Five Former Venezuelan Government Officials Charged in Money Laundering Scheme Involving Foreign Bribery
Charges were unsealed today against five former Venezuelan government officials for their alleged participation in an international money laundering scheme involving bribes made to corruptly secure energy contracts from Venezuela’s state-owned and state-controlled energy company, Petroleos de Venezuela S.A. (PDVSA). Two of the five defendants are also charged with conspiracy to violate the Foreign Corrupt Practices Act (FCPA).
Acting Assistant Attorney General John P. Cronan of the Justice Department’s Criminal Division, U.S. Attorney Ryan K. Patrick of the Southern District of Texas and Special Agent in Charge Mark Dawson of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) in Houston made the announcement.
Four of the defendants, Luis Carlos De Leon Perez (De Leon), 41; Nervis Gerardo Villalobos Cardenas (Villalobos), 50; Cesar David Rincon Godoy (Cesar Rincon), 50; and Rafael Ernesto Reiter Munoz (Reiter), 39, were arrested in Spain in October 2017 by Spanish authorities on arrest warrants based on a 20-count indictment returned in the Southern District of Texas on Aug. 23, 2017. Cesar Rincon was extradited from Spain on Feb. 9, and made his initial appearance today before U.S. Magistrate Judge MJ Stephen Smith of the Southern District of Texas. De Leon, Villalobos and Reiter remain in Spanish custody pending extradition. A fifth defendant, Alejandro Isturiz Chiesa (Isturiz), 33, remains at large. All five defendants are citizens of Venezuela; De Leon is also a U.S. citizen.
De Leon, Villalobos, Reiter and Isturiz are each charged with one count of conspiracy to commit money laundering. Cesar Rincon is charged with two counts of conspiracy to commit money laundering. Each of the defendants is charged with one or more counts of money laundering, as follows: De Leon, Cesar Rincon and Reiter, four counts each; Villalobos, one count; and Isturiz, five counts. De Leon and Villalobos are also each charged with one count of conspiracy to violate the FCPA.
“Corruption threatens economic and political stability, and victimizes ordinary law-abiding people by diverting public funds into the pockets of corrupt officials and bribe payers,” said Acting Assistant Attorney General Cronan. “The charges announced today demonstrate our commitment to fighting corruption at its source and to prosecuting those who allegedly launder their illicit gains through American financial institutions and real estate. Through cases like this, we are sending a strong message to corrupt foreign officials: if you launder your ill-gotten gains through the United States, you will be prosecuted.”
“Effective deterrence of corruption requires prosecution of culpable individuals, wherever those individuals are located,” said U.S. Attorney Patrick. “We will continue to enforce the FCPA against those that avail themselves of the privileges of the American marketplace.”
“This case is an example of what can be accomplished when international law enforcement agencies work together to thwart complex cross-border crimes” said Special Agent in Charge Dawson. “HSI is committed to upholding the rule of law and investigating those that would participate in illegal practices.
The indictment alleges that the five defendants, all of whom were then-current officials of PDVSA and its subsidiaries or former officials of other Venezuelan government agencies or instrumentalities, were known as the “management team” and wielded significant influence within PDVSA. According to the indictment, the management team conspired with each other and others to solicit several PDVSA vendors, including vendors who were residents of the United States, and who owned and controlled businesses incorporated and based in the United States, for bribes and kickbacks in exchange for providing assistance to those vendors in connection with their PDVSA business. The indictment further alleges that the co-conspirators then laundered the proceeds of the bribery scheme through a series of complex international financial transactions, including to, from or through bank accounts in the United States, and, in some instances, laundered the bribe proceeds in the form of real estate transactions and other investments in the United States.
According to the indictment, two PDVSA vendors, Roberto Enrique Rincon Fernandez (Roberto Rincon), 57, of The Woodlands, Texas, and Abraham Jose Shiera Bastidas (Shiera), 54, of Coral Gables, Florida, sent over $27 million in bribe payments to an account in Switzerland for which De Leon was a beneficial owner and De Leon and Villalobos were authorized signers. The indictment alleges that those funds were later transferred to other accounts in Switzerland. Both Roberto Rincon and Shiera previously pleaded guilty in the Southern District of Texas to FCPA charges in connection with a scheme to bribe PDVSA officials. According to admissions made in connection with their pleas, Roberto Rincon and Shiera paid bribes and provided other things of value to PDVSA officials to ensure that their companies were placed on PDVSA bidding panels and ensure that they were given payment priority so that they would get paid ahead of other PDVSA vendors with outstanding invoices. Roberto Rincon and Shiera are currently awaiting sentencing.
An indictment is merely an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
With the unsealing of the indictment today, the Justice Department has announced charges against 15 individuals, 10 of whom have pleaded guilty, as part of a larger, ongoing investigation by the U.S. government into bribery at PDVSA. HSI in Houston is conducting the ongoing investigation with assistance from HSI in Boston and Madrid, as well as from Internal Revenue Service Criminal Investigation. Trial Attorneys Jeremy R. Sanders and Sarah E. Edwards of the Criminal Division’s Fraud Section and Deputy Chief John Pearson and Assistant U.S. Attorney Robert S. Johnson of the Southern District of Texas are prosecuting the case. Assistant U.S. Attorney Kristine Rollinson of the Southern District of Texas is handling the forfeiture aspects of the case.
The Criminal Division’s Office of International Affairs, the Swiss Federal Office