Two brokers affiliated with a New York firm were charged in federal court with paying at least $5 million in bribes to an official at a state-owned Venezuelan bank to win bond trading work.
The bank official was charged with taking the bribes.
The charges appeared in a criminal complaint unsealed Monday in the Southern District of New York.
The two brokers — Tomas Alberto Clarke Bethancourt, also known as Tomas Clarke, and Jose Alejandro Hurtado — were arrested Friday in Miami, where they live.
They face four conspiracy and substantive counts under the Foreign Corrupt Practices Act and the Travel Act, and two money laundering-related counts.
The FCPA and Travel Act counts are punishable by up to five years in prison.
Money laundering is punishable by up to 20 years in prison.
The case began in 2010, when the SEC examined the books of a registered broker-dealer, Direct Access Partners LLC (DAP). The SEC and DOJ said the periodic examination led to discovery of the massive fraud and bribery.
DAP generated more than $66 million in revenue on trades in Venezuelan sovereign or state-sponsored bonds for Banco de Desarrollo Económico y Social de Venezuela (BANDES).
Some of the money went to bribe BANDES vice president of finance, María de los Ángeles González de Hernandez, who authorized the fraudulent trades, the government alleged.
Gonzalez lives in Caracas, Venezuela but was also arrested in Miami Friday.
The DOJ said she received monthly payments through the kickback scheme, including many ‘in six-figure amounts.’
She’s charged in two counts with Travel Act conspiracy and substantive offenses, both punishable by up to five years in prison. She also faces two money laundering-related counts, which carry penalties of up to 20 years in prison.
(Foreign officials who take bribes can’t be prosecuted under the FCPA. The Travel Act (18 U.S. C. §1952) prohibits traveling between states or countries or using an interstate facility in aid of any crime.)
Clarke and Hurtado and two other brokers were also charged in an SEC civil complaint with fraud and manipulation.
DAP landed the BANDES business by paying kickbacks to Gonzalez from 2008 to 2010, the government said.
For example, in January 2010, according to the charges, the traders and Gonzalez arranged two fraudulent roundtrip trades with BANDES as both buyer and seller. The trades ‘lacked any legitimate business purpose’ but caused BANDES to pay DAP more than $10 million in fees. Some of that money went to Gonzalez for authorizing the trades, the government said.
The DOJ also filed a civil forfeiture action against the three criminal defendants. The complaint seeks money held in several bank accounts, including some located in Switzerland, and properties in and around Miami.
The DOJ and SEC cases were filed in federal court in Manhattan.
The DOJ’s breakdown of the criminal counts and charges can viewed and downloaded here.
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