Bitcoin Hedge Fund and CEO Slapped With $2.5 Million Penalty for Ponzi Scheme

A New York federal court has ordered cryptocurrency hedge fund Gelfman Blueprint, Inc. (GBI) and its CEO Nicholas Gelfman to pay over $2.5 million for operating a fraudulent Ponzi scheme, according to an official announcement published Oct. 18.

GBI is a New York-based corporation and denominated Bitcoin (BTC) hedge fund incorporated in 2014. As stated on the company’s website, by 2015 it had 85 customers and 2,367 BTC under management.

The order is the continuation of the initial anti-fraud enforcement action filed by the U.S. Commodity Futures Trading Commission (CFTC) against GBI in September 2017. The CFTC charged GBI for allegedly running a Ponzi scheme from 2014 to 2016, telling investors that it had developed a computer algorithm called “Jigsaw” which allowed for substantial returns through a commodity fund. In reality, the entire scheme was a fraud.

Per the announcement, GBI and Gelfman fraudulently solicited over $600,000 from at least 80 customers. Moreover, Gelfman set up a fake computer “hack” to conceal the scheme’s trading losses. It eventually resulted in the loss of almost all customer funds.

The current order charges GBI and Gelfman to pay over $2.5 million in civil monetary penalties and restitution. GBI and Gelfman are ordered to pay $554,734.48 and $492,064.53 in restitution to customers and $1,854,000 and $177,501 in civil monetary penalties, respectively.

James McDonald, the CFTC’s Director of Enforcement, said that “this case marks yet another victory for the Commission in the virtual currency enforcement arena. As this string of cases shows, the CFTC is determined to identify bad actors in these virtual currency markets and hold them accountable.”

Last month, the CFTC filed a suit with the U.S. District Court for the Northern District of Texas against two defendants for the allegedly fraudulent solicitation of BTC. Per the suit, defendants Morgan Hunt and Kim Hecroft were running two fraudulent businesses and misleading the public to invest in leveraged or margined foreign currency contracts, such as forex, binary options, and diamonds.

US deports Pakistani man convicted in money laundering scheme

The US has deported a Pakistani national, who was convicted last year for laundering money and was ordered to pay nearly USD 71 million, after his release from a prison, a federal law enforcement agency has said.

Muhammad Sohail Qasmani, 50, was removed from the US and turned over to Pakistani authorities without incident on Tuesday after he served his sentence at a Pennsylvania prison.

In June 2017, he was convicted in a federal court for conspiring to commit wire fraud. He was sentenced to 48 months imprisonment and ordered to pay nearly USD 71 million in restitution, according to US Immigration and Customs Enforcement or ICE.

According to court documents, Qasmani had applied for admission into US at Los Angeles International Airport in California as a B-2 nonimmigrant visitor on December 22, 2014. US Customs and Border Protection paroled him into the US for the purpose of criminal prosecution and released him to the custody of the Federal Bureau of Investigations.

In an interview with FBI agents, Qasmani admitted that from November 2008 till December 31, 2012, he agreed to provide money laundering services to co-conspirators in exchange for a percentage of the money he transferred. Qasmani provided these services with the knowledge that his collaborators had obtained this money from victims of an international telecommunications fraud, federal attorney said. In June 2017,  Qasmani was convicted federally.

Danske Flags More Than $230 Billion in Transactions Related to Money Laundering Probe

By Patricia Kowsmann & Drew Hinshaw

COPENHAGEN—Denmark’s largest bank found more than $200 billion in transactions at its Estonian branch and suspects a “large portion” of it was related to money laundering, often from Russia. The CEO stepped down as a result of the year-long investigation.

Danske’s CEO Thomas Borgen said “it is clear that Danske Bank has failed to live up to its responsibility in the case of possible money laundering in Estonia,” adding the investigation didn’t find breaches of his legal obligations. Mr. Borgen will stay until a replacement is appointed, the company said.

The size of the scandal has hammered its shares and raised concerns about a bank that holds more than a third of the country’s customer deposits.

Danske’s woes began in early 2017 when the lender became embroiled in a series of money-laundering cases involving its branch in Estonia, a eurozone country formerly part of the Soviet Union that became a preferred destination for money launderers, particularly from Russia.

On Wednesday the bank said about €200 billion of money ($233 billion) moved through the Estonian unit from 2007 to 2015. A large part of the payments were likely suspicious, it said. Investigators looked at 15,000 customers, before focusing on 6,200 who they believe deserved serious scrutiny for signs of money laundering. Of that 6,200, “the vast majority of these customers have been deemed suspicious,” the report concluded.

