At least $3.3M in Drug Proceeds Laundered by 2 Cincinnati Businesses

By: Erin Couch

Prosecutors say Tri-State Jeweler on Race Street and Nationwide Automotive on Vine Street were both used to launder proceeds from a narcotics conspiracy that took place between March 2016 through October 2019.

According to the indictment, the conspiracy involved at least 400 grams of fentanyl, at least 500 grams of methamphetamine and at least 5 kilograms of cocaine. Prosecutors say defendants conspired to possess and intended to distribute the drugs.

The indictment indicates cash was stored at the two businesses, where it was hidden and then transported to and from the Cincinnati area.

Prosecutors say at least $3.3 million in drug proceeds total had been laundered.

According to the office, federal agents seized 19 pounds of fentanyl, three pounds of heroin, 100 pounds of cocaine, 42 pounds of meth, 47 weapons, 12 vehicles, jewelry store inventory, and $1.1 million in assorted jewelry from defendants and residences, all valued at $1.1 million. They also seized more than $500,000 in cash.

Tri-State Jewelers is accused of storing at least $2.5 million total between December 2018 and April 2019. Nationwide Automotive is accused of laundering at least $800,000.

They cite three July incidents at Tri-State Jewelers where the store reportedly sold jewelry pieces purchased with drug proceeds, totaling to $20,400. They say also in July Nationwide Automotive sold a vehicle for $38,800 reportedly purchased narcotics proceeds

Twenty-two of the 37 defendants are local to Cincinnati, according to the office.

The 37 defendants include:

Thirty-seven people were charged Tuesday in connection with a $3.3 million drug-money laundering scheme.
Thirty-seven people were charged Tuesday in connection with a $3.3 million drug-money laundering scheme. (Source: Southern District of Ohio U.S. Attorney)

https://www.fox19.com/2019/11/19/feds-least-m-drug-money-laundered-by-cincinnati-businesses/

Professor Who Wrote Book on Drug Crime Is Accused of Money Laundering

By: Bob Van Voris

A Miami professor who’s an expert on drug trafficking and organized crime was charged by the U.S. with laundering money from Venezuela, skimming more than $250,000 for himself.

Bruce Bagley, 73, a professor of international studies at the University of Miami, was the co-editor of the 2015 book “Drug Trafficking, Organized Crime, and Violence in the Americas Today” as well as a contributor to various journals on the topic.

But on Monday prosecutors in Manhattan charged Bagley with laundering about $2.5 million into the U.S., money that foreign nationals embezzled and got from bribes and other corrupt schemes. Bagley pocketed about 10% of the money, according to prosecutors.

“Bagley, an American professor, contributed to the success of illegal activity overseas, carried out against the Venezuelan people,” FBI Assistant Director-in-Charge William F. Sweeney Jr. said in a statement.

relates to Professor Who Wrote Book on Drug Crime Is Accused of Money Laundering

Bruce Bagley

Bagley, of Coral Gables, Florida, appeared in federal court in Miami Monday, according to court records. He was released on $300,000 bond cosigned by his son and daughter.

The University of Miami, where Bagley is a professor of international studies, said he was put on administrative leave after the school learned he was indicted.

“The arrest came as a complete surprise to everyone and we are just now reviewing the indictment,” Bagley’s lawyer, Daniel Forman, said in an email. “Based on my extensive knowledge of Dr. Bagley, both professionally and personally, I am confident he will be vindicated at the end of the day.”

Widely quoted in the media about drug trafficking, Bagley has criticized flawed efforts at combating it. Last year, he told Bloomberg News that Marxist guerrillas from the National Liberation Army in Colombia were “serious about peace” and that the government was dragging its feet implementing land reform and ensuring security.

The New York Times cited him in 2012 about what he called a “Whac-A-Mole” approach, in which targeting trafficking in one place just moves to another location.

On the “Rate My Professors” website, Bagley has a few, mixed reviews. While the most recent, from 2013, describes him as “awesome,” others from earlier complain he belittles students with opinions contrary to his and with one calling him a “guy who loves to hear himself talk.”

According to U.S. prosecutors, Bagley opened a bank account using a company he owned, taking in 14 payments from November 2017 to October 2018. The payments came from Swiss and United Arab Emirates accounts, prosecutors said. The description of Bagley’s company, which isn’t named in court papers, matches Bagley Consultants Inc., a defunct Florida corporation opened by the professor in 2005.

