More than a dozen Venezuelan entrepreneurs have turned to South Florida civil courts seeking to recover millions of U.S. dollars they claim they are owed for investments made with Venezuelan bolivars.
Many say they got scammed on investments prompted by Venezuelas restrictions to foreign currency. The faulty transactions at least in one case stem from the acquisition of underpriced dollars sold at the official exchange rate.
In one of the lawsuits, 12 plaintiffs accuse Miami-Dade residents Carlos Eduardo Mendoza and Efraín Betancourt, managers of Yupi Holdings in Aventura, of keeping 78 million bolivars in loans made in 2012 in Venezuela. The defendants claim they are owed about $8 million that should have been deposited in American bank accounts under the loan agreement with Yupi Holdings.
In another case, the Venezuelan firm All Factoring sued four entities from various countries and five individuals, including Miami-Dade residents Luis Wolkowiez and Jorge Reyes.
In that case, plaintiffs accuse the defendants of failing to repay the bulk of a 234-million bolivar loan for which they were to receive $15.5 million.
Wolkowiez was sued in 2012 on accusations of breaching a similar agreements, public records show. A settlement was reached in that case.
People in Venezuela are seeking ways to obtain dollars, said Alexander F. Fox, an attorney for one of the plaintiffs in the case against Yupi Holdings. He also represents Wolkowiez in the All Factoring lawsuit.
When there is no liquidity, the more scarce the dollars, the more opportunities for people who want to steal, the attorney added.
Yupi Holdings representatives denied the accusations. In the case of All Factoring, Jorge Reyes attorney denied any wrongdoings by his client while the other defendants or attorneys declined to comment, did not respond to emails and phone calls or could not be reached.
The Venezuelan government e strictly regulates currency exchanges. Illegal currency swaps those done without approval of the Central Bank above a limit of $10,000 per year are punished by fines and even prison time.
The main official system to obtain dollars in Venezuela was through the Commission of Foreign Currency Administration, known by its Spanish acronum of CADIVI. Venezuelans travelling abroad and firms that must pay foreign providers previously were able to acquire dollars through CADIVI at the official rate of 6.3 bolivars per dollar.
The Venezuelan government announced that this system will be replaced by an auction system in which one dollar costs at least 11.3 bolivars for imports of non-essential goods.
In a country that imports 70 percent of its consumable goods and suffers double-digit inflation, the demand for dollars regularly pushes black market rates far above the official exchange rate. Earlier this year, the black market rate reached about 75 bolivars per dollar 12 times the official exchange.
This gap opened the door to operations in which some have obtained millions of dollars through fictitious imports or by declaring inflated prices for imported merchandise.
The practice is so vast that in June, the Central Bank of Venezuela reported that a third of the foreign currency spent on imports - an estimated $20 billion came from fraudulent schemes.
In these alleged scams, investors or foreign companies often owned by Venezuelans might pay $10 for 750 bolivars on the black market. The Venezuelan importer, who is often simply an intermediary, would then exchange those same 750 bolivars for $120 dollars from CADIVI. The money obtained from CADIVI is supposed to be used to pay for goods imported into the country.
Often, however, the merchandise does not exist or is not worth the price quoted in paperwork. The extra dollars from the illegal transaction may end up back in the black market.
Its the best business you can do in the world, Fox said. They make money, not because theyre smart, but because they have access to dollars at the official rate. Imagine buying stocks at $1 and selling them for $10.
According to the lawsuit against Yupi Holdings, defendants Mendoza and Betancourt asked the 12 plaintiffs to deposit funds in the bank account of a Venezuelan intermediary, Inversiones Maxx, which supposedly would use the money to finance imports from Miami.
According to court documents, when the imported merchandise arrived in Venezuela, the intermediary would swap the loaned bolivars for dollars through CADIVI. Yupi Holdings would receive the dollars in the U.S. and pay the loan back in U.S. currency.
Plaintiffs, who were desirous of transferring funds from their bank accounts in Venezuela to the United States in U.S. dollars viewed the transaction as an opportunity to obtain U.S. dollars at the official exchange rate available through CADIVI, which is much lower than the currency exchange rate available in the open market, the lawsuit states.
Eduardo Rivas, the investor who heads the lawsuit, said, they told us they needed bolivars for imports. He had no further details about the purchase, he said. We didnt even ask.
Rivas said he wanted to swap bolivars from a printing business in Venezuela because he lives in Miami and bolivars are useless to him here. He says another of the investors, Lidemar González, who invested more than 30 million bolivars, needed dollars to pay his companys U.S. providers.
Most of the plaintiffs had obtained an exchange rate that ranged from 8.6 to 9.3 bolivars per dollar.
They paid a price higher than the official rate of that time, 4.3 bolivars per dollar, but typically paid less than the parallel unofficial market quote, which fluctuated from 9 to 11 bolivars per dollar during that period.
Those who attracted other clients, like Rivas and Ernesto Chavez, were supposed to receive a commission. But neither the commissions nor the loans were paid.
Fox said that U.S. authorities could determine that defendants committed the crime of unlicensed money transmitting. However, he does not believe his clients operations could be considered illegal in Venezuela because the transactions were used for importing goods.
Neil G. Taylor, Ramiro Parras lawyer, has a different opinion. Parra is one of the investors who decided not to sue Yupi Holdings. However, he is being sued in Miami-Dade by another investor, Henssel Bages, who invested $1 million after being introduced to the operation by Parra.
Taylor says Parra is just another swindled investor, that Bages deposited all the money in the Inversiones Maxxs account and Parra did not get one penny.
But the attorney also argued that the agreement is illegal because it violates the Venezuelan currency exchange laws and is not enforceable in U. S. courts.
[This operation] while common, ... nonetheless involves a knowing breach of the host countries laws and, consequently, the criminal Laundering of Monetary Instruments... , Taylor argued in the motion to dismiss the case against Parra.
Often times in South America, people who leave a country and come to the United States want to get their money out and they do it through the black market, said Taylor, who added that this violates the currency control established by countries that do not want to see their currency weakened. When you do this, its against the law, its money laundering.
Manuel Gomez, associate professor of law at Florida International University, said the U.S. would consider the transaction as money laundering only if the proceeds came from an illegal activity. But Venezuelan courts could consider it illegal if foreign currency was offered, he said, or if it is proven that it was not a loan but a mere currency swap.
Attorney Menachem Mayberg said his clients, Betancourt and Mendoza, did not defraud anyone.
They havent shown anything that proves that my clients received the money up to this date, Mayberg said.
A ruling on the lawsuit is pending.