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Financial Services Law Insights and Observations


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  • FinCEN Issues Advisory Regarding Venezuelan Government

    Financial Crimes

    On September 20, the Financial Crimes Enforcement Network (FinCEN) issued an advisory to financial institutions to warn of public corruption and money laundering related to Venezuelan government agencies and bodies. The advisory lists several red flags specific to the Venezuelan government to assist financial institutions with identifying and reporting suspicious activity to FinCEN, including, among other things, payments for government contracts made to personal accounts or to companies in a different line of business, payments made from shell corporations, and certain real estate purchases by Venezuelan government officials, primarily in south Florida and Houston, Texas.

    As previously reported in InfoBytes, sanctions have recently been imposed on several Venezuelan political figures. (See previous InfoBytes coverage here and here.)

    Financial Crimes FinCEN Department of Treasury Sanctions

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  • President Trump Imposes Additional Venezuelan Sanctions

    Financial Crimes

    On August 24, President Trump announced the issuance of new sanctions against Venezuela. Executive Order 13808 “Imposing Additional Sanctions with Respect to the Situation in Venezuela,” adds additional restrictions to those declared in Executive Order 13692. The sanctions prohibit transactions related to the following:

    • “new debt with a maturity of greater than 90 days” in conjunction with the Venezuelan state-owned oil and natural gas company (state-owned company);
    • “new debt with a maturity of greater than 30 days, or new equity, of the Government of Venezuela, other than debt” in conjunction with the state-owned company;
    • “bonds issued by the Government of Venezuela prior to the effective date of this order”;
    • “dividend payments or other distributions of profits to the Government of Venezuela from any entity owned or controlled, directly or indirectly, by the Government of Venezuela;
    • “[t]he purchase, directly or indirectly, by a [U.S.] person or within the [U.S.], of securities from the Government of Venezuela, other than securities qualifying as new debt with a maturity of less than or equal to 90 days [for state-owned company debt] or 30 days [for other Government of Venezuela debt].”

    On August 25, OFAC also issued four General Licenses containing additional provisions: (i) General License 1 imposes a wind-down period through September 24, 2017 for contracts and other agreements that were effective prior to the Executive Order's effective date; (ii) General License 2 authorizes certain transactions involving a specifically listed holding company; (iii) General License 3 authorizes dealings in certain specified Government of Venezuela-related bonds that would otherwise be prohibited; and (iv) General License 4 allows new debt transactions related to “the provision of financing for, and other dealings in new debt related to the exportation or reexportation, from the [U.S.] or by a U.S. person . . . of agricultural commodities, medicine, medical devices, or replacement parts and components for medical devices,” provided compliance with the outlined requirements and limitations. OFAC also published answers to several related frequently asked questions concerning the additional sanctions.

    Financial Crimes OFAC Sanctions Department of Treasury

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  • OFAC Imposes Sanctions on Eight Additional Venezuelans Connected to Venezuelan President Maduro

    Financial Crimes

    On August 9, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced that it was imposing sanctions on eight Venezuelan individuals for their role in supporting the “Constituent Assembly,” which was instituted under President Nicolas Maduro in order to allegedly undermine the democratic process by “rewrit[ing] the Venezuelan constitution and dissolv[ing] Venezuelan state institutions.” Seven of the individuals sanctioned are current or former officials of the Venezuelan government, and one was an active participant in identified “anti-democratic” actions. All assets belonging to the identified individuals subject to U.S. jurisdiction are frozen, and U.S. persons are prohibited from having any dealings with them. As previously reported in InfoBytes, sanctions were imposed on President Maduro on July 31.

    Financial Crimes Sanctions Department of Treasury OFAC

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  • OFAC Imposes Sanctions on Venezuelan President Maduro

    Financial Crimes

    On July 31, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced that it was imposing sanctions on Venezuelan President Nicolás Maduro, pursuant to Executive Order 13692, for undermining the country’s democracy and rule of law after recent elections and committing widespread human rights abuses. The sanctions prohibit any U.S. individual from dealing with President Maduro and freezes all assets belonging to him subject to U.S. jurisdiction. Treasury Secretary Steven T. Mnuchin explained that the July 30 “illegitimate elections confirm that Maduro is a dictator who disregards the will of the Venezuelan people. By sanctioning Maduro, the United States makes clear our opposition to the policies of his regime and our support for the people of Venezuela who seek to return their country to a full and prosperous democracy.”

    The July 31 sanctions follow an announcement on July 26 in which OFAC announced it was imposing sanctions against 13 current or former Venezuelan government officials associated with election corruption and human rights violations. As a result, all assets subject to U.S. jurisdiction are frozen and U.S. persons are prohibited from dealing with any of the individuals on the list.

    Financial Crimes Sanctions OFAC Department of Treasury

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  • Two Additional Businessmen Plead Guilty in Venezuelan Oil Company Scheme

    Federal Issues

    On January 10, it was announced that two additional defendants, 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.

    According to admissions contained here and here, 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 the company’s officials to obtain energy contracts or receive payment for previously awarded contracts. Some of the bribes were paid to the company’s 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 the company. The government’s investigation is ongoing. Previous FCPA Scorecard coverage on the company’s investigations can be found here.

    Federal Issues FCPA International Bribery

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  • DOJ Issues Two Declination Letters Requiring Disgorgement

    Federal Issues

    On September 29, 2016, the DOJ issued two declination letters concerning suspected FCPA violations, closing their investigations of two Texas-based corporations. The DOJ claims that its investigation of one of the corporations found that the company’s employees paid approximately $500,000 in bribes to Venezuela and China government officials in order to influence those officials’ purchasing decisions and thereby secure approximately $2.7 million in profits. With respect to its investigation of the second corporation, DOJ claims that the company’s China subsidiary provided approximately $45,000 worth of benefits to China government officials to obtain sales which generated profits of approximately $335,000. In connection with the issuance of the declination letters, the companies agreed to the disgorgement of their profits from the sales associated with their purportedly illegal conduct.

