When prosecutors won a major money-laundering conviction of Venezuela’s former national treasurer, the feds grabbed hundreds of millions of dollars that he had stolen from his government and invested in an equestrian farm, show-jumping horses, luxury cars and bank accounts in South Florida.
The money from those tainted assets belongs to the U.S. Treasury, not Venezuela’s socialist government, prosecutors declared in November. The ex-Venezuelan treasurer, Alejandro Andrade, was “complicit” in the crime of taking bribes and selling access to an official currency-exchange system that converted bolivars into billions, prosecutors argued. Venezuela, as a sovereign state, is not a “victim” of his crime under U.S. law.
Now, a group of Miami lawyers are challenging the Justice Department’s stand in the ongoing South Florida money-laundering prosecutions of wealthy Venezuelan defendants, known as “kleptocrats.” The lawyers are seeking to recover potentially hundreds of millions of dollars for Venezuela’s people, who are struggling through an economic disaster.
They are hoping to obtain whatever stolen funds federal authorities seize from future convicted defendants to help the theft’s true “victims,” the Venezuelan people — not the government of President Nicolás Maduro, according to a court motion filed this month. The lawyers’ legal strategy parallels bipartisan legislation in Congress that aims to accomplish the same goal.
Attorney William Tunkey, the longtime partner of a Miami law firm known for its criminal defense work, would not disclose the name of his client in Venezuela who is behind the bid to recover the country’s stolen money. But he said the person is not aligned with Maduro or members of his government.
Tunkey also would not say whether the client is an ally of Juan Guaidó, the opposition leader whom President Donald Trump officially recognized as the interim president of Venezuela in January after the National Assembly declared Maduro’s presidency illegitimate.
Beyond legal arguments, Venezuela experts believe American politics and foreign policy will dictate what ultimately happens with money embezzled by kleptocrats and diverted into investments in South Florida, New York and Europe.
“Who is representing the government of Venezuela in this case?” said Russell Dallen, a lawyer and investment manager who has businesses in Miami and Caracas. “It’s a perfectly legitimate question. Is it the Guaidó government or the Maduro government? ... If it’s the Guaidó good guys, then [the U.S. government] would be willing to give them the money.”
Dallen and other experts say the only likely way that stolen Venezuelan funds recovered by the feds could be returned to Venezuela is through Guaidó. They note the U.S. government doesn’t recognize Maduro as president and that the U.S. Treasury has imposed sanctions against Venezuela’s primary income producer, the state-owned oil company known as PDVSA, freezing its assets in the United States.
The national oil company has been the main source of billions of dollars looted by Andrade, other senior officials and members of Venezuela’s business elite, who are accused of paying bribes for access to the government’s highly lucrative currency-exchange system.
In recent Venezuelan corruption cases playing out in Houston, New York and Miami, federal judges have rejected attempts by PDVSA and its representatives to collect funds looted from Venezuela’s government through bribery, kickback and currency-exchange schemes.
But returning the looted money still remains a possibility through lawsuits or a proposed federal law.
“The practical and political challenges have to do with the fact that the Maduro regime is responsible for the corruption in question, and would not be an appropriate administrator of the funds,” said Michael Camilleri, a human-rights lawyer with the Inter-American Dialogue, a Washington, D.C., group that promotes democracy in Latin America. “Returning the funds to the Guaidó interim government is more palatable.”
This month, Sen. Marco Rubio, R-Florida, joined other GOP and Democratic senators in pushing legislation to provide relief to Venezuela’s people, which includes establishing a fund to manage assets seized from kleptocrats “that could be returned to a future Democratic government in Venezuela.”
“As Maduro and his gang of narco-terrorist thugs continue holding the Venezuelan people hostage under their failed socialist regime, the United States Senate is sending a clear bipartisan message by introducing the VERDAD Act (Venezuela Emergency Relief, Democracy Assistance, and Development Act),” Rubio said in a statement. “This legislation will offer needed humanitarian assistance and support for Venezuela’s long path to democratic order.”
