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Huge U.S. money-laundering probe targets widening circle of Venezuelan elites by Jay Weaver and Antonio Maria Delgado – Miami Herald – 26 de Febrero 2020

New bank documents in laundering probe targets widening circle of Venezuelan elites
Switzerland’s highest court agreed to release bank documents related to an alleged corruption scheme that would have allowed the embezzlement of more than $4.5 billion.

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Luis Oberto Jr. is pictured with his wife, Maria Graciela Oberto, at the Winter Wonderland Ball at the New York Botanical Garden, December 2011. PATRICK MCMULLAN

For two years federal investigators in Miami have patiently waited for reams of Swiss bank records to be turned over so they could bring a monumental money-laundering case against a wealthy circle of Venezuelan businessmen and ex-government officials.

Finally, those secret bank records have arrived, due to a major decision to release them by Switzerland’s highest court.

With that critical evidence in hand, U.S. prosecutors can now move forward and decide on filing a long-planned indictment charging four members of Venezuela’s young business elite — known as “boliburgueses” — and two former high-ranking officials in the government’s oil sector, along with a Swiss banker at the center of the alleged international money-laundering racket.

The business elites are suspected of paying hefty bribes to the government officials in exchange for making loans in bolivars to the national oil company, Petróleos de Venezuela, S.A., and then receiving repayments in dollars — with the proceeds washed through the government’s favorable currency-exchange system to magnify profits. The multibillion-dollar payouts were then diverted to secret Swiss bank accounts between 2012 and 2014, according to U.S. authorities.

“The operation, carried out thanks to acts of corruption, would have allowed the embezzlement of more than $4.5 billion, laundered mainly through accounts opened in Switzerland,” the Swiss Federal Tribunal wrote in a January order rejecting appeals seeking to stop the release of the bank records.

The majority of that tainted money was transferred into accounts held by Venezuelan bankers Luis and Ignacio Oberto at Compagnie Bancaire Helvetique, and the rest into their accounts at EFG Bank AG and seven other Swiss financial institutions in the sprawling fraud scheme, U.S. authorities say in official correspondence with their Swiss counterparts. The Miami Herald obtained copies of the “mutual legal assistance” letters summarizing the transactions.

The Justice Department’s $4.5 billion money-laundering investigation is the largest of three distinct Miami-based probes targeting Venezuelan “kleptocrats” and their associates, resulting in the prosecution of a dozen defendants in South Florida so far — including a former national treasurer, Alejandro Andrade, who was the first to plead guilty in late 2017. The probes, which prosecutors say form a triangle of corruption connecting Venezuela to Switzerland to South Florida, dramatize the alleged theft of stratospheric sums of government funds in the oil-rich South American country. The high-level political corruption has spurred Venezuela’s economic collapse and the exodus of millions of its citizens.

The latest U.S. investigation, led by Homeland Security Investigations, has zeroed in on a half-dozen “targets” suspected of transferring embezzled Venezuelan government funds into bank accounts, real estate and other assets in Miami and New York, according to U.S. authorities. At the forefront are the Oberto brothers, scions of a prominent banking family who reside in the luxury Carillon high-rise overlooking Miami Beach. The Herald reported on their leading roles in the alleged money-laundering scheme in November.

Since that report, the Herald has learned the names of other targets: Venezuelan cousins Alejandro Betancourt and Francisco Convit, who respectively live in Spain and Venezuela. Convit was indicted as the lead defendant in a separate Venezuelan money-laundering case in Miami in 2018, while Betancourt is suspected of being a co-conspirator in that same case. He has not been charged.

Also being targeted in the latest probe: Rafael Ramirez, former president of the state-owned oil company, PDVSA, who now lives in Italy, and former Venezuelan Vice Minister of Energy Nervis Villalobos, who is in custody in Spain awaiting extradition to the United States on bribery charges in an unrelated PDVSA fraud case.

