Wednesday, April 21, 2021

Venezuela’s businessman face scrutiny in $1.2 billion money laundering case


As Venezuela’s oil-based economy continues to crumble, a politically connected class of businessmen with financial ties to Miami has grown fabulously wealthy from energy deals with the socialist government. Among the Venezuelan upper crust who have made fortunes during the Bolivarian revolution: Alejandro Betancourt.

Without any experience in the energy industry, Betancourt co-founded a power company called Derwick Associates a decade ago that has reaped billions of dollars in government contracts for a string of new plants in Venezuela — drawing barbs about being overpaid for the projects and having cozy relationships with top politicians.

With his windfall, Betancourt not only expanded his business into the United States but also bought a penthouse apartment in Manhattan’s Olympic Tower, along with a castle estate and other luxury properties in Spain, according to court documents.

- Advertisement -

In Miami, Betancourt has surfaced in a massive money laundering case that charges his cousin and several of the so-called Boliburgueses — young , well-educated entrepreneurs close to the Venezuelan regime — with conspiring to bribe government officials to approve a loan scheme to embezzle $1.2 billion from the country’s national oil company during the presidency of Nicolas Maduro.

Although Betancourt is not identified by name in the federal case filed in Miami, several sources familiar with the widening investigation say that he is “Conspirator 2” among the dozen unnamed Venezuelan conspirators and officials listed in a criminal complaint that details the alleged international racket.

Betancourt, 39, and some of the other unidentified conspirators and officials could be added as defendants to an indictment, according to sources familiar with the federal case. So far, nine defendants have been charged in the Miami case, with two pleading guilty and one awaiting trial. The remaining six defendants, including Betancourt’s cousin, Francisco Convit Guruceaga, are considered fugitives by the U.S. Attorney’s Office in Miami.

Betancourt’s attorney, prominent Miami lawyer Jon Sale, issued a statement Friday denying his involvement. “My client denies any wrongdoing,” Sale said.

In Miami, Houston and New York, several corruption cases have been pursued by the Justice Department alleging bribery, embezzlement and money laundering activities in Venezuela and the United States that have taken a devastating toll on Venezuela’s economy. The country has suffered the loss of billions of dollars embezzled from its state-owned oil company, Petroleos de Venezuela S.A, or PDVSA, mainly because of green-palming between government officials and the country’s elite business class, federal authorities say.

- Advertisement -

Russell Dallen, a lawyer and investment manager, spoke about foreign corruption at the Latin America Summit on Friday in Miami, spotlighting the prosecution of the PDVSA money-laundering case and others. Dallen, head of Caracas Capital in Miami, said Venezuela’s rampant corruption has caused dramatic declines in oil production and income over the past two decades, fueling hyperinflation, widespread poverty and the exodus of more than four million people.

“Instead of reinvesting the money and rebuilding the country, it was all stolen through these currency-exchange and loan schemes,” said Dallen, pointing out that Venezuela was once among the biggest oil producers in the world.

“The Venezuelan people are starving,” he added. “The [minimum wage] is $5 a month, up from $2. That’s all they make — it’s less than Haiti, less than Cuba. That’s why people are voting with their feet and leaving the country.”

In the Miami case, federal court records say that “Conspirator 2” was among the ring of Boliburgueses and government officials who received hundreds of million of dollars in late 2014 from PDVSA as payment for a loan that they made to the state-owned oil company. A criminal affidavit alleges the ring used a shell company to loan $42 million worth of bolivars and then got repaid in euros at the government’s favorable exchange rate. That currency exchange transaction instantly multiplied the loan repayment to the equivalent of $600 million.

Betancourt’s cousin, Convit, who also sits on the board of directors of Derwick’s Oil and Gas Corp., is the lead defendant mentioned with Conspirator 2 in the introduction to the complaint affidavit.

Betancourt’s chief financial officer at Derwick, Orlando Alvarado, is listed as “Conspirator 4” in the Miami case and also as an associate of his cousin, Convit. According to the affidavit, Conspirator 4 discussed a plan in 2016 with one of the ring’s leaders to create “fake” foreign currency exchange contracts to make the embezzlement of the national oil company’s funds look legitimate so the proceeds could be transferred to Convit and several others, including Conspirator 2 and Venezuelan officials accused of accepting bribes.

“Conspirator 4 [Alvarado] suggested a meeting with everyone who has ‘an interest’ to sort things out and fix ‘the papers’ before things get bad when it is too late,” the affidavit says.