“There is suspicion that there have been employees in Estonia who have assisted or colluded with customers,” the bank said in a press release.

Danske has been slow to respond to the growing scandal, and it only launched an in-depth investigation into the matter in September of last year. The branch is the subject of investigation by U.S. authorities, and Danish and Estonian prosecutors.

Denmark’s banking supervisor in May reprimanded Danske for weak controls and ordered it to hold $800 million more in capital. In its ruling it described repeated inaction from the bank’s management. It said warnings were softened when passed on to the board. Despite being warned of trouble within its portfolio of nonresident customers in 2013, the bank didn’t start shutting the accounts down almost two years later, according to the supervisor.

Danske said Wednesday that the investigation found a number of former and current employees, both at the Estonia branch and in the headquarters, “didn’t comply with legal obligations” of their employment. It has reported some to the Estonian authorities, including the police.

Real estate agent sentenced to 6+ years for wire fraud, money laundering

By Alcynna Loyd

A California real estate agent was recently sentenced to more than six years in prison and three years of supervised release after pleading guilty to one count of wire fraud and one count of money laundering.

According to the Department of Justice, from October 2012 through October 2013, Robert Jacobsen sold homes with unpaid mortgages on them to unsuspecting homebuyers but eventually, authorities caught wind of the scheme.

According to the DOJ, Jacobsen’s scheme involved him creating a fictitious company called “American Brokers’ Conduit Corporation,” which was not related to an already-existing mortgage originator known as “American Brokers’ Conduit,” which originated loans in the Bay Area.

The DOJ explained that Jacobsen used intermediaries to gain control of homes with mortgage liens that secured loans originated by the real “American Brokers’ Conduit,” and then Jacobsen would use intermediaries to sue the phony “American Brokers’ Conduit Corporation” in court, claiming that the legitimate mortgage liens were invalid.

From the DOJ’s announcement:

As he controlled both the plaintiff and the defendant in these lawsuits, Jacobsen then instructed the attorneys for both sides to enter into stipulated judgments, signed by the courts, resolving the lawsuits by purporting to declare the mortgage liens invalid. In so doing, he omitted to tell the courts that neither he nor any other person involved in the lawsuits was a legitimate representative of either the real “American Brokers’ Conduit” or the then-current owners of the liens. Jacobsen filed those agreements with the relevant county recorder’s offices, to give the appearance to anyone conducting a title search that the liens had been declared invalid by a court, and then sold the homes to unsuspecting buyers without paying off the original loans on the homes. 

Jacobsen was initially charged with 13 counts of wire fraud and money laundering but the remaining charges will be dropped if he maintains his part of the plea agreement, the DOJ said. As a result of his plea, Jacobsen was also ordered to forfeit a yacht he purchased with the sale proceeds and pay an undetermined restitution fee.

Former Lower Southampton public safety director pleads guilty in $400,000 money-laundering scheme

By Erin McCarthy

Former Lower Southampton Public Safety Director Robert Hoopes pleaded guilty Wednesday to taking part in a money-laundering scheme with a Bucks County judge and a constable, calling it “the first thing that I truly regret that I ever did in my life.”

Judge Gene E.K. Pratter asked him: Why decide to enter the plea now?

“Because I did it,” Hoopes said. “I did the things that are in [the indictment]. … It  was the stupidest thing I’ve ever done in my life.”

“Right after my arrest,” he added, “I was ready to admit my guilt.”

A superseding indictment later painted an even more corrupt picture. Between 2014 and 2016, authorities say, Hoopes, Waltman, and Rafferty shook down several businessmen, with Hoopes often serving as the front man in negotiations.

A former police officer and attorney, Hoopes had been in charge of Lower Southampton’s police department, rescue squad, and two fire departments for less than a year when he was charged and subsequently fired by the township.

Hoopes said he has since separated from his wife, who now lives in California, and retired from his law practice. He lives alone in his family’s Doylestown home, he said, and has struggled with alcohol and post-traumatic stress disorder, which he developed serving in Vietnam.

He stressed to Pratter that he “never had a blemish” on his records as a police officer or lawyer and that he regretted his actions.

But “I’m not worried about myself,” he said. “I’m worried about my family.”

Three of Hoopes’ five daughters attended the hearing and wiped away tears as they sat behind him in court.