Overseas Accounts

The overseas accounts were held by a “purported food company” and a wealth management firm allegedly controlled by a Colombian, whom the government didn’t identify.

Prosecutors claim Bagley would withdraw 90% of the payments in the form of cashier’s checks payable to an account held by an unnamed person and transfer the rest to his own account.

Even after the bank account was shut down for suspicious activity in October 2018, Bagley opened a second one in December, where he received money on two separate occasions, prosecutors said.

Bagley is charged with two counts of money laundering and one count of conspiracy. He faces as long as 20 years in prison if convicted.

“About the only lesson to be learned from Professor Bagley today is that involving oneself in public corruption, bribery, and embezzlement schemes is going to lead to an indictment,” Sweeney said.

The case is U.S. v. Bagley, 19-cr-00765, U.S. District Court, Southern District of New York (Manhattan).

https://www.bloomberg.com/news/articles/2019-11-18/professor-wrote-laundering-book-then-washed-millions-u-s-says

Vallejo Man Sentenced to Seven Years in Prison for Money Laundering

A 58-year-old Vallejo man will spend the next seven years in federal prison after a jury found him guilty of conspiracy to commit money laundering, two counts of substantive money laundering, and filing a false tax return, U.S. Attorney McGregor W. Scott announced on Thursday.

Marty Marciano Boone and his wife and co-defendant Ronda Boone, 56, filed separate false tax returns claiming that they were owed millions of dollars in refunds from the IRS, Scott said in a news release. While the IRS flagged Ronda Boone’s tax return as fraudulent and denied her claim, Marty Boone’s false return resulted in the IRS paying him over $1.9 million in a refund check.

The couple then laundered those funds through domestic and foreign accounts, including by establishing a shell corporation in Cyprus and a church in the state of Washington through which the defendants moved the fraudulently obtained money.

Ronda Boone is scheduled to be sentenced on Nov. 21. She faces a maximum penalty of 10 years in prison.

https://www.timesheraldonline.com/2019/11/14/vallejo-man-sentenced-to-seven-years-in-prison-for-money-laundering/

Council of Europe Anti-Money Laundering and Counter-Terrorist Financing Committee visits Georgia

Financing of Terrorism (MONEYVAL) carried out an onsite visit to Georgia from 4 to 15 November 2019.

The delegation was composed of MONEYVAL experts with a legal, law enforcement and financial background and supported by members of the MONEYVAL Secretariat. The delegation has been received by the Deputy Head of the Georgian Financial Intelligence Unit and by the First Deputy of the General Prosecutor’s Office. The delegation met with the authorities responsible for the Georgian anti-money laundering and countering the financing of terrorism (AML/CFT) system (i.e. competent ministries, criminal justice and operational agencies, financial sector bodies and supervisors of businesses and professions with AML/CFT obligations). The delegation also held meetings with a great number of private stakeholders (e.g. financial institutions, notaries, lawyers, real estate agents, and casinos) and representatives from non-profit organizations.

The delegation is tasked with analyzing – in the form of a mutual evaluation report – Georgia’s level of compliance with the Financial Action Task Force (FATF) 40 Recommendations and the level of effectiveness of Georgia’s AML/CFT system, and with providing recommendations on how the system could be strengthened.

The report will be scheduled for discussion and adoption at MONEYVAL’s 60th Plenary meeting: 29 June – 3 July 2020.

https://www.coe.int/en/web/moneyval/-/council-of-europe-anti-money-laundering-and-counter-terrorist-financing-committee-visits-georgia

CipherTrace Urges Crypto Companies to Prepare for Anti-Money Laundering Compliance

By Rachel Wolfson

For better or for worse, the cryptocurrency space is coming of age. Since Bitcoin’s rise to mainstream prominence in 2015, there has been increasing recognition of digital assets from government agencies around the world. In turn, new regulations are being imposed to control the way cryptocurrency companies operate and do business globally.

Most recently, the Financial Action Task Force issued new guidelines on how digital assets should be regulated. In order to raise awareness around these requirements, the blockchain security company CipherTrace hosted a conference and hackathon this week in San Francisco dedicated entirely to discussions on the FATF guidelines, also known as the “travel rule.”