The Justice Department also has a Kleptocracy Asset Recovery Initiative set up to find, forfeit and return the tainted funds of corrupt foreign officials to victims in their native countries. “Although returning funds to a foreign government runs the risk of simply replenishing the coffers of kleptocrats, the Justice Department has a creative solution,” wrote the Inter-American Dialogue’s Camilleri and World Refugee Council executive director Fen Osler Hampson in The Washington Post in January.
They cited an example of funds recovered in the U.S. from corruption in Kazakhstan: In a civil forfeiture by the Justice Department, a $115 million settlement was donated to a charitable foundation overseen by the World Bank for the benefit of poor youths and families. The settlement bypassed the Kazakh government.
“With Venezuela the Justice Department should follow a similar model, moving quickly to deduct reasonable expenses and return the remaining proceeds to Venezuelans when judgments against kleptocrats ... have been obtained,” Camilleri and Hampson wrote.
Because of dire food, power and medical shortages, about three million Venezuelans have fled to neighboring countries such as Colombia to seek refuge.
In an interview, Camilleri said the redistribution of recovered stolen Venezuelan funds in the United States could not only help Venezuelans at home but also refugees who left for other countries. He said the funds under the Justice Department program could be supervised by a third party, such as the World Bank, a United Nations humanitarian agency, or even the interim government of Guaidó.
“It’s certainly not easy,” he said, “but that’s not a reason to postpone it indefinitely because there are real immediate needs.”
In Andrade’s case, the federal judge agreed with prosecutors that the money the former treasurer stole from Venezuela’s government and invested in South Florida should be kept in the U.S. Treasury. Andrade pleaded guilty to accepting bribes from Venezuelan TV network mogul Raul Gorrin, who is accused of making the payoffs to gain access to the government’s favorable currency exchange during the tenure of the late President Hugo Chávez, who died in 2013. Gorrin is still at large in Venezuela and owns a high-end portfolio of real estate in Miami and Manhattan.
“Under these circumstances — where a member of the Venezuelan government is a co-conspirator in the charged offense — it would be inappropriate to afford the [government] victim status for purposes” of recovering the embezzled money, prosecutors Michael Nadler and Vanessa Snyder argued in the Andrade case. They also said Venezuela is a sovereign state and therefore its government is not eligible to recover stolen funds under the U.S. Crime Victims Rights Act.
Because the Andrade case has been resolved — he was sentenced to 10 years in prison and a judge approved a $1 billion forfeiture in late November — Tunkey filed the assets challenge in another pending case in Miami. That case targets nine Venezuelan officials, businessmen and investment managers charged with operating a $1.2 billion money-laundering racket during Maduro’s presidency. Tunkey and law partner Joseph Nascimento are focusing on that case because it is still open, with only two of the defendants pleading guilty. The rest are still fugitives or in custody overseas.
The lawyers are seeking “victim status” for the Venezuelan people before the July sentencing of a former national-oil company executive who accepted bribes in exchange for allowing access to PDVSA’s currency-exchange system. Abraham Edgardo Ortega, PDVSA’s former director of financial planning, pleaded guilty in late October to accepting $12 million in bribes and giving “priority status” to Venezuelan companies that did business with the oil company so they could tap into its vast income through loan- and currency-exchange scams.
In a court motion, the lawyers have asked U.S. District Judge Kathleen Williams to hold a restitution hearing to determine Venezuela’s losses as a result of Ortega’s criminal conduct. Then, “Venezuela will seek a restitution judgment and will suggest that any monies recovered ... be placed into a blocked account administered by a third party ... for the benefit of the Venezuelan people,” the motion says.
Overall, potentially hundreds of millions of dollars are at stake.
In the motion, Tunkey noted that Nadler, the prosecutor, indicated that he opposes turning over any recovered funds to Venezuela. Nadler plans to file a response by April 30. But his position was made quite clear in the Andrade case: “The government of Venezuela’s complicity in this conspiracy renders victim status inappropriate under any applicable statute.”