Hoopes previously had pleaded not guilty. With Hoopes’ change of plea Wednesday, Waltman, 60, of Lower Southampton, remains the only defendant in the case who has not entered a guilty plea. Waltman awaits trial, scheduled for later this fall, on charges related to the scheme. Rafferty, 63, of Lower Southampton, pleaded guilty in the spring.

At the end of Wednesday’s proceeding, Pratter asked Hoopes whether he ever socializes with anyone allegedly involved in the scheme.

“No, I’ve never seen them or talked to them” since charges were filed, Hoopes said.

Former Ecuadorian oil exec forfeits six SoFla properties tied to money laundering

By Keith Larsen

A former top executive with Ecuador’s national oil company has been sentenced to more than four years in prison for allegedly laundering money through six South Florida properties.

Marcelo Reyes Lopez, a former executive with PetroEcuador, was sentenced in July to four years and five months in prison for his role in an alleged money laundering scheme involving several PetroEcuador officials and other Ecuadorian government officials.

He had pleaded guilty to one count of money laundering in October in U.S. District Court of the Southern District of Florida and agreed to forfeit six properties tied to the scheme.

The complaint for the case has remained sealed. A motion filed by the U.S. Attorney’s Office in November, however, said the U.S. “anticipates that its evidence will show the defendant participated in an extensive bribery scheme that existed to provide illicit payments to officials from Ecuador’s state-run and state-controlled oil company in order to secure and profit from contracts with that company.”

On May 8, the court entered a preliminary order of forfeiture for the six properties:

  • 11316 Northwest 79th Lane, Doral; a four-bedroom, three-bathroom house
  • 14340 Southwest 156th Avenue, Miami; a three-bedroom, two-bathroom house
  • 16711 Collins Avenue, Unit 1902, Sunny lsles Beach; a two-bedroom, two-bathroom condo
  • 605 South Ocean Drive, Hollywood; a three-bedroom, two-bathroom house
  • 609 South Ocean Drive, Hollywood; a multifamily complex
  • 345 Monroe Street, Unit 1-4, Hollywood; a multifamily complex

According to court documents, the six properties were purchased between 2013 and 2014, for a total of $3.5 million.

On Wednesday, Lopez’s sentencing documents were filed with the court, which showed he would be sentenced to a correctional facility in Georgia.

The news comes on the heels of another major money laundering case where federal officials allege top executives of Venezuela siphoned $1.2 billion from its state oil fund, PDVSA, to purchase South Florida real estate. The U.S. Attorney’s office claims at least 16 pieces of South Florida property are tied to the defendants of the scheme, one of which was a condo in the Porsche Design Tower in Sunny Isles.

Money Laundering Links Romance Scams To Corporate Cyberattacks

By JohnWilson

On the long list of cybersecurity threats facing corporate leaders, romance scams would at first glance hardly seem to crack the top 10. What could cons of lonely middle-aged singles have to do with the business email compromise (BEC) attacks increasingly targeting American corporations? Plenty, it turns out. Recent Justice Department enforcement actions and published research reports have illuminated the connection: Romance scam victims are turned into money mules — conduits for funds stolen from corporations and other victims.

Scamming people online is relatively easy. The harder part is getting money out of the U.S. and back to Nigeria, where many of the scammers are based. A corporate treasurer is likely to hesitate before wiring tens of thousands of dollars to an unknown person or company in Nigeria, even if asked to do so by the company’s CEO. A transfer request like this is also more likely to raise eyebrows at the company’s bank, but a “consulting company” with a U.S. bank account is more likely to slip through unquestioned. The romance scam victim, who has an established history of transferring money to Nigeria, is the

“consulting company” receiving the funds and transferring them onward. Why would these victims agree to do this? In many cases, they remain under the scammer’s spell and are willing to do whatever they are asked to do. In other cases, they have become financially desperate or they are being blackmailed to force their ongoing cooperation.

Romance scammers frequently target women who are 40 or older. They will often pose as an American military man living overseas, using photos grabbed from Facebook or other sites. After a period of relationship building, the male partner will start asking for money. He may say he needs surgery, but the military will cover only 80% and he asks to borrow the remaining 20%. Or perhaps he has been arrested in a dangerous part of the world and needs money to buy his freedom.

Caution and prudence are no match for hope and loneliness. It’s surprising how often this works — how willing people are to ignore the warning signs and repeated disappointments. Time after time the scammer finds an excuse about why he can’t come to visit his romantic victim, yet he always finds a way to ask for more money. In one especially sad case we tracked, a divorced woman with two children sent more than half a million dollars to a Nigerian scam artist, losing her home and forcing her to move her children out of their school.