- Advertisement -

The close relationship between Convit, Betancourt and Alvarado raises questions about what Betancourt knew of the alleged loan scheme at Venezuela’s state-owned oil company and the flow of laundered money. The detailed affidavit, however, does not provide evidence of Betancourt’s knowledge of the illicit PDVSA loan scheme. Nor does it provide proof, such as a bank record or wire transfer, showing he was aware of the source of the laundered money he allegedly received.

According to the affidavit filed in July of last year, PDVSA repaid the ring’s loan to a shell company called Rantor Capital, transferring the $600 million to Portmann Capital Management in Malta. The oil company’s loan repayment was eventually turned over to another shell company, Eaton Global Services Limited, set up in Hong Kong, which was controlled by the Venezuelan leaders of the money-laundering conspiracy, federal prosecutors say.

The $600 million windfall was then divided up among the group of wealthy Venezuelan businessmen, the three stepsons of Maduro and PDVSA officials, according to an email obtained by agents with Homeland Security Investigations and sources familiar with the criminal case. The president and his stepsons — Yosser Gavídia Flores, Walter Gavídia Flores and Yoswal Gavídia Flores — are under investigation in the Miami case, sources said.

According to the affidavit, here is how the government funds were distributed in in late 2014 and early 2015:

$272.5 million went to Raul Gorrín, the Venezuelan tycoon who owns a Caracas TV network, insurance company and other businesses. He has not been charged in the Miami case, but is considered a main suspect in the federal investigation. In turn, Gorrín kept about $72.5 million for himself — wiring some money to pay for aviation, yacht and brokerage services in Miami — and gave the balance, $200 million, to Portmann Capital Management for the benefit of Maduro’s three grown stepsons from his marriage to Cilia Flores.

? That account was set up for the stepsons in the name of a “straw” representative, Mario Enrique Bonilla Vallera, a Venezuelan businessman who owns a handful of Florida companies with addresses linked to four multimillion-dollar homes in the exclusive Cocoplum neighborhood of Coral Gables. Bonilla has been charged in the money-laundering indictment, but remains at large.

$272.5 million also went to Convit and Conspirator 2. Of that total, $94 million was distributed to Pedro Binaggia, an attorney and businessman who was tasked to launder millions of dollars from Venezuela to Europe and the United States. (In 2016, Binaggia became a confidential source for Homeland Security Investigations out of fear that he would get caught laundering funds.)

Binaggia, using Deltec Bank in the Bahamas, redistributed about $20 million to: Carmelo Urdaneta Aqui, former legal counsel for the Venezuelan Ministry of Oil and Mining; Abraham Edgardo Ortega, a former director of finance at PDVSA; Jose Vicente Amparan Croquer, described as a professional money launderer, and three other unnamed Venezuelan conspirators with ties to the state-owned oil company.

Those three are Victor Eduardo Aular Blanco, a former PDVSA vice president of finance who authorized the state-owned oil company’s loan with the ring; Alvaro Ledo Nass, a former PDVSA general counsel, and his lawyer-brother, Adolfo Ledo Nass, according to sources familiar with the investigation.

The remaining funds were absorbed by the cost of the initial loan to the oil company and Portmann Capital’s charges related to the transaction.

Significantly, some of Venezuela’s embezzled money was funneled through shell companies into fabricated investment funds, U.S. banks and South Florida luxury real estate, forming the foundation for the federal money-laundering case in Miami. Gorrin, who was close to the late Venezuelan President Hugo Chavez as well as Maduro, invested tens of millions of dollars in Cocoplum and in luxury condominiums in Miami and Manhattan.

The news media in Venezuela and the United States have focused on Gorrin because of his high profile in business and political circles. Although he has not been charged in the Maduro-era money laundering case, Gorrin has been indicted in a similar $1 billion briberyand embezzlement scheme involving the former Venezuelan treasurer, Alejandro Andrade, in the Chavez administration. Andrade, who cooperated with federal authorities, has already pleaded and begun a 10-year prison sentence..

Betancourt, though less well known, exerts tremendous influence in Venezuela as well. A graduate of Suffolk University in Boston, Betancourt founded Derwick a decade ago with Pedro Trebbau Lopez, the energy company’s vice president. (Trebbau has not been implicated in the ongoing Venezuelan kleptocracy case in Miami.) Betancourt and Trebbau made immediate inroads with the Chavez administration as it looked for private partners in the oil and energy industries.

Ever since, Derwick has been surrounded by controversy. At times, the company has been accused of corruption for obtaining huge energy construction contracts from the Venezuelan government without having the required know-how. The company has also been accused of overcharging for the installation of used and inadequate equipment.

According to a 128-page report on the energy sector written by ONG Transparencia Venezuela, the local chapter of Transparency International, Derwick was awarded 11 construction contracts worth $2.9 billion, which was overpriced by an average of 162 percent.

