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Former officer of Venezuela oil company pleads guilty to obstruction
On December 10, a former procurement officer of a Venezuela’s state-owned and state-controlled energy company, pleaded guilty to one count of obstructing an investigation into bribes paid by the owner of U.S.-based companies to Venezuelan government officials in exchange for securing additional business with the company and payment priority on outstanding issues. The former procurement officer, who previously worked for the company in Houston, Texas, pleaded guilty to one count of conspiracy to obstruct an official proceeding.
The charge stems from a guilty plea he entered on December 10, 2015, to one count of conspiracy to launder money and one count of making false statements on his federal income tax return. Under the terms of a plea agreement in that case, he agreed to cooperate with the investigation by being interviewed by the United States, and to providing “truthful, complete and accurate information” to government agents and attorneys. In the latest plea, though, he admitted that after his earlier plea, he concealed facts about bribes paid to the company by a target of the investigation, referred to as Co-Conspirator 1 in the indictment. Additionally, he informed Co-Conspirator 1 that U.S. government authorities were investigating Co-Conspirator 1, and provided Co-Conspirator 1 with information about the investigation, including the topics discussed in his meetings with the government. Consequently, Co-Conspirator 1 destroyed evidence and attempted to flee the country in July 2018. He is scheduled to be sentenced on Feb. 19, 2019.
Co-conspirators sentenced in Venezuelan bribery scheme involving Venezuelan TV mogul
Two co-conspirators of a billionaire news network owner were sentenced this week as part of the DOJ’s recently unsealed prosecution of a bribery scheme involving over $1 billion paid in bribes to members of the Venezuelan government. According to the DOJ, the owner was indicted under seal in August for conspiracy to violate the FCPA, conspiracy to commit money laundering, and nine counts of money laundering. Two co-conspirators, Florida resident and former Venezuelan National Treasurer, and Chicago resident and former owner of a Dominican Republic bank, each pleaded guilty under seal to one count of conspiracy to commit money laundering, and were sentenced in federal court earlier this week.
According to the owner’s indictment, he allegedly bribed members of the Venezuelan government—including former Venezuelan National Treasurer—in exchange for the right to handle the government’s foreign currency exchange transactions, and then acquired a bank in order to launder the bribe money and other illicit proceeds. To do so, the owner allegedly moved money from Switzerland to accounts in Florida and New York and used it to purchase luxury items such as “jets, a yacht, multiple champion horses, and numerous high-end watches.”
In December 2017, the former Venezuelan National Treasurer pleaded guilty to one count of conspiracy to commit money laundering, admitting to taking bribes in exchange for helping his co-conspirators—including the owner—by choosing them to conduct currency exchanges at favorable rates to the Venezuelan government. As part of his plea, the former Venezuelan National Treasurer agreed to cooperate and pay a forfeiture money judgment of $1 billion through the forfeiture of “real estate, vehicles, horses, watches, aircraft, and bank accounts.” On November 27, 2018, U.S. Southern District of Florida Judge Robin L. Rosenberg sentenced the former Venezuelan National Treasurer to 10 years in prison, the maximum under his plea deal.
In March 2018, Chicago resident and former owner of a Dominican Republic bank took a similar plea deal, pleading guilty to one count of conspiracy to commit money laundering, admitting to helping the owner and others acquire and then launder money through the bank. On November 29, 2018, he was sentenced to 3 years in prison.
The Miami Herald has also reported that the owner's personal banker was sentenced last month for his role in another money laundering scheme involving a Venezuelan state-owned oil company. Coverage of the company's prosecutions is available here.
President Trump issues new Venezuela Executive Order targeting gold sector; OFAC publishes related FAQs
On November 1, President Trump issued Executive Order 13850 (E.O. 13850) authorizing the imposition of sanctions on persons who operate in Venezuela's gold sector “or in any other sector of the Venezuelan economy as may be determined by the Secretary of the Treasury, in consultation with the Secretary of State.” The sanctions come in response to the actions of Venezuelan President Maduro’s regime and associated persons in allegedly “plunder[ing] Venezuela's wealth for their own corrupt purposes.” Among other things, the sanctions specifically block the acquisition or retention of property and interests in the United States by persons who “operate in the gold sector of the Venezuelan economy” or “have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, any activity or transaction” involving deceptive practices or corruption in conjunction with the Venezuelan government.
The same day, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) released a set of FAQs connected to the issuance of E.O. 13850, stating that it “expects to use its discretion to target in particular those who operate corruptly in the gold or other identified sectors of the Venezuela economy, and not those who are operating legitimately in such sectors.”
E.O. 13850 is issued in conjunction with E.O.s 13692, 13808, 13827, and 13835. See here for continuing InfoBytes coverage of Venezuelan actions and E.O.s.
Former Venezuelan state-owned oil company procurement officer pleads guilty
On October 30, a Texas businessman, who was a former procurement officer for PDVSA, pleaded guilty to conspiracy to launder the bribe payments he and his co-conspirators at PDVSA received for directing PDVSA business to a Miami-based supplier. The scheme involved false invoices, false e-mail addresses, and shell companies with a Swiss bank account.