There’s a long history of Nigeria-based scams. These criminals have had little fear of being brought to justice, bragging about their ill-gotten gains in their Facebook posts. The long arm of the law is finally reaching them. The U.S. Justice Department and other U.S. agencies are increasingly going after Africa-based scammers, including in two recently announced enforcement actions, and have succeeded in getting accused criminals extradited to the United States for prosecution.

On June 11, the Justice Department and a group of other U.S. federal agencies announced the arrest of 74 individuals involved in scamming in an enforcement action it called Operation Wire Wire. Among them, 23 individuals were charged with money laundering of at least $10 million from BEC scams, which they also call “cyber-enabled financial fraud.” Of the 23, 8 people were charged with laundering $5 million stolen from a Seattle corporation, a law firm and several title companies.

“The fraudsters enlist and manipulate the money mules through romance scams or ‘work-at-home’ scams,” the Justice Department said.

The same Nigerian scammers (both individuals and groups) who have long run romance scams are now unleashing BEC attacks against corporations. Agari recently analyzed the contents of 78 criminal email accounts captured from 10 organized crime groups and dating as far back as 2009. It found after focusing for years on simple romance and rental scams, most of the groups began conducting BEC attacks between 2016 and 2018. BEC has become the most popular attack vector (24% of all attacks over the life of the accounts), a surprising finding given that most of these groups did not begin BEC attacks until 2016 or later. Most of the groups also engage in apartment rental scams, which aren’t as lucrative as BEC or romance scams but are much easier to pull off and replicate.

“The same criminal organizations that perpetrate BEC also exploit individual victims, often real estate purchasers, the elderly and others, by convincing them to make wire transfers to bank accounts controlled by the criminals,” the Justice Department said in its June 11 announcement. In a separate set of eight arrests announced on June 25, dubbed Operation Keyboard Warrior, a group of Africa-based defendants were charged with perpetrating “romance scams, fraudulent-check scams, gold-buying scams, advance-fee scams and credit card scams,” and sending the proceeds of those scams from the U.S. to Ghana, Nigeria and South Africa “through a complex network of both complicit and unwitting individuals that had been recruited through the various internet scams.”

In one of the accompanying indictments, the defendants were charged with carrying out “fictitious online romance relationships … in order to convince them to carry out” acts including “receiving and shipping merchandise, depositing and forwarding counterfeit checks and transferring the proceeds of the conspiracy via wire, U.S. Mail, ocean freight and express package delivery services.”

Amid the crackdown, however, losses are mushrooming. The FBI’s Internet Crime Complaint Center (IC3) in July reported a 136% increase in identified global exposed losses between December 2016 and May 2018.

It’s a tough problem. The victims I’ve spoken with have a gambler’s mentality. Deep down they know it’s a scam, but if they cut off the communication they know they’ll never see the money the scammer supposedly borrowed from them. Better to keep playing, hoping their luck will change. Sadly, the odds they’ll ever see a dime are zero. They’d be better off in Vegas, where winning is at least a possibility. Emotionally and financially broken, they are easily manipulated into aiding the scammer by helping to launder the proceeds of BEC scams.

‘Game Over’: Wall Street Analyst Says Bitcoin Must Not Breech Year-To-Date Support

By: William Suberg

Renaissance Macro Research’s head of technical research Jeff deGraaf concluded it may be “game over” for Bitcoin (BTC) in a new analysis, CNBC reports August 9.

In a note to clients, deGraaf, who has received multiple accolades for his trading insights in the past twenty years, claimed Bitcoin’s price movements suggest the largest cryptocurrency is “permanently impaired.”

CNBC quotes deGraaf as writing that Bitcoin’s “parabolic moves are notoriously dangerous for short-sellers,” adding that a top normally develops with the appearance of a “descending triangle over months, with reduced volatility and little [fanfare],”

“Once the top is complete on the support violation, the security in question can often be considered permanently impaired or even ‘game‐over’. We are of course referencing Bitcoin as exhibit ‘A’ in today’s market.”

Such a situation would become a genuine consideration if BTC/USD broke year-to-date support levels, deGraaf added.

Bitcoin prices have come full circle over the past three weeks to trade around $6,359 by press time, after previously rising as high as $8,450 in late July.

This time last year, Bitcoin traded at around half that figure — $3,400 — as markets began their ascent that brought Bitcoin’s price to around $20,000 in December 2017.


Meanwhile, misgivings from traditional finance sources have continued in recent months, despite increased Wall Street interest and pledges to build out Bitcoin-related infrastructure.

