The former chief executive officer of Direct Access Partners LLC and a former partner at the brokerage firm were charged in federal court in New York Monday for bribery involving Venezuela’s state bank.
Benito Chinea, 47, the former CEO, and Joseph DeMeneses, 44, were charged in a 15-count indictment unsealed Monday. They each face one count of conspiracy to violate the Foreign Corrupt Practices Act and the Travel Act, five counts of violating the FCPA, and five counts of violating of the Travel Act.
Chinea and DeMeneses are accused of paying kickbacks to Maria de los Angeles Gonzalez de Hernandez, a vice president of finance at Banco de Desarrollo Economico y Social de Venezuela, or BANDES, in exchange for the bank’s bond-trading business.
Chinea was taken into custody Monday in Manalapan, New Jersey, where he lives, and DeMeneses in Fairfield, Connecticut, where he lives.
In August last year, three officers of Direct Access pleaded guilty in the case.
Ernesto Lujan, a former managing partner of the SEC-registered broker-dealer, Tomas Alberto Clarke Bethancourt (also known as Tomas Clarke), a former senior vice president, and Jose Alejandro Hurtado, a broker, each pleaded guilty to six counts of conspiring to violate the Foreign Corrupt Practices Act, the Travel Act, and money laundering, and substantive counts of the offenses.
All three had worked in the firm’s Miami office. They agreed to cooperate with prosecutors and haven’t been sentenced yet.
They admitted paying at least $5 million in bribes to Gonzalez from 2008 to 2010. In return, she directed bond trading work to Direct Access and approved fraudulent trades. Some of the trades she approved were phony round-trip trades with no business purpose except to generate brokerage fees.
The scheme made about $74 million in revenue for Direct Access, prosecutors said.
Gonzalez pleaded guilty in November to conspiracy to violate the Travel Act and commit money laundering, as well as two substantive counts of the offenses. She also agreed to cooperate with federal prosecutors.
Also on Monday, the SEC announced civil charges against Chinea and DeMeneses. Others involved in the bribery scheme had already been sued by the SEC.
The SEC asked for disgorgement and penalties against Chinea, DeMeneses, Lujan, Clarke, Hurtado, and his wife, Leticia Pabon.
The agency charged the defendants with fraud, manipulation, and making false statements in SEC filings.
A copy of the DOJ’s April 14, 2014 release is here.
The SEC’s April 14 release is here.
Richard L. Cassin is the Publisher and Editor of the FCPA Blog. He can be contacted here.