The travel rule requires regulators and Virtual Asset Service Providers, such as exchanges from various countries worldwide, to collect and share personal data during transactions. Much like the guidelines followed by traditional banks under the United States Bank Secrecy Act, the travel rule being enforced for crypto firms follow the same requirements as money transmitters do to record identifying information on all parties in fund transfers made between financial institutions.

Yet, unlike traditional financial firms, many cryptocurrency exchanges do not capture personally identifiable information by default. Complying with the travel rule will, therefore, require significant shifts for businesses operating in the crypto space.

“The new regulations coming from FATF will ultimately change the way crypto companies operate, requiring them to track not only their own customers’ transactions but also where their customers are sending money to,” Dave Jevans, CEO of CipherTrace, told Cointelegraph.

One of the main goals of the CipherTrace conference was to gather regulators, banks, crypto companies, and programmers together to make sense of the new guidelines, and then build a solution that would allow organizations to easily comply with the FATF rules.

“There are broad implications around privacy, identification of customers, how data works across various blockchains and privacy coins,” said Jevans. “We need to come up with solutions to ensure that companies can easily comply with these regulations, which is what we aim to achieve here.”

Companies must act now

Prior to working on a compliance solution at the hackathon, a number of panels highlighted the themes and main challenges surrounding the FATF regulations. While these rules are not yet legally binding — as the FATF said in a public statement in June that countries have until June 2020 to adopt the guidelines — a broad theme at the CipherTrace conference was that action must be taken immediately. The G-20 stated that it already uses the recommendations for anti-money laundering regulation of cryptocurrencies, so crypto companies that fail to comply with the new regulations are likely to face penalties.

“The consequences for non-compliance could range from a slap on the wrist, to going to jail if a company violates the Bank Secrecy Act,” Carol Van Cleef, CEO of blockchain consulting firm Luminous Group, warned on stage during the legal requirements panel. “No matter how big or small a company is, each has obligations to fulfil under the law.”

Although this may be the case, John Jefferies, CipherTrace’s chief financial analyst, pointed out that many companies operating in the cryptocurrency sphere have yet to comply with the new regulations.

“Many U.S. exchanges may not yet be compliant, but they should be at this time,” Jefferies said. “Moving forward, when Binance or Coinbase completes a transaction for example, they need to send the sender recipient data at the same time with that transaction. Otherwise, they are not in compliance.”

While most crypto companies are not yet compliant with the FATF regulations, Jevans, the CEO of CipherTrace, stressed the importance of getting everyone on the same page.

“Education is the main challenge we have to tackle first,” he said. “We need to know what the FATF laws are, why we should care and what can happen if companies don’t comply.”

The U.S. Treasury Department’s Financial Crimes Enforcement Network emerging technology policy specialist, Carole House, explained the FATF guidelines during her keynote. She highlighted that the guidelines are designed to curb the use of cryptocurrencies for financial crimes by making crypto transactions more traceable, giving regulators increased visibility into both cross-border and domestic currency transfers.

“Crypto companies need to comply with virtual currency recommendations by the end of June 2020. We’ve already been involved with a number of people from the Digital Commerce Association to provide commentary around accomplishing this,” House stated.

The regulations are clear — now what?

As the FATF regulations were brought to light, a number of challenges around ensuring compliance followed.

For instance, the question of how the FATF guidelines would relate to privacy coins was a pressing issue. One of the stated goals of privacy coins such as Monero and Zcash is to ensure that users have anonymized transactions, so it is questionable how these could be compliant with the new regulations.

During the privacy coin panel, Jack Gavigan, head of product and regulatory affairs at Zcash, asked, “Is compliance possible in relation to privacy coins?”

Answering his own question, Gavigan stated his belief that compliance is indeed possible, as a number of privacy coins are already listed in U.S. exchanges regulated by the Financial Crimes Enforcement Network.

Even though this may be the case, understanding how to abide by the FATF regulations in a way that focuses on privacy while maintaining the decentralized ethos of cryptocurrency and blockchain remains a challenge.

Jake Tarnow, a security software developer at CipherTrace, aimed to solve this problem during the hackathon. His team came up with an impressive solution that aims to keep data anonymous when information is being exchanged between Virtual Asset Service Providers.

“If VASP A is trying to send data to VASP B, we need to know how this can be done in a way that none of the information is in the clear,” Tarnow told Cointelegraph.

His solution entailed using a zk-SNARK — short for a “zero-knowledge succinct non-interactive argument of knowledge” — a form of cryptography that allows one party to securely reveal that it possesses a piece of information, without actually exposing the information itself.