Last week, JPMorgan CEO Jamie Dimon broke silence once more to call the cryptocurrency a “scam” after previously saying he “was not going to talk about” it.

Napoles, 5 others indicted for int’l money laundering, conspiracy, bribery

MANILA – A US federal grand jury has indicted alleged pork barrel scam mastermind Janet Lim-Napoles and 5 others for conspiring to funnel in and out of the US some $20 million in Philippine public funds obtained through a multi-year bribery and fraud scheme.

The US Department of Justice said in a statement released Tuesday that among those indicted for conspiracy to commit domestic and international money laundering were:

Janet Lim Napoles, 54
Jo Christine Napoles,34
James Christopher,33
Jeane Catherine,28
Reynald Luy Lim, 52;
Ana Marie Lim, 47.

Three defendants, working with some 20 Filipino officials, funneled into the Napoles matriarch’s non-governmental organizations money from government funds, including lawmakers’ Priority Development Assistance Fund, said the US justice department.

Napoles’ NGOs were supposed to use the money for development projects, but did not do so and instead diverted the funds to “kickbacks for the legislators and other government officials, and for the personal use of the Napoles family,” the agency said.

Some $20 million of the funds, it said, were diverted to money remitters in the Philippines and then wired to Southern California bank accounts, where the money was used to purchase real estate, shares in 2 businesses, 2 Porsche Boxsters, and finance the living expenses of 3 family members in the US, Jeane Napoles and the Lims.

An audit discovered the fraud in September 2012. The fraud and the US proceeds were exposed in the Filipino press in July of the following year, the US justice department said.

Napoles was arrested in August 2013 and her family’s bank accounts were frozen in the Philippines.

“Napoles and her family then attempted to quietly liquidate the assets in the US, secretly repatriate most of the resulting funds back to the Philippines and to other accounts in the US and United Kingdom, and disburse some of the funds to Jeane Napoles, who used the money to finance her lifestyle and open a fashion business,” said the agency.

“Even after Jannet Napoles made a highly publicized statement admitting that she had bribed Philippine legislators in connection with these ‘ghost projects,’ the defendants attempted to convert the proceeds of this crime to their own use,” said US Attorney Nicola Hanna in the same statement.

“The efforts of the Philippine and American investigators demonstrates that there are consequences to abusing the public trust and we hope to deter such conduct in the future. To do this, we will work with our Philippine counterparts to secure the extradition of the defendants to the United States,” she added.

About approximately $12.5 million in the Napoles’ Southern California real estate has been seized by the US Attorney’s Office and is subject to a pending civil forfeiture case.

If the court orders the assets forfeited, the US will work with Philippine officials in an attempt to return the stolen funds back to the Philippine government, the US justice department said.

US authorities, it said, were coordinating with Manila’s justice department, Office of the Ombudsman, Anti-Money Laundering Council, and the Commission on Audit.

Napoles remains behind bars for her plunder and graft cases before the Sandiganbayan in relation to the pork barrel scam.

The government in February provisionally accepted Napoles as a state witness. She was removed from the WPP by the new justice secretary last May.

Venezuela’s Maduro under investigation in $1.2 billion U.S. money-laundering case

By Jay Weaver

Venezuelan President Nicolás Maduro is under investigation as part of a U.S. probe into a massive scheme that authorities say has pilfered more than $1 billion from the state-owned oil company, PDVSA, the Miami Herald has learned.

Maduro has not been named or charged in a criminal complaint filed in Miami federal court this week that detailed the international money-laundering conspiracy. But sources familiar with the investigation say he and other government officials and associates — including his three stepsons — are being investigated for any links to a network that prosecutors believe has plundered Venezuela’s national oil company and funneled vast amounts of cash into European and U.S. banks as well as South Florida real estate and other assets.

“Everything runs through him,” said one person familiar with the investigation, describing Maduro as a principal suspect of the U.S. investigation.

Even if Maduro, who became president after Hugo Chávez’s death in 2013, is ultimately charged, it’s unlikely he would be brought to the U.S. for prosecution. But the probe could add to the political challenges already facing the embattled president. Maduro has been the focus of months of protests over his country’s failing economy. The once oil-rich nation has been wracked by hyperinflation, widespread hunger and violence. Thousands of Venezuelans have fled the country.

