The former chief executive officer of Direct Access Partners LLC and a managing director were each sentenced to four years in prison Friday for bribing a Venezuela state bank official in return for bond trading business.
Benito Chinea, 48, of Manalapan, New Jersey, and Joseph DeMeneses, 45, of Fairfield, Connecticut, pleaded guilty in December last year to one count of conspiracy to violate the Foreign Corrupt Practices Act and the Travel Act.
Chinea was also ordered Friday to forfeit $3.6 and DeMeneses forfeited nearly $2.7 — the amounts of commissions and bonuses they made from the offenses, the DOJ said.
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 2012, she directed bond trading work to Direct Access and approved fraudulent trades.
She pleaded guilty in late 2013 to conspiracy to violate the Travel Act and commit money laundering, as well as two substantive counts of the offenses. She lives in Venezuela but was arrested in Miami.
Direct Access, an SEC registered broker-dealer, had offices in New York and Miami. It generated more than $60 million in revenue on trades in Venezuelan sovereign or state-sponsored bonds for BANDES. Some of the trades were phony round-trip trades with no business purpose except to generate brokerage fees.
Another Direct Access managing director, Ernesto Lujan, pleaded guilty in mid 2013 to conspiracy, money laundering, and violating the FCPA.
The Venezuelan government had a majority ownership interest in Bandes and provided it with substantial funding, the DOJ said.
Federal judge Denise L. Cote imposed the sentences Friday in Manhattan.
Chinea and DeMeneses routed payments to Gonzalez through third-parties posing as “foreign finders” and into offshore bank accounts. “Chinea personally signed checks worth millions of dollars that were made payable to one of these purported ‘foreign finders’ and later deposited in a Swiss bank account, the DOJ said.
Judge Cote said the “massive fraud . . . . went to the heart” of U.S. laws against bribing foreign officials to gain a commercial advantage, according to Bloomberg.
The parent of Direct Access Partners LLC filed for bankruptcy in 2013. The broker-dealer once had 120 employees.
Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.