A web of former Venezuelan officials and businessmen was charged in Miami Wednesday with operating a massive $1.2 billion international money-laundering racket funded with stolen government money that was invested in South Florida real estate and other assets.
The defendants 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, according to a federal criminal complaint.
The complaint describes a Venezuelan government culture in which officials, politicians and businessmen connected to President Nicolás Maduro and his predecessor, the late Hugo Chávez, have plundered the national oil company, PDVSA, to enrich themselves while impoverishing the South American country.
“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,” says a Homeland Security Investigations affidavit filed with the complaint in Miami federal court. “[It] has become an international money-laundering hub and a desirable destination for well-to-do foreign criminals and kleptocrats.”
The complaint names eight defendants and lists nine unidentified co-conspirators. Among them is a German national arrested Tuesday at Miami International Airport who manages “banking” activities for numerous Venezuelan officials and kleptocrats. Matthias Krull, 44, a Panamanian resident who also worked as a banker in Switzerland, made his first appearance in Miami federal court on Wednesday and has a pretrial detention hearing on Monday.
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. He is accused in the complaint of using his Miami financial firms, Global Security Advisors and Global Strategic Investments, to launder money with false mutual-fund investments.
Other defendants are expected to be arrested in the sprawling case, which was filed by federal prosecutor Francisco Maderal. But apprehending some won’t be easy because they are likely to be in Venezuela, which has a hostile relationship with the United States.
Among the other named defendants: Carmelo Urdaneta Aqui, the former legal counsel to the Venezuelan Ministry of Oil and Mining, who the complaint says bought a condo at the Porsche Design Tower in Miami; Abraham Edgardo Ortega, the former executive director of finance at the state-owned oil company, Petroleos de Venezuela, S.A., PDVSA; and Francisco Convit Guruceaga, a Venezuelan businessman who is often referred to as “Bolichico,” or member of the “boliburgues,” the country’s elite.
Another key figure in the alleged ring: Jose Vincente Amparan Croquer, a “professional money launderer” in Venezuela with investment relationships in Spain and Malta.
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.
An atmosphere of intimidation hung over some of the money-laundering deals, according to the unnamed associate.
Toward the end of 2015, the associate was summoned to a meeting in Caracas with three of the defendants: Convit, Urdaneta and Amparan. They convened around a table in Convit’s office, with numerous security guards, the complaint says. Convit kept a handgun on the table and a German shepherd with a shock collar next to him. “Convit held the remote for the collar, and commented that he could not always control the dog,” the complaint says.
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.
“Two years and over one hundred recordings later, Operation Money Flight revealed an international conspiracy to launder the PDVSA funds through Miami and several large-scale international money-laundering organizations,” the complaint says. “More specifically, the investigation revealed the use of Miami real estate and sophisticated false-investment schemes to launder hundreds of millions of U.S. dollars.”
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 favorable exchange-rate spread would result in illicit profits of tens of millions of dollars for each transaction.
The Homeland Security Investigations’ case unsealed Wednesday is unrelated to another major money-laundering probe underway that targets a former high-ranking Venezuelan official close to the late President Chávez. That probe also takes aim at other former senior officials and financial figures who collaborated with them.
The Miami Herald and el Nuevo Herald reported in March that Alejandro Andrade, a former bodyguard to Chávez who rose to the rank of national treasurer between 2007 and 2010, is suspected of laundering millions of dollars stolen from the Venezuelan government to invest in real estate, show horses and other assets in South Florida and elsewhere, according to sources in Miami and former Venezuelan government officials familiar with the investigation.
Andrade’s acquisitions in South Florida and other parts of the United States don’t show up in public records because the purchases were made through shell companies that allow him to keep his ownership hidden, sources said. Andrade and several other associates in Venezuela’s government, banking and business sectors are suspected of enriching themselves by selling billions of dollars in bonds, capitalizing on fluctuating exchange rates and hiding their profits in Swiss bank accounts and U.S. investments, they said..
The investigation, led by the U.S. Attorney’s Office in Miami, stands out among the several federal criminal cases brought against former Venezuelan officials in recent years because Andrade was one of the most trusted members in Chávez’s inner circle. The socialist leader died in 2013.