“By using zk-SNARKs, VASPs can send this information in a bulletproof way, where no one else can pick that up and pull out their proprietary information,” explained Tarnow.

During the hackathon, developers also worked closely with security software gurus to integrate the Travel Rule Information Sharing Architecture into their systems. CipherTrace announced the release of TRISA in September as an open-source, peer-to-peer design for cryptocurrency companies and blockchain projects to comply with the FATF regulations.

TRISA is meant to provide secure, reliable delivery of personally identifiable information, or PII, to the correct VASP, eliminating a huge risk for exchanges. However, sharing PII is prone to spamming, a problem that developers at the CipherTrace hackathon aimed to solve.

“Various backend systems managing PII are vulnerable to spamming, as spammers can get into these systems and start asking people to send PII,” explained Jefferies.

Independent consultant Kenneth Kron and his team won first place in the hackathon for coming up with a solution that introduces PII tokens to prevent spamming in TRISA.

“We want to solve the problem of PII spamming in TRISA by introducing PII tokens and KYC providers who can generate enhanced KYC tokens. If spammers are trying to capture personal information and get a hit, all they get back is a token in this case,” Kron told Cointelegraph.

All the ingredients for a compliance recipe

Overall, the CipherTrace conference and hackathon gathered a unique mix of individuals to discuss the future of cryptocurrency regulations. The discussions throughout the event demonstrated that action must be taken now to ensure that crypto companies are compliant with the FATF regulations by June 2020.

“We gathered many tribes that do not typically interact, enabling experts from government, exchanges and privacy groups to understand each other’s diverse perspectives,” Jefferies told Cointelegraph after the conference. “The conversations instilled a sense of urgency in the community and TRISA, while creating an open-source path to meet these tight regulatory deadlines and defend privacy at the same time.”

 

https://cointelegraph.com/news/ciphertrace-urges-crypto-companies-to-prepare-for-anti-money-laundering-compliance

4 American Airlines Flight Attendants Arrested on Money Laundering Charges After Trip From Chile

By Paulina Dedaj

Four Chilean nationals working as American Airlines flight attendants were arrested this week on money laundering charges after federal agents say they were found with more than $22,000 in cash.

U.S. Customs and Border Patrol agent was performing a routine check at Miami International Airport on Monday when he came across one of the flight attendants, identified as Carlos Alberto Munoz-Moyano.

Three other women traveling with Munoz-Moyano were also arrested after reportedly telling federal agents they were smuggling the cash on behalf of someone else. It is unclear if the suspects were working on the flight when it arrived in Miami.

The arrest report stated that 55-year-old Maria Del Pilar Roman-Strick had $7,300 and 48-year-old Maria Wilson-Ossandon had $6,371.

Maria Pasten-Cuzmar also was arrested with no cash on her, but agents say the other three named her as the director of the illicit operation, the Miami Herald reported.

A spokesperson for American Airlines told Fox News on Wednesday: “We take this matter seriously and are cooperating with law enforcement throughout their investigation.”

He also confirmed that they were all Chilean citizens and that the state would be handling the case after the U.S. attorney declined the case.

Each suspect faces charges of money laundering and transmitting unauthorized money.

https://www.foxnews.com/us/american-airlines-flight-attendants-miami-money-laundering-chile

Silk Road Seller Pleads Guilty to Money Laundering $19 Million With Bitcoin

By Danny Nelson

A former narcotics trafficker pled guilty to charges that he laundered $19 million in profit through Silk Road.

Prosecutors with the Southern District of New York announced a plea deal with Hugh Brian Haney on Thursday, adding another postscript to the infamous dark web marketplace’s history. According to a press release, Haney was accused of laundering close to $20 million using bitcoin in early 2018.

Silk Road was among the dark web’s earliest drug marketplaces and a haven for its bitcoin-accepting vendors until its operator, Ross Ulbricht, was arrested in October 2013 and the site was shut down. Ulbricht is currently serving a life sentence on charges of narcotics distribution, computer hacking and conspiracy.

Haney was one of the sellers who used the marketplace. According to the prosecutors, Haney was a “high-ranking member” of a narcotics outfit known as Pharmville, and is said to have received nearly 4,000 bitcoin from Silk Road-linked accounts through February 2012. According to the complaint, he trafficked in fentanyl, oxycontin and other narcotic sales.