Though Maduro is not mentioned by name in the criminal complaint filed by the U.S. Attorney’s Office on Wednesday, there are references to him as “Venezuelan Official 2” and to his stepsons, according to multiple sources familiar with the probe. His stepsons — Yosser Gavidia Flores, Walter Gavidia Flores and Yoswal Gavidia Flores — though also unnamed are described by the sources as receiving an estimated $200 million in funds stolen from the nation’s national oil company, Petroleos de Venezuela, S.A., or PDVSA, that were wired to a European bank in late 2014 and early 2015.

The deposits for his three stepsons — the grown children of Maduro’s wife, Celia Flores, from previous relationships — were among 10 wire transfers totaling about $600 million, according to a Homeland Security Investigations criminal complaint.

The affidavit says the wire transfers were made from PDVSA, with about $265 million going to accounts linked to the complaint’s lead defendant, Francisco Convit Guruceaga, a Venezuelan billionaire businessman. He and other members of the wealthy class are often referred to as the “boliburgués,” an elite politically connected group in Venezuela. An unnamed conspirator also received some of the money, according to the affidavit filed by Assistant U.S. Attorney Francisco Maderal.

Roughly $200 million went to the “chamos” — Spanish for stepsons — of Venezuelan Official 2. Sources say that Venezuelan Official 2 is Maduro.

Court documents say another $80 million went to “Conspirator 7.” Sources familiar with the affidavit told the Miami Herald that Conspirator 7 is Raúl Gorrín, owner of the Globovision television network in Venezuela. Gorrín, who has close ties to Maduro and the late president Chávez, has been sharply criticized for turning a pro-opposition news network into one more friendly to the president.

In late 2017, Gorrín tried to broker an exit strategy with the Trump administration for Venezuela’s beleaguered government, according to various Washington sources, by peddling the idea that Maduro and other key government leaders might be willing to negotiate a transition in Venezuela in exchange for amnesty. He also retained Ballard Partners — the firm of President Donald Trump’s former Florida lobbyist — ostensibly to help his Venezuelan TV network company expand into U.S. markets.

Gorrín’s lawyer in Miami, Howard Srebnick, denied any wrongdoing by his client, who has not been charged in the criminal complaint. “Mr. Gorrín is a successful media mogul who has not been involved in any money laundering,” Srebnick told the Miami Herald in a text message.

The eight defendants named in the complaint are accused of embezzling funds from Venezuela’s vast oil income and exploiting its foreign-currency exchange system to amass illegal fortunes in the United States and other countries. To leverage their profits, the defendants took advantage of their access to the Venezuelan government’s foreign-currency exchange system, which offers a far more favorable rate than the everyday market. It was used to convert bolivars to dollars and euros as the defendants stole from the country’s oil riches for overseas investments in Florida, Europe and other parts of the world.

The Venezuelan information ministry in Caracas could not be reached by phone.

Among the defendants is a German national arrested Tuesday at Miami International Airport who manages “banking” activities for numerous Venezuelan officials — Matthias Krull, 44, a Panamanian resident who worked as a banker in Switzerland. His defense attorney, Oscar S. Rodriguez, declined to comment on Friday. Krull is being held at the Miami Federal Detention Center.

Another defendant, Gustavo Adolfo Hernandez Frieri, 45, a Colombian-born naturalized U.S. citizen, was arrested in Italy on Wednesday and is expected to be extradited.

Hernandez is accused of using his Miami financial firm, Global Securities Advisors, and another firm, Global Strategic Investments, to launder money with false mutual-fund investments. A Homeland Security investigator says in the affidavit that the two brokerage companies, which are listed as having offices at 701 Brickell Ave., are “affiliated” and were used by Hernandez for meetings with members of the money-laundering network.

Representatives of Global Strategic Investments insist Hernandez has had no involvement in the firm, which is headed by Hernandez’s brother, Cesar.

The alleged money-laundering conspiracy began in December 2014 with a currency-exchange scheme to embezzle $600 million from PDVSA obtained through bribes and fraud, the complaint says. The defendants used an associate, who would later become a confidential source for the feds, to launder a portion of the PDVSA funds. By May of 2015, the conspiracy had doubled to $1.2 billion embezzled from Venezuela’s national oil company.

In early 2016, the associate approached Homeland Security investigators in Miami about cooperating and becoming a confidential source, the complaint says. The source agreed to wear a recording device to launder $78 million in PDVSA funds that he had received from a loan contract with the national oil company.

The federal probe, called Operation Money Flight, was launched with the initial focus on the defendants’ efforts to launder a portion of the $78 million. That investigation uncovered the broader money laundering, according to the affidavit.


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