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Alejandro Betancourt DERWICK ASSOCIATES

The Swiss banker in the middle of the alleged money-laundering scheme: Charles Henry De Beaumont, who was employed by Compagnie Bancaire Helvetique until 2012 and later became an independent asset manager conducting transactions with his former bank and others, according to law enforcement and legal sources familiar with the U.S. investigation. De Beaumont collected $22 million in fees for his handling of the allegedly illicit transactions for the Obertos, Betancourt, Convit and others, and he also used some of that money to buy luxury residences in the Dominican Republic and in the Continuum condo high-rise in Miami Beach.

In 2018, the U.S. Department of Justice, along with the U.S. Attorney’s Office in Miami, sought Switzerland’s legal assistance with the investigation under a treaty agreement, requesting account records at Compagnie Bancaire Helvetique and other Swiss financial institutions such as EFG Bank, which by law manage wealthy clients’ money in total secrecy.

By requesting Switzerland’s assistance, the Justice Department was able to toll a five-year statute of limitations that could have impeded prosecutors’ efforts to bring money-laundering conspiracy charges against the Obertos and the others. In other words, the formal request for the Swiss bank records — crucial to filing an indictment — bought prosecutors time to make their case.

The Oberto brothers, along with the cousins Betancourt and Convit, are suspected of paying huge bribes to the two former Venezuelan government officials, allowing the businessmen to make loans in bolivars to the national oil company and receive payments in dollars between 2012 and 2014. Both the loan and bribery payments were laundered through Swiss and American bank accounts, U.S. authorities say.

But these were no ordinary loan transactions with simple interest payments. The Oberto brothers and the cousins were able to increase their returns exponentially by capitalizing on a favorable bolivar-dollar exchange system that is the exclusive domain of government and political insiders close to the late Venezuelan President Hugo Chávez and his successor, Nicolás Maduro.

For the Obertos and their partners, the potential yield would rise dramatically as the bolivar depreciated in relation to the U.S. dollar. Initially, the lending scheme would double or triple the value of the initial loan amount. But over several months, with inflation, the return could be as much as five or ten times the initial investment, according to U.S. authorities.

By December 2014, 12 bolivars at the artificially lower government rate could buy one U.S. dollar. But on the open-market exchange, the rate was 172 bolivars per one dollar. That gave the Oberto brothers’ group the opportunity to multiply their currency investment by a ratio of 14 to 1. With that spread, $1,000 worth of bolivars on the government exchange could be turned into $14,000 worth of bolivars on the open market.

In a May 2018 letter to Swiss authorities, the Justice Department said that the loan scheme “was nothing more than a mechanism to embezzle Venezuela’s foreign currency reserves and launder the proceeds.”

To facilitate the scheme, PDVSA officials wired the loan repayments through Banco Espirito Santo to the Oberto brothers’ various Swiss accounts between 2012 and 2014, according to sources and the mutual legal assistance letters between U.S. and Swiss authorities. (Espirito Santo, Portugal’s biggest bank, collapsed in 2014 amid allegations of fraud and money laundering.)

The Oberto brothers’ main banker was CBH’s De Beaumont, though they also had accounts in shell companies at other Swiss banks such as EFG that received tainted Venezuelan funds, according to those sources and letters.

“The U.S. authorities have been investigating De Beaumont, Luis [Oberto], Ignacio [Oberto] and others for their participation in a conspiracy, from approximately 2012 to 2014, to commit wire fraud and launder the proceeds of that fraud and fraudulent foreign currency exchange schemes to embezzle Venezuela’s foreign currency reserves,” a senior lawyer with the Justice Department’s Office of International Affairs wrote to the Central Authority of Switzerland on May 25, 2018. (The Justice Department’s original request for legal assistance from the Swiss was made on March 13, 2018.)

“During the course of that investigation, the U.S. authorities have uncovered additional transactions involving Swiss accounts associated with additional suspected members of the organization,” wrote attorney Jason Carter, associate director of the Justice Department’s Office of International Affairs. “Additional evidence has revealed De Beaumont’s conspirators Luis and Ignacio [Oberto] were using several Swiss-based bank accounts to launder assets intended to pay corrupt Venezuelan officials.”

