An official with Venezuela’s state-owned economic development bank directed its bond-trading business to a New York brokerage in exchange for bribes from two of its employees, U.S. prosecutors said.
Maria Gonzalez, 54, vice president of finance at Banco de Desarrollo Economico y Social de Venezuela, Tomas Alberto Clarke Bethancourt, 43, and Jose Alejandro Hurtado, 38, were charged in a criminal complaint unsealed yesterday in federal court in New York.
Prosecutors said Clarke was a senior vice president and Hurtado an employee in the Miami office of the brokerage, which was identified in a lawsuit by the U.S. Securities and Exchange Commission as Direct Access Partners LLC, or DAP.
“These latest charges certainly highlight the widespread corruption throughout the Venezuelan government and the immense sums of money available with no Venezuelan oversight,” Russ Dallen, head bond trader at Caracas Capital Markets, said yesterday in an e-mailed response to questions.
U.S. Attorney Preet Bharara in Manhattan said that the three defendants engaged in a conspiracy to pay bribes to Gonzalez in exchange for her directing the bank’s financial trading business to DAP. All three were arrested by agents with the Federal Bureau of Investigation on May 3 and presented in federal court in Miami on May 6.
The SEC said Hurtado, who lives in Miami, was the intermediary between DAP and Gonzalez. The Venezuelan government has a majority ownership interest in the bank, known as BANDES, and provided it with substantial funding, according to the SEC.
Henry Bell, a lawyer for Clarke, had no comment on the charges. Frank Rubino, who represents Hurtado, and Jane Moscowitz, a lawyer for Gonzalez, didn’t immediately return phone messages yesterday seeking comment on the allegations.
Phone calls to DAP’s offices yesterday after regular business hours weren’t answered.
From April 2009 through June 2010, Clarke, Hurtado and Gonzalez participated in a conspiracy in which Gonzalez directed trading business which she controlled to DAP and in return, agents and employees of the broker-dealer split the more than $60 million in mark-ups and mark-downs from trading with BANDES, the U.S. alleged.
Clarke and Hurtado allegedly devised a scheme with Gonzalez to split commissions which BANDES paid the broker-dealer, and the government said Gonzalez received monthly kickbacks from DAP and its employees which prosecutors said “were frequently in the six-figure amounts.”
Gonzalez, who was in charge of overseas trading for BANDES, made at least $3.6 million in kickbacks from the scheme according to prosecutors. In exchange, Gonzalez allegedly directed bank business to DAP. Hurtado and his wife made millions from DAP in salary, bonuses and finder’s fees in connection with the BANDES business, prosecutors said. Millions more went to a foreign entity controlled by Clarke, which then transferred some of the money to a Swiss account for Gonzalez’s benefit, according to the government.
In addition to generating money on mark-ups and mark-downs, Clarke caused DAP in January 2010 buy and sell the same bonds for BANDES on the same day.
“The result of such trades was that BANDES was left with the same bond holdings as before the trades, except that it had paid the broker-dealer approximately $10.5 million in mark-ups in the course of the two round-trip transactions,” the U.S. government said in its complaint.
The SEC’s lawsuit against Clarke and Hurtado includes as defendants Haydee Leticia Pabon, 33, who is Hurtado’s wife, and Iuri Rodolfo Bethancourt, 40, a resident of Panama. According to the SEC, Clarke and Bethancourt are “apparent relatives.”
Bharara’s office yesterday filed a civil forfeiture lawsuit seeking control of bank accounts used in the alleged scheme and Miami-area properties that Hurtado allegedly bought with his proceeds.
“The defendants’ arrests lay bare a web of bribery and corruption in which employees of a U.S. broker-dealer allegedly generated tens of millions of dollars through transactions in order to fund kickbacks to a Venezuelan government official in exchange for her directing the Venezuelan economic development bank’s financial trading business to their employer,” Bharara said yesterday in a statement. “The defendants also engaged in international money laundering to carry out their corrupt scheme.”
A BANDES press official, who declined to be identified because of bank policy, declined to comment on the charges. An official in Venezuela’s finance ministry, who declined to be identified because of ministry policy, also declined to comment. A representative of the Information Ministry, who couldn’t be identified because of ministry policy, declined to comment.
Gonzalez is charged with conspiracy to violate the Travel Act, violation of the Travel Act, money laundering and money laundering conspiracy. Clarke and Hurtado are each charged with conspiracy to violate the Foreign Corrupt Practices Act, violation of the FCPA, Conspiracy to violate the Travel Act, violation of the Travel Act, money laundering and money laundering conspiracy.
The money laundering and money laundering conspiracy charges carry maximum prison terms of 20 years.
The case is U.S. v. Clarke, 13-mag-00683, U.S. District Court, Southern District of New York (Manhattan). The SEC case is Securities and Exchange Commission v. Bethancourt, 13-cv-03074, U.S. District Court, Southern District of New York.
To contact the editor responsible for this story: Michael Hytha at email@example.com.