“Hugh Haney used Silk Road as a means to sell drugs to people all over the world,” U.S. Attorney Geoffrey S. Berman said in a statement. “Then he laundered more than $19 million in profits through cryptocurrency.”

He was caught after liquidating his remaining bitcoins on an exchange for $19,147,053 in January and February 2018. The unnamed company froze his account and launched an internal investigation that ultimately led to a search warrant. Haney was arrested in July 2019.

Initially, Haney claimed his bitcoin came from a mining operation. But investigators used “blockchain analysis software” to show the funds came from Silk Road, according to the July complaint.

According to his plea deal, Haney pled guilty to one count of concealing money laundering and one count of engaging in a financial transaction in criminally derived property. He is set to be sentenced in February 2020.

 

Active-duty Fort Carson Soldier Arrested for Money Laundering and Criminal Impersonation

By Toni Keith

FOUNTAIN, Colo. (KKTV) – An active-duty Fort Carson soldier is facing a long list of charges after police say he used social media to take advantage of people.

The Fountain Police Department announced the arrest of 22-year-old Christian Johnson on Wednesday. Investigators believe he was advertising on social media for assistance to help cash checks. The victims would pay a certain amount and the rest of the money was given to Johnson in cash. The checks were fraudulent and did not clear with the bank, forcing the victim to owe or lose money.

Multiple transactions occurred in Fountain and Colorado Springs.

Johnson was booked into the El Paso County Criminal Justice Center and is being charged with money laundering, forgery, criminal impersonation, issuing false financial statements, fraud and bait advertising.

If you believe you were a victim of Johnson in reference to cashing checks, you can call Officer Daly at 719-382-4234.

Anyone with information, or is a witness to this investigation, is asked to call the El Paso County Sheriff’s Office Communication Center at (719) 390-5555

Feds Posed as Drug Cartel to Send N.J. Man, Texas Doomsdayer to Prison for Money Laundering

By Joe Brandt

Anthony Romano thought he was meeting a man with ties to a Colombian drug cartel.

They made a deal: the man would give Romano cash proceeds from the drug trade in exchange for a check for that amount, minus a fee. Romano and the man met multiple times in Cape May and Atlantic counties.

In truth, the “cartel” man was actually a federal agent looking to nab money launderers, U.S. Attorney Craig Carpenito said in a news statement Monday.

In September, Romano, 53, of Springfield, admitted his role in the scheme – conspiring to launder $590,000 in late 2017.

After several early meetings with the agent, Romano mentioned a friend down south who could help the “cartel” launder even bigger sums. He introduced him to John Eckerd, a developer in McKinney, Texas who was working on a massive development an hour outside of Dallas: a combination doomsday bunker, resort, golf course, and spa.

The $320 million development, called Trident Lakes, barely got under construction. The local CBS affiliate showed shots of a field mostly empty, except for an ornate fountain.

Carpenito said the development was pitched as “a five-star doomsday escape for the wealthy with DEFCON 1 preparedness” that was “capable of withstanding catastrophic events ranging from viral epidemics to nuclear war.”

And Eckerd was prepared to use it to launder Colombian drug money.

In January 2018, after several four- and five-figure transactions, the agent met Romano somewhere in New Jersey to give him $100,000 cash. Eckerd then wired money to a “cartel” account.

The next month, Romano accepted a backpack containing $100,000 cash after meeting the agent and giving him a tour of the development site in Fannin County, Texas. Eckerd then handed the agent a check.

Besides admitting to the money laundering scheme, Romano also pleaded guilty to a 2014 robbery of The Pawn Shop in Union, acknowledging that conspirators, in that case, had a gun during the incident.

U.S. District Judge Renee Marie Bumb, in Camden, sentenced him to 54 months in prison.

Eckerd, who admitted to conspiring to launder $200,000, was sentenced to 15 months in prison Monday in Bumb’s courtroom.

Carpenito credited FBI agents and detectives from the Union County Prosecutor’s Office for their investigation.

https://www.nj.com/atlantic/2019/11/feds-posed-as-drug-cartel-to-send-nj-man-texas-doomsdayer-to-prison-for-money-laundering.html

Venezuela’s Business Elite 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.

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.

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.

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 bribery and 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, including efforts to move $200 million through straw representatives for Maduro’s three stepsons..

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.”

https://www.miamiherald.com/news/local/article236793383.html