Two executives of an SEC-register broker-dealer pleaded guilty Thursday to bribing an official of a state-owned Venezuelan bank in exchange for bond trading business.
Ernesto Lujan, a former managing partner of Direct Access Partners, and Tomas Alberto Clarke Bethancourt (also known as Tomas Clarke), a former senior vice president, pleaded guilty to conspiracy, money laundering, and violating the Foreign Corrupt Practices Act.
Both had worked in the broker’s Miami office.
They paid at least $5 million in bribes to María de los Ángeles González de Hernandez, a vice president at Banco de Desarrollo Economico y Social de Venezuela (BANDES).
In return for bribes from 2008 to 2010, she directed bond trading work to Direct Access and approved fraudulent trades.
She was charged in May with Travel Act conspiracy and substantive offenses, and two money laundering-related counts. She lives in Venezuela but was arrested in Miami.
Clarke said Thursday in court a second state-owned bank was involved. He named Cristobal-based Banfoandes, which the Venezuela government shut down in 2009, according to Reuters.
Another broker from Direct Access, Jose Alejandro Hurtado, also faces Travel Act, money laundering, and FCPA charges in the case.
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 SEC and DOJ said a periodic examination of the books of Director Access in 2010 led to discovery of fraud and bribery.
The brokerage generated more than $66 million in revenue on trades in Venezuelan sovereign or state-sponsored bonds for BANDES, a state-controlled economic develop bank. Some of the trades were phony round-trip trades with no business purpose except to generate brokerage fees.
Clarke and Hurtado and two other brokers were also charged in an SEC civil complaint with fraud and manipulation.
The Wall Street Journal said Direct Access Partners, based in New York, stopped doing business after the arrests. The paper said ‘Goldman Sachs Execution & Clearing, the firm’s clearing agent, stopped accepting trades after that probe came to light on May 8, effectively shutting the firm down.’
After entering his guilty plea in federal court in New York City Thursday, Lujan was released for the first time since his arrest in June on $1.5 million bond.
Clarke is free pending sentencing.
Richard L. Cassin is the Publisher and Editor of the FCPA Blog. He can be contacted here.