Subscribe to our FinCrimes Update for news about the Foreign Corrupt Practices Act and related prosecutions and enforcement actions.
On September 13, the DOJ announced two additional guilty pleas in its wide-ranging foreign bribery investigation into payments to officials of Venezuela’s state-owned energy company, Petroleos de Venezuela S.A. (PDVSA). Juan Carlos Castillo Rincon (Castillo), a former manager of a Texas-based logistics and freight forwarding company, pleaded guilty to one count of conspiracy to violate the FCPA in connection with corruptly securing contracts, contract extensions, and favorable contract terms from PDVSA. Castillo pleaded guilty in the Southern District of Texas, as did Jose Orlando Camacho (Camacho), the PDVSA official who accepted the bribes, and whose guilty plea was also unsealed. As now revealed, in July 2017, Camacho pleaded guilty under seal to conspiracy to commit money laundering. Both Camacho and Castillo are scheduled to be sentenced in February 2019. Prior Scorecard coverage of the PDVSA matter can be viewed here.
With these guilty pleas, DOJ has now brought charges against 18 individuals as part of its investigation into bribery at PDVSA. Fourteen individuals have pleaded guilty. Due to the limits inherent in the FCPA, the DOJ’s charges against the corrupt foreign officials such as Camacho (i.e., PDVSA employees) have been based on money laundering and not FCPA (see Prior FCPA Scorecard Coverage here and here) whereas the charges against the U.S.-based individuals who made and/or directed the corrupt payments generally have included FCPA violations (see Prior FCPA Scorecard Coverage here).
On August 1, DOJ announced the arrest of Jose Manuel Gonzalez Testino, a dual U.S.-Venezuelan citizen, on foreign bribery charges for making and conspiring to make corrupt payments to an official of Venezuela’s state-owned energy company, Petroleos de Venezuela S.A. (PDVSA). Gonzalez was arrested at Miami International Airport on an arrest warrant based on a criminal complaint in the Southern District of Texas, which was unsealed on July 31. Gonzalez made an initial appearance before a magistrate judge in the Southern District of Florida.
According to the criminal complaint, Gonzalez and a co-conspirator paid at least $629,000 in bribes to a former PDVSA official in exchange for favorable business treatment for Gonzalez’s companies, including: (1) directing PDVSA contracts to Gonzalez’s companies, (2) giving Gonzalez’s companies priority over other vendors to receive payments, and (3) awarding Gonzalez’s companies contracts in U.S. dollars rather than Venezuelan bolivars.
DOJ has announced charges against 17 individuals, including Gonzalez, as part of its investigation into bribery at PDVSA. 12 individuals have pleaded guilty.
On July 16, 2018, Luis Carlos De Leon-Perez, a dual U.S.-Venezuelan citizen, pleaded guilty to one count of conspiracy to violate the FCPA and one count of conspiracy to commit money laundering. De Leon’s convictions relate to allegations that he bribed officials at Venezuela’s state-owned oil company, Petroleos de Venezuela S.A. (PDVSA), and laundered money for bribes to other company employees. FCPA Scorecard provided earlier coverage of this case here.
De Leon admitted to soliciting and directing bribes from two U.S. citizens in exchange for securing payment priority for their companies from PDVSA and for awards of PDVSA contracts. De Leon also admitted to conspiring with these individuals to launder and conceal the proceeds of the scheme through a series of financial transactions, including wire transfers to offshore accounts. Sentencing is scheduled for September 24, 2018.
De Leon’s conviction underscores how wide investigations can become as the DOJ continues pulling threads and obtaining guilty pleas. The DOJ has charged 15 defendants in the PDVSA cases, 12 of whom have pleaded guilty to date, including De Leon. DOJ also credited the assistance of the Swiss Federal Office of Justice and the Spanish Guardia Civil.
The DOJ announced on Thursday, April 19, that a former Venezuelan official had pleaded guilty to one count of conspiracy to commit money laundering. The charge arose from Cesar David Rincon Godoy’s role in a bribery scheme involving bribes paid by the owners of U.S. companies to Venezuelan government officials to secure energy contracts and payments on outstanding invoices. As the former general manager of the procurement subsidiary of the Venezuelan state-owned energy company, Petroleos de Venezuela S.A. (PDVSA), Rincon had solicited and accepted bribes. The judge entered a personal money judgment of $7,033,504.71. As a government official receiving the bribes, Rincon could not be charged himself with FCPA offenses (which are targeted at those paying the bribes). Related charges against four other individuals remain pending, including charges of conspiracy to violate the FCPA; 11 individuals have already pleaded guilty in the PDVSA cases.
For prior coverage of the PDVSA enforcement actions, please see here.