José Aguilar, an engineer who was tasked with investigating Derwick for the Wall Street Journal, said the company records he reviewed suggests that it charged the Venezuelan government between $2 billion and $2.2 billion for the 11 projects — work that could have been done for between $1.3 billion and $1.4 billion.

“There was at least $800 million in overbilling,” Aguilar told el Nuevo Herald, noting the company hired inexpensive contractors to do much of its work.

But a study written by a professor at the Simon Bolivar University in Caracas commended Derwick’s work, saying it was one of the few government energy contractors that actually completed their plants within budgets.

But not all of Derwick’s plants came online, and at least one never produced electricity, Aguilar said. “The output of all these plants has been traditionally poor,” he said.

Derwick’s rapid rise led to confrontations with a leading financial institution, Banco Venezolano de Credito, which adopted an anti-Chavez stand and accused the energy company of being in league with the president. The rivals’ accusations sparked defamation lawsuits, with Derwick firing the first salvo with a libel suit in Miami.

Then, Otto J. Reich, a former ambassador to Venezuela and diplomat in three Republican administrations, was hired by the Venezuelan bank to take on Derwick in a public relations war. Reich himself ended up suing Betancourt and other Derwick officials in a libel case filed in New York federal court, accusing them of paying bribes to Venezuelan government officials. Reich’s suit against Betancourt, Derwick’s CEO, and its vice president, Trebbau, was dismissed. After the dismissal, Reich reached a confidential settlement with a third defendant in 2016.

Derwick’s Betancourt and Alvarado have been collaborating on energy- and oil-related business deals for years.

Betancourt and Alvarado made headlines in 2015, when they became major shareholders in a Panama-based company called O’Hara that sought to take control of a Canadian oil company, Pacific Rubiales, which ran some of Colombia’s largest oil fields.

According to press reports, O’Hara joined with other investors to acquire about 20 percent of Pacific Rubiales’s shares, establishing the group as the company’s largest shareholders. But Betancourt’s investment push — along with his becoming a member of Pacific Rubiales’ board — led to strained relations with the company’s original shareholders.

Facing imminent bankruptcy amid falling oil prices, the Canadian oil company was sold to another investment group in an emergency transaction — but Betancourt, Alvarado and other investors lost millions in the end.

Betancourt and Alvarado continue to face potential trouble as they come under scrutiny in the Miami money-laundering case. It is moving along, despite the absence of six defendants who are at large in Venezuela and possibly elsewhere.

Matthias Krull, an international banker who catered to mega-rich Venezuelans including Gorrin, pleaded guilty soon after his arrest in July of last year and was sentenced to 10 years in prison. Krull admitted that he was retained by Gorrin to help launder some of the Venezuelan ring’s $600 million from Europe to the United States in 2016.

But Krull has been allowed to remain free on a bond in Miami because of the value of his cooperation with the U.S. Attorney’s Office, according to his lawyer, Oscar S. Rodriguez.

Krull, the German-born son of a Lutheran pastor who was raised in Venezuela and educated in Switzerland, was based in Panama as a banker for the Swiss bank Julius Baer before his arrest. According to court records, he has helped investigators understand the complex web of relationships between the defendants and other suspects in the huge money laundering case.

“Mr. Krull’s value actually comes from the fact that he has been a banker in Venezuela … for a long time,” prosecutor Michael Nadler said in September while alerting a federal judge that he would be recommending a sentence reduction for Krull when he surrenders in March. “The amount of people that he has put us in contact with … is large.”

Abraham Edgardo Ortega, a former executive director of financial planning at PDVSA, also pleaded guilty a year ago to accepting millions of dollars in bribes that were secretly wired to U.S. and other financial institutions with the assistance of a Miami investment manager and others.

Ortega, who worked at PDVSA for more than a decade, admitted he used his official role to give “priority” status to Venezuelan companies that did business with the government so they could tap into its vast oil income to make overnight fortunes through loan and currency exchange schemes. He has been free on bond while cooperating with authorities and still awaits sentencing.

In February, Miami investment manager Gustavo Hernandez Frieri faces trial on charges of helping launder at least $12 million in bribery payments to Ortega. Hernandez’s alleged role was to put that money into a fake mutual fund so that it looked legitimate and then launder it into U.S. banks for a fee.

Hernandez, who lives in the exclusive Bay Point neighborhood of Miami and ran his business from a Brickell Avenue office, remains free on bond. Nadler, the prosecutor, indicated in court that Hernandez may not go to trial because he and his attorney Michael Pasano, are “in discussions about pleas” and that “the terms are still being worked out.”


Get our daily notification on the latest financial crimes news around the World


- Affiliate Products -


This Week

Enable Notifications    OK No thanks