For prior coverage of the company's actions, please see here.
Swiss banker sentenced to 10 years in Venezuelan state-owned oil company embezzlement and bribery scheme; official pleads guilty in same scheme
On October 29, a former banker was sentenced to serve 10 years in prison for his role in a scheme to launder funds embezzled from a Venezuelan state-owned oil company. The banker had pleaded guilty to one count of conspiracy to commit money laundering on August 22, 2018. He admitted to using his position at the bank to attract clients from Venezuela. He helped some of those clients launder proceeds from the company's foreign-exchange embezzlement scheme using false-investment schemes and Miami real estate. The PDVSA money was originally obtained through bribery and fraud.
Two days later, on October 31, a former executive director of financial planning at the Venezuelan state-owned oil company pleaded guilty to charges related to his role in the same scheme. He admitted to accepting $5 million in bribes to give priority loan status to a French company and Russian bank. The former executive was paid with the proceeds of the same foreign-exchange embezzlement scheme. He admitted that he ultimately received $12 million in bribes for his participation in the embezzlement scheme and laundered that money with a co-defendant through a false-investment scheme. He is expected to be sentenced on January 9, 2019.
OFAC adds members of Venezuelan President Maduro’s inner circle to Specially Designated Nationals List
On September 25, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) made additions to the Specially Designated Nationals List pursuant to Executive Order 13692. OFAC’s additions to the list include four members of Venezuelan President Maduro’s inner circle, along with a “front network” identified as acting for or on behalf of a sanctioned member of the Maduro regime. According to OFAC, the additional sanctions are issued in response to the Maduro regime's continued “corruption and gross mismanagement.” As a result, all assets belonging to the identified individuals and entities subject to U.S. jurisdiction are blocked, and U.S. persons generally are prohibited from dealing with them.
OFAC also referenced FinCEN advisories issued August and September 2017 (see previous InfoBytes coverage here and here) as a source for additional information on “the methods that Venezuelan senior political figures, their associates, and front persons use to move and hide corrupt proceeds,” including the potential for exploitation within the U.S. financial system and real estate market.
See here for continuing InfoBytes coverage of actions related to Venezuela.
DOJ secures additional guilty pleas in wide-ranging Venezuelan energy company case
On September 13, the DOJ announced two additional guilty pleas in its wide-ranging foreign bribery investigation into payments to officials of a Venezuela’s state-owned energy company. The first individual, 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 the energy company. He pleaded guilty in the Southern District of Texas, as did the second individual, the energy company official who accepted the bribes, and whose guilty plea was also unsealed. As now revealed, in July 2017, the second individual pleaded guilty under seal to conspiracy to commit money laundering. Both individuals 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 the company. Fourteen individuals have pleaded guilty. Due to the limits inherent in the FCPA, the DOJ’s charges against the corrupt foreign officials such as the second individual (i.e., the energy company's 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).
Another executive arrested in Venezuelan energy company bribery case
On August 1, DOJ announced the arrest of a dual U.S.-Venezuelan citizen on foreign bribery charges for making and conspiring to make corrupt payments to an official of a Venezuela’s state-owned energy company. He 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. He made an initial appearance before a magistrate judge in the Southern District of Florida.
According to the criminal complaint, the citizen and a co-conspirator paid at least $629,000 in bribes to a former company official in exchange for favorable business treatment for his companies, including: (1) directing company contracts to his companies, (2) giving his companies priority over other vendors to receive payments, and (3) awarding his companies contracts in U.S. dollars rather than Venezuelan bolivars.
DOJ has announced charges against 17 individuals, including the citizen, as part of its investigation into bribery at the company. 12 individuals have pleaded guilty.
Latest conviction in Venezuelan oil company bribery case
On July 16, 2018, 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. The citizen’s convictions relate to allegations that he bribed officials at Venezuela’s state-owned oil company and laundered money for bribes to other company employees. FCPA Scorecard provided earlier coverage of this case here.
The citizen admitted to soliciting and directing bribes from two U.S. citizens in exchange for securing payment priority for their companies from the oil company and for awards of the company's contracts. The citizen 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.
His 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 company's cases, 12 of whom have pleaded guilty to date, including the citizen. The DOJ also credited the assistance of the Swiss Federal Office of Justice and the Spanish Guardia Civil.
OFAC issues Venezuela General License, updates FAQs
On July 19, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) issued Venezuela General License 5 (GL 5) to allow U.S. persons to engage in transactions related to the financing for, and other dealings in the Petroleos de Venezuela SA 2020 8.5 Percent Bond that would otherwise by prohibited by Executive Order 13835 (E.O. 13835). (See previous InfoBytes coverage here.) OFAC also published two additional FAQs to provide additional guidance on the reasons for the issuance of GL 5 as well as answers to whether E.O. 13835 prohibits U.S. persons having a legal judgment against the Government of Venezuela from attaching and executing against Venezuelan government assets, including vessels, properties, or financial assets.
Visit here for additional InfoBytes coverage on Venezuela sanctions.