July 25, 2018 / 10:00 PM / 20 days ago

Two arrested on U.S. charges of scheming to launder embezzled PDVSA funds

(Reuters) - A former Julius Baer banker and a Colombian man have been arrested on U.S. charges that they took part in a billion-dollar scheme involving former Venezuelan officials to launder money embezzled from Venezuelan state-owned oil company PDVSA through Florida, federal prosecutors said on Wednesday.

Matthias Krull, 44, a German national who is a former Julius Baer Panama vice chairman, was arrested Tuesday on Miami, according to the U.S. Department of Justice.

Gustavo Adolfo Hernandez Frieri, 45, a Colombian national and naturalized U.S. citizen described by prosecutors as a “professional money launderer,” was arrested on Wednesday in Italy and faces extradition proceedings, the Justice Department said.

A lawyer for Krull did not immediately respond to a request for comment. Julius Baer also did not respond to a request for comment. No lawyer for Frieri could immediately be identified.

The two men were charged in a criminal complaint unsealed in federal court in Miami with conspiracy to commit money laundering.

“Venezuela’s state of social, political and economic crisis in which multibillion-dollar corrupt and criminal ecosystems thrive drives rivers of criminal proceeds through south Florida, which has become an international money-laundering hub and a desirable destination for well-to-do foreign criminals and kleptocrats,” the complaint said.

Prosecutors said the scheme began in 2014 and 2015 and aimed to launder $1.2 billion through Florida real estate and fake investment schemes, including fraudulent bond issues and investment funds.

Prosecutors said U.S. dollars embezzled from PDVSA were used in corrupt schemes to take advantage of the Venezuelan government’s fixed exchange rate between Venezuelan bolivars and U.S. dollars. In 2014, the government rate overvalued the bolivar by a factor of about 10, allowing massive returns for people able to use the government rate, the complaint said.

The schemes benefited wealthy Venezuelans and involved kickbacks to officials for authorizing exchanges of bolivars for dollars at the government rate, according to the complaint.

The complaint also charged several other people, including Carmelo Urdaneta Aqui, former legal counsel to the Venezuelan Ministry of Oil and Mining, and Abraham Edgardo Ortega, former executive director of finance at PDVSA, with taking part in the scheme. The other defendants remain at large, according to the Justice Department.

PDVSA and Venezuela’s Oil Ministry did not immediately respond to a request for comment. Reuters was not immediately able to contact Urdaneta or Ortega.

Reporting by Brendan Pierson in New York; Additional reporting by Alexandra Ulmer in Caracas; Editing by Leslie Adler

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