Houston-based energy company sues former Venezuelan government officials for bribery related conduct related to Petroleos
On February 16, 2018, Harvest Natural Resources and HNR Energia B.V (collectively, “Harvest”), a Houston-based energy corporation that formally dissolved in May 2017, filed suit in the Southern District of Texas against two former presidents of Venezuela’s national oil company Petroleos de Venezuela, S.A. (“PDVSA”), Rafael Dario Ramirez Carreno (“Ramirez”) and Eulogio Antonio Del Pino Diaz (“Del Pino), and others who allegedly worked for Ramirez and PDVSA. According to the complaint filed by Harvest, Venezuela’s Ministerio del Poder Popular de Petroleo y Mineria twice refused to allow Harvest to sell energy assets co-owned with PDVSA because Harvest refused to pay bribes requested by the defendants. According to Harvest, the denials forced the company to sell the same assets at a loss of $470 million. Harvest has sued the defendants alleging civil violations of the Racketeer Influenced and Corrupt Organizations Act (“RICO”), the Sherman Act, the Robinson-Patman Act, and the Texas Free Enterprise and Antitrust Act.
This suit was filed days after the DOJ unsealed charges against five former Venezuelan government officials for their involvement in a money laundering scheme at PDVSA. Previous FCPA Scorecard coverage of the ongoing DOJ and ICE-HIS investigation into bribery at Petroleos can be found here.
DOJ unseals charges against former Venezuelan government officials for money laundering and FCPA violations in Petroleos scheme
On February 12, the DOJ unsealed charges against five former Venezuelan government officials for their involvement in a money laundering scheme at Venezuela’s state-owned energy company Petroleos de Venezuela (Petroleos). The five defendants—Luis Carlos De Leon Perez (De Leon), Nervis Gerardo Villalobos Cardenas (Villalobos), Cesar David Rincon Godoy (Cesar Rincon), Alejandro Isturiz-Chiesa, and Rafael Ernesto Reiter Munozare (Reiter)—are each charged with conspiracy to commit money laundering. De Leon and Villalobos are also charged with conspiracy to violate the FCPA.
De Leon, Villalobos, Cesar Rincon, and Reiter were arrested in Spain in October 2017 on arrest warrants based on an indictment filed in the Southern District of Texas last August. Cesar Rincon has been extradited from Spain, while the others are pending extradition.
The indictment alleges that the five defendants possessed significant influence within Petroleos, which permitted them to solicit PDVSA vendors for “bribes and kickbacks in exchange for providing assistance to those vendors in connection with their PDVSA business.” The Petroleos vendors included residents of the U.S. and vendors who owned U.S.-based businesses. According to the indictment, two Petroleos vendors, Roberto Enrique Rincon Fernandez and Jose Shiera-Bastidas, transferred more than $27 million to accounts in Switzerland that were connected to De Leon and Villalobos. Rincon and Shiera previously pleaded guilty in the Southern District of Texas to FCPA charges related to the bribery of Petroleos officials.
The charges are part of an ongoing investigation by the DOJ and ICE-HSI into bribery at Petroleos, which has resulted in charges against fifteen individuals, ten of whom have pleaded guilty. Previous FCPA Scorecard coverage of the Petroleos investigation can be found here.
Florida Energy Company Owner Pleads Guilty to Conspiracy to Violate the FCPA in Venezuelan Bribery Scheme
On October 11, the DOJ announced that Fernando Ardila Rued – a co-owner of several Florida-based energy companies – pleaded guilty to FCPA charges that he conspired to bribe foreign officials in exchange for obtaining contracts from Venezuela’s state-owned energy company, Petroleos de Venezuela S.A. (PDVSA). In his plea, Ardila admitted to conspiring with two other individuals – Abraham Jose Shiera Bastidas and Roberto Enrique Rincon Fernandez – from 2008 through 2014 to bribe PDVSA purchasing analysts through cash payments and other entertainment in order to win contracts for Shiera and Rincon’s companies. Ardila is the tenth individual who has pleaded guilty in connection with the PDVSA scheme.
This investigation has been a collaboration between the DOJ, ICE-HSI, and IRS-Criminal Investigation Division. Previous FCPA Scorecard coverage of the PDVSA investigation can be found here.
On January 10, it was announced that two additional defendants, Juan Jose Hernandez Comerma and Charles Quintard Beech III, owners of Florida and Texas-based energy companies, had pleaded guilty to foreign bribery charges related to a scheme to corruptly secure energy contracts from Venezuela’s state-owned oil company, Petroleos de Venezuela S.A.
According to admissions by Hernandez and Beech, they conspired with other previously charged defendants from 2008 through 2012 to pay bribes and other things of value, including recreational travel, meals, and entertainment to Petroleos officials to obtain energy contracts or receive payment for previously awarded contracts. Some of the bribes were paid to a Petroleos official’s relative to conceal the nature, source, and ownership of the bribe.
In total, eight individuals have now pleaded guilty in cases related to the government’s investigation into bribery at Petroleos. The government’s investigation is ongoing. Previous FCPA Scorecard coverage on the Petroleos investigations can be found here.
On June 16, the DOJ announced that Roberto Enrique Rincon Fernandez, the owner of several U.S.-based energy companies, had pleaded guilty to bribery charges related to a scheme to corruptly secure energy contracts from Venezuela's state-owned oil company, Petroleos de Venezuela (Petroleos). This stems from the previously reported December 2015 charges against Mr. Rincon and Jose Shiera-Bastidas, the owner of an oil-field supply company. According to admissions made by Rincon, he worked with Shiera to submit bids for equipment and services to Petroleos. Beginning in 2009, Rincon and Shiera agreed to pay bribes to Petroleos purchasing analysts to ensure that their companies were placed on Petroleos bidding panels, which enabled the companies to secure lucrative energy contracts. Rincon also admitted to making bribe payments to other Petroleos officials to ensure that his companies were placed on Petroleos-approved vendor lists and given payment priority over other vendors with outstanding invoices. Previous FCPA Scorecard coverage on the Petroleos investigations can be found here.
On March 23, 2016, the DOJ announced that Abraham Jose Shiera-Bastidas pleaded guilty in a federal court in Texas to violating the FCPA and committing wire fraud by paying bribes to ensure that two companies won contracts and received other preferential treatment from Venezuelas state-owned oil company, Petroleos de Venezuela (Petroleos). Mr. Shiera-Bastidas was the owner of an oil-field supply company that supplied goods and services to Petroleos de Venezuela. Mr. Shiera-Bastidas was charged in December 2015 along with the owner of the other involved company, Mr. Roberto Enrique Rincon Fernandez. The charges against Mr. Rincon Fernandez are still pending and he has been detained pending his trial, which is scheduled for April. The judge also unsealed guilty pleas made by four other individuals in connection with the same probe into Petroleos. One of these individuals was an employee of Mr. Shiera-Bastidas company, while the other three individuals were former officials of Petroleos. Mr. Shiera-Bastidas is due to be sentenced in July and faces a maximum of five years in prison for each count. Previous FCPA Scorecard coverage on the Petroleos investigations can be found here.
- Kathryn L. Ryan to discuss "NMLS usage" at the NMLS Annual Conference & Training
- Jeffrey S. Hydrick to discuss "State legislative update" at the NMLS Annual Conference & Training
- Kathryn L. Ryan to speak at the "Business model primer" at the NMLS Annual Conference & Training
- Daniel P. Stipano to discuss "Dynamic customer due diligence and beneficial ownership from KYC to ongoing CDD and the new rule implementation" at the Puerto Rican Symposium of Anti-Money Laundering
- Michelle L. Rogers to discuss "Preparing for servicing exams in the current regulatory environment" at the Mortgage Bankers Association National Mortgage Servicing Conference & Expo
- Jon David D. Langlois to discuss "Regulatory risks of convenience fees" at the Mortgage Bankers Association National Mortgage Servicing Conference & Expo
- APPROVED Webcast: NMLS Annual Conference & Ombudsman Meeting: Review and recap
- Brandy A. Hood to discuss "Keeping your head above water in flood insurance compliance" at the Mortgage Bankers Association National Mortgage Servicing Conference & Expo
- Melissa Klimkiewicz to discuss "Servicing super session" at the Mortgage Bankers Association National Mortgage Servicing Conference & Expo
- Daniel P. Stipano to discuss "Lessons learned from recent high profile enforcement actions" at the Florida International Bankers Association AML Compliance Conference
- Moorari K. Shah to provide "Regulatory update – California and beyond" at the National Equipment Finance Association Summit
- Sasha Leonhardt and John B. Williams to discuss "Privacy" at the National Association of Federally-Insured Credit Unions Spring Regulatory Compliance School
- Aaron C. Mahler to discuss "Regulation B/fair lending" at the National Association of Federally-Insured Credit Unions Spring Regulatory Compliance School
- Heidi M. Bauer to discuss "'So you want to form a joint venture' — Licensing strategies for successful JVs" at RESPRO26
- Jonice Gray Tucker to discuss "Small business & regulation: How fair lending has evolved & where are we heading?" at CBA Live
- Jonice Gray Tucker to to discuss "DC policy: Everything but the kitchen sink" at CBA Live
- Daniel P. Stipano to discuss "Lessons learned from ABLV and other major cases involving inadequate compliance oversight" at the ACAMS International AML & Financial Crime Conference
- Daniel P. Stipano to discuss "A year in the life of the CDD final rule: A first anniversary assessment" at the ACAMS International AML & Financial Crime Conference
- Moorari K. Shah to discuss "State regulatory and disclosures" at the Equipment Leasing and Finance Association Legal Forum
- Hank Asbill to discuss "Pay no attention to the man behind the curtain: Addressing prosecutions driven by hidden actors" at the National Association of Criminal Defense Lawyers West Coast White Collar Conference
- Daniel P. Stipano to discuss "Keep off the grass: Mitigating the risks of banking marijuana-related businesses" at the ACAMS AML Risk Management Conference
- Daniel P. Stipano to discuss "Mid-year policy update" at the ACAMS AML Risk Management Conference
- Benjamin W. Hutten to discuss "Requirements for banking inherently high-risk relationships" at the Georgia Bankers Association BSA Experience Program