The Securities and Exchange Commission said Friday that seven individuals from a registered broker-dealer settled charges related to bribes paid to a former official of a Venezuelan state-owned bank.
In federal court in Manhattan, Judge Jesse Furman entered final judgments against Iuri Rodolfo Bethancourt, Benito Chinea, Tomas Alberto Clarke Bethancourt, Joseph DeMeneses, Jose Alejandro Hurtado, Ernesto Lujan, and Haydee Leticia Pabon.
Chinea, Clarke, DeMeneses, Hurtado, and Lujan were ordered to pay $42.5 million in disgorgement and prejudgment interest.
The disgorgement and prejudgment interest were deemed satisfied by forfeiture orders entered in parallel criminal cases against those five defendants.
The global markets group at Wall Street-based Direct Access Partners executed fixed-income trades for customers in foreign sovereign debt.
“DAP Global generated more than $66 million in revenue for DAP from transaction fees — in the form of markups and markdowns — on riskless principal trade executions in Venezuelan sovereign or state-sponsored bonds for Banco de Desarrollo Económico y Social de Venezuela (BANDES),” the SEC said.
The defendants used about $5 million of the revenue to bribe Maria de los Angeles Gonzalez de Hernandez, a BANDES Vice President of Finance, to authorize the fraudulent trades.
Five officers and employees from Direct Access Partners had already pleaded guilty in the criminal case and were sentenced to prison for bribing Gonzalez.
In March 2015, DAP’s former CEO and its managing director were each sentenced to four years in prison. Benito Chinea, 48, and Joseph DeMeneses, 45, pleaded guilty to one count of conspiracy to violate the Foreign Corrupt Practices Act and the Travel Act.
Chinea forfeited $3.6 and DeMeneses forfeited nearly $2.7.
In December last year, Jose Alejandro Hurtado, 40, a Miami-based broker at DAP, was sentenced to three years in prison and ordered him to forfeit nearly $11.9 million.
Hurtado admitted being the middleman between Direct Access Partners and Gonzalez. He pleaded guilty in 2013 to conspiracy and substantive violations of the Foreign Corrupt Practices Act, the Travel Act, and money laundering laws.
Earlier in December, Tomas Clarke, 46, a former DAP senior vice president based in Miami, was sentenced to two years in prison and ordered to forfeit nearly $5.8 million.
Ernesto Lujan, 52, a former DAP managing partner in charge of its Miami office, was also sentenced to two years in prison and ordered to forfeit $18.5 million after pleading guilty in 2013.
The case began in 2010 when the SEC conducted a periodic examination of Direct Access Partners. The routine review led to discovery of the massive fraud and bribery.
The SEC said the judgments last week permanently enjoined all defendants from violating Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5.
Gonzalez, 57, the former BANDES official, was sentenced in January this year to time served for taking at least $5 million in bribes. She had served 16-1/2 months in jail after her arrest in Miami in 2013.
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 was also ordered to forfeit $5 million.
The SEC’s Litigation Release No. 23513 (dated April 8, 2016) in Securities and Exchange Commission v. Clarke Bethancourt, et al., Civil Action No. 13-cv-3074 (S.D.N.Y.) is here.
Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.