentified banker, who became a confidential source for US law enforcement authorities, according to the criminal complaint filed in the Southern District of Florida.

When authorities  asked the defendants for proper documentation for their transfers, they instead experienced obstruction and intimidation from them, according to the complaint.

"The conspiracy in this case began in December 2014 with a currency exchange scheme to embezzle approximately 600 million US Dollars from PDVSA, obtained through bribery and fraud, and the defendants' efforts to use the  [confidential source banker] to launder a portion of the proceeds of that scheme," the complaint said.

Ultimately, $1.2 billion was embezzled in the conspiracy, the DOJ said.

The DOJ alleges the defendants used the difference between the open market exchange rate and the official rate between US dollars and Venezuelan bolivars to defraud PDVSA. Court documents said that in 2014 the open market rate was 60 bolivars to $1, whereas the official rate was six bolivars to $1.

The complaint alleges that Venezuelan officials accepted bribes in the form of kickbacks for giving the defendants access to the more favorable official exchange rate after they had obtained bolivars at the much cheaper market rate.

When the defendants attempted to launder money into the US via transfers of a total of 78.8 million euros from a Maltese asset management firm, the banker continually informed the defendants that his bank's compliance department needed a foreign exchange contract.

Instead of providing the banker with the legitimate forex contract he had requested, the criminal complaint said, the defendants sent a $600 million "false joint venture contract" from Eaton Global Services, which the complaint called a Hong Kong shell company.

Meeting with the attack dog

The banker objected to the joint venture contract, pressed for legitimate documentation and then ultimately balked at the transaction, the complaint said.

According to the criminal complaint, when the banker was summoned to Caracas by defendant Francisco Convit to discuss the situation in November 2015, Convit deployed security guards and employed a handgun and a German Shepard wearing a shock collar to intimidate him.

"Convit held the remote for the collar, and commented that he could not always control the dog," the criminal complaint said.

Urdaneta, the former oil ministry counsel, and Venezuelan Jose Vincente Amparan, who handled the paperwork with the Maltese financial firm, were also present at the meeting, the complaint said. Amparan said it would be impossible to provide a forex contract and that more false documents would be provided. The banker asked to return the defendants' money, but they refused.

Soon afterward, the complaint said, the banker approached the Homeland Security Investigations, the investigative arm of the US Department of Homeland Security, and he agreed to cooperate with a probe into the alleged scheme. In February 2016 he began wearing a wire and recording conversations about the money laundering scheme.

Over the next two years, the banker made more than 100 secret recordings in which false documentation and other matters were discussed, the complaint said.

In July the US Attorney for the Southern District of Florida filed a criminal complaint based on the HSI probe charging the Venezuelan officials and the co-defendants with conspiracy to launder money, laundering money, and interstate travel in futherance of a felony.

Krull guilty plea

In August, Krull, who had been arrested a month earlier, waived indictment and pleaded guilty to one count of conspiracy to launder money. He is scheduled to be sentenced Oct. 29 and has offered to cooperate with US authorities in their investigation of other suspects in the case.

Krull was a managing director and vice chair of Swiss bank Julius Baer; his job was to "attract private banking clients, primarily from Venezuela," his factual proffer said. Convit was one of his clients, as was a Venezuelan referred to as "Conspirator 7" in court documents.

Court documents said that Conspirator 7 was the owner of a television network in Venezuela and that Krull had met with him on Fisher Island in Miami, where Conspirator 7 owns a condominium.

The Miami Herald and other news outlets have identified Conspirator 7 as Raul Gorrin, the owner of Globovision in Caracas and an associate of high-level politicians in Venezuela.

Forfeiture action

The indictment of the other defendants also included a forfeiture action that seeks $45 million in US currency, which the DOJ has already frozen, and deposits in US, Bahama, Swiss and UK financial institutions.

The forfeiture action also seeks real estate that was allegedly acquired with the proceeds of the scheme. Among these are apartments in the Panamanian Residencial Santa Maria Signature building.

The action also seeks forfeiture of Unit 2205, a condo in the high-profile Porsche Design Tower on Collins Avenue in Sunny Isle Beach, Florida. The Miami-area tower is a project of Gil Dezer, who in a different and distinct project has partnered with the Trump Organization to brand and market real estate a quarter-mile south on Collins Avenue.

The criminal complaint alleges that Urdaneta, the former oil ministry counsel, had made a deposit on a Porsche Design Tower condo unit and mentioned it in the course of a May 2016 recorded conversation about ways to launder money. Urdaneta told the confidential source banker that the Porsche building had told him that taking title to the unit with a company or a trust could trigger a requirement to report the transaction to the US Treasury Department's Financial Crimes Enforcement Network, or FinCEN.

"In a follow up chat with the [confidential source banker], Urdaneta explained that he was worried about the FinCEN reporting requirement and discussed ways to minimize the risk; Urdaneta suggested forming a new company with his wife as the beneficial owner," the complaint said.

Urdaneta agreed to transfer his equity in the unit to Amparan as a fee for Amparan's money laundering services, the complaint said. In January 2017 the unit was transferred to Paladium Real Estate Group LLC, which listed Urdaneta's wife as owner and Amparan's wife as manager. After the transfer, Urdaneta's wife was removed from the LLC and the unit came under Amparan's control, the complaint said.

The indictment identifies the other defendants as: Gustavo Adolfo Hernandez Frieri, a Colombian, who operates financial firms in Miami; Hugo Andre Ramalho Gois, a Portuguese national associated with Amparan; Marcelo Federico Gutierrez Acosta y Lara, a Uruguayan national; and Mario Enrique Bonilla Vallera, who court documents allege was a straw owner of an account in the scheme.