    The declinations were made pursuant to the FCPA Pilot Program, a one-year program launched in April 2016 to encourage companies to voluntarily self-disclose FCPA-related misconduct, cooperate with DOJ, and make appropriate remediation efforts. The DOJ’s decision to close the investigations was based on a number of factors including the companies’ (i) voluntary disclosures; (ii) thorough internal investigations; (iii) full cooperation in providing DOJ with information about the individuals responsible for the purported misconduct; (iv) agreement to disgorge all profits made from the purported misconduct; (v) enhancement of compliance programs and internal accounting controls; and (vi) remediation in the form of terminating or sanctioning employees responsible for the purported misconduct. These are the fourth and fifth declination letters issued under the Pilot Program.

    The disgorgement of profits in connection with the declination letters to the two corporations raises the question of whether such disgorgement may be a prerequisite to obtaining a declination letter under the Pilot Program. Companies that previously received declination letters under the Pilot Program were required to disgorge profits as part of settling related SEC enforcement actions. Past FCPA Scorecard coverage of the Pilot Program and associated declination letters may be found here.

    Federal Issues FCPA International SEC DOJ

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  • Businessman Pleads Guilty to Foreign Bribery Charges in Connection with Venezuela's State-Owned Oil Company

    Federal Issues

    On June 16, the DOJ announced that 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. This stems from the previously reported December 2015 charges against the energy companies’ owner and the owner of an oil-field supply company.

    According to admissions made by the energy companies’ owner, he worked with the oil-field supply company’s owner to submit bids for equipment and services to Venezuela’s state-owned oil company. Beginning in 2009, the two individuals agreed to pay bribes to purchasing analysts of the state-owned oil company to ensure that their companies were placed on the state-owned oil company’s bidding panels, which enabled the companies to secure lucrative energy contracts. The energy companies’ owner also admitted to making bribe payments to other officials of the state-owned oil company to ensure that his companies were placed on vendor lists approved by the state-owned oil company and given payment priority over other vendors with outstanding invoices. Previous FCPA Scorecard coverage on these investigations can be found here.


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  • Former New York-Based Broker-Dealer Executives Sentenced to Two Years in Prison

    Federal Issues

    Two former executives of a now-defunct New York-based broker-dealer were each sentenced to two years in prison for their roles in a bribery scheme involving a Venezuela’s state-owned economic development bank. On December 8, Tomas Clarke, the former Miami-based senior vice president of the broker-dealer, was sentenced to two years in prison and ordered to forfeit nearly $5.8 million for his role. On December 4, Ernesto Lujan, the former managing partner at the broker-dealer’s Miami office, was sentenced to two years in prison and ordered to forfeit $18.5 million. The pair pleaded guilty in August 2013 in the U.S. District Court for the Southern District of New York to conspiracy to violate the FCPA, the Travel Act, and to commit money laundering, as well as substantive counts of these offenses.

    The broker-dealer earned more than $60 million in commissions from trades placed by the Venezuela’s state-owned economic development bank over a five year period. To obtain that business, the broker-dealer paid millions of dollars in bribes to an official, Maria De Los Angeles Gonzalez De Hernandez (Gonzalez), at the development bank, often routing them through third parties and offshore bank accounts in Switzerland and elsewhere. Clarke and Lujan are two of five former broker-dealer executives to plead guilty in connection with this case. In March, two other former executives, including the broker-dealer’s former CEO, were each sentenced to four years in prison. One other former executive, who pleaded guilty in August 2013, has yet to be sentenced. Gonzalez, who pleaded guilty in November 2013 in the U.S. District Court for the Southern District of New York to conspiracy to violate the Travel Act and to commit money laundering, as well as substantive counts of these offenses, also is awaiting sentencing.


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  • OFAC Publishes Venezuela Sanctions Regulations

    Federal Issues

    On July 10, OFAC published regulations to implement the Venezuela Defense of Human Rights and Civil Society Act of 2014 and Executive Order 13692. The Act required the President to impose targeted sanctions on certain persons determined to be responsible for significant acts of violence or serious human rights abuses against antigovernment protesters in Venezuela, and to have ordered, or otherwise directed, the arrest or prosecution of certain persons in Venezuela. The Executive Order set forth standards for designating and suspending entry into the United States of corresponding persons in Venezuela. The regulations provide the framework for blocking property or interests in property of persons designated according to the Executive Order. According to OFAC, the regulations are currently in “abbreviated form” and the agency will issue a more comprehensive set of regulations that may provide further interpretive guidance, general licenses, and statements of licensing policy.

    Sanctions OFAC

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  • White House Issues Executive Order Targeting Venezuela

    Federal Issues

    On March 8, President Obama signed an executive order imposing sanctions on Venezuela in response to the country’s ongoing human rights violations and abuses in anti-governmental protests. Specifically, the Order (i) designates seven Venezuelan government officials as Specially Designated Nationals (SDNs), (ii) provides authorization for the designation of additional parties as SDNs who are determined to be engaged in specified activities, and (iii) suspends entry into the United States of persons designated under the Order. While the Order stems from defending human rights and democratic governance, according to Treasury Secretary Jack Lew, the Order “will be used to protect the U.S. financial system from the illicit financial flows from public corruption in Venezuela.”


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