Carter noted in the letter that U.S. investigators have obtained bank records, financial documents and emails provided by “several cooperating witnesses” that show De Beaumont “knowingly conspired with the other conspirators to defraud CBH and launder the proceeds of the fraud and the embezzlement scheme through CBH and through other means, including banks and real estate in Miami, Florida.”

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Alejandro Andrade, former Venezuelan national treasurer MIAMI HERALD ARCHIVE

Defense lawyers for the Oberto brothers, who according to sources familiar with the probe had once considered cooperating with federal prosecutors in Miami, said they “have for years consistently maintained their innocence to the government.”

“Most importantly … they have not and are not considering pleading guilty or cooperating with prosecutors,” said Ed Shohat and David O. Markus, high-profile criminal defense attorneys in Miami. “If charged, they will plead not guilty and their innocence will be proven at trial.”

Betancourt’s lawyer, Jon Sale, who is considered the dean of white-collar criminal defense attorneys in South Florida, said his client has committed no wrongdoing. “Mr. Betancourt is a legitimate businessman who has not violated any laws of the United States or elsewhere,” he said.

Convit could not be reached for comment.

In the Swiss court’s review of the Justice Department’s request for bank records, businesses associated with Betancourt (Calandra Business SA and IPC Investments Corp.) and Convit (Banstead Assets SA and Vencon Holdings Investments) — along with Gazprombank Latin American Ventures B.V. — tried to block the release of CBH bank records to U.S. authorities, but to no avail.

Both CBH and EFG banks did not challenge the department’s request, according to sources familiar with the matter.

CBH’s legal office at the Geneva-based bank won’t acknowledge the U.S. investigation or the Justice Department’s request, saying only that its former employee, De Beaumont, resigned in 2012 and continued to work as an “independent asset manager” for “various banks.” The legal office, however, did not identify the banks for which De Beaumont worked in that capacity.

In a statement, the office said: “For avoidance of doubt, CBH does not and has never engaged in or facilitated money laundering or any other unlawful banking transactions. CBH has always fully complied with all applicable laws and regulations that govern its business and has always maintained rigorous internal anti-money-laundering safeguards and controls to identify and prevent unlawful transactions, as repeatedly confirmed and approved by outside auditors. … If Mr. De Beaumont has engaged in money laundering activities as alleged, CBH has no knowledge of those activities.”

EFG Bank in Zurich declined to comment for this story.

The U.S. investigation has focused on two Swiss bank accounts belonging to Violet Advisors SA and Welka Holdings Limited, shell companies set up by the Oberto brothers to receive the loan payments from PDVSA, federal authorities say in the letters seeking bank records from Switzerland.

“PDVSA and the Oberto brothers used a sham loan contract as a means to hide a foreign currency embezzlement scheme with bribe payments to Venezuelan officials,” Carter, the Justice Department lawyer, wrote in the May 25, 2018, letter.

He then listed a series of suspicious PDVSA fund transfers to Violet and Welka that he says were “disguised as loan repayments.” Among them:

▪ In 2012 and 2013, PDVSA’s bank Espirito Santo made 20 wire transfers totaling $2.8 billion to the Oberto brothers’ accounts at CBH Bank.

▪ In March-April 2012, PDVSA’s bank made four wire transfers totaling $1 billion to one of the Oberto brothers’ accounts at EFG Bank.

In a review of dozens of emails related to the alleged money-laundering scheme, U.S. investigators found a May 11, 2012, email giving instructions to exchange $25 million to euros and to wire that money to “a list of companies associated with high-ranking PDVSA officials,” according to Carter’s letter to Swiss authorities seeking bank records.

By 2018, U.S. investigators had reviewed 54 emails, containing 97 wire transfer requests by the Oberto brothers for their Violet and Welka accounts at CBH Bank. U.S. investigators obtained those emails from cooperating conspirators in the scheme. They are not named in the letter.

For example, on April 24, 2012, about $21 million was sent from the Obertos’ Violet account at CBH to another account in the name of IPC Investments Corp. held at the same bank, Carter’s letter states. In total, U.S. investigators verified four wire transfers totaling $93.4 million from Violet to IPC Investments, according to the letter. IPC Investments belongs to Betancourt, according to sources familiar with the probe.

Starting in January 2013, two wire transfers totaling $30.6 million were sent from the Obertos’ Violet account to the Calandra Business account at CBH, which, sources say, is controlled by Betancourt.

During this same period, three wire transfers totaling $32.5 million were sent from the Obertos’ Violet account at CBH to the Vencon Holdings Investments account at the same bank, Carter’s letter states. Convit controls Vencon Holdings, sources say. Also that month, a wire transfer of about $10.2 million was sent from the Obertos’ Violet account to the Banstead Assets account at CBH. Convit also controls Banstead, sources say.

On March 21, 2013, one wire transfer of about $34.9 million was sent from the Oberto brothers’ Welka account at CBH to another Swiss account held at Gazprombank belonging to Gazprombank Latin America Ventures B.V., which along with Betancourt and Convit unsuccessfully challenged the release of bank records to U.S. authorities.

In addition to these and other transactions, Carter’s letter states, the Oberto brothers “then initiated a series of transfers to numerous individuals and offshore entities,” including a $367 million transfer from their Violet account at CBH to Bagnet Capital Ltd. According to Carter’s letter, the brothers “had previously stated that they were the beneficial owners” of Bagnet, one of the offshore entities.

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Venezuela’s late President Hugo Chávez, left, sits with Cuba’s President Fidel Castro during a 2006 event in Cordoba, Argentina. Roberto Candia AP

Lastly, the brothers’ personal accounts at CBH received several transfers totaling more than $38 million, the letter states.

“De Beaumont, Luis [Oberto], and Ignacio [Oberto] caused the transfer of billions of dollars into and through bank and correspondent accounts in the United States,” the letter states. “Additionally, transfers were executed in excess of $6 million to the Obertos’ personal accounts held in the United States.” The names of those banks are not listed.

The U.S. money-laundering investigation has stirred up political accusations in Venezuela, leading to claims by Maduro’s government that Betancourt, among the U.S. targets, has been backing the president’s main political opponent, Juan Guaidó. Guaidó recently went on a multi-country campaign to prop up his status and was a guest at President Donald Trump’s State of the Union address in early February. (The U.S. government has formally recognized Guaidó as Venezuela’s president, while denouncing Maduro.)

Later in February, Venezuelan Information Minister Jorge Rodríguez accused Betancourt of financing opposition leader Leopoldo López and Guaidó with ill-gotten funds. López is Guaidó’s political mentor.

Betancourt is “the main oil advisor and financier of Leopoldo López,” Rodríguez said on national television in February.

Although he failed to provide any evidence for the claim, the minister promised he would provide proof of the link between Betancourt and López, and of the link between Betancourt and Guaidó. Guaidó is recognized as Venezuela’s legitimate president by the U.S. and almost 60 other nations.

The minister quoted news articles reporting that Trump’s lawyer, Rudy Giuliani, represented Betancourt in an effort to persuade Justice Department officials to back off on their criminal investigation — in the aftermath of Giuliani’s visit with the Venezuelan businessman at his castle in Spain last summer.

According to U.S. news reports, Guaidó’s father, Wilmer Guaidó, was present at the gathering in Spain, where Betancourt convinced Giuliani to assist him with the Trump administration. During their meeting, Betancourt also told Giuliani that he financed the opposition’s efforts to topple Maduro.

According to Rodríguez, there are recordings showing the relationship between Betancourt and the leader of the Venezuelan opposition.

“Guaidó,” the minister said, “videos will come out of your father talking to you, of Betancourt talking to you and of you saying wonderful things about Betancourt.

Luis Oberto Jr. is pictured with his wife, Maria Graciela Oberto, at the Winter Wonderland Ball at the New York Botanical Garden, December 2011. PATRICK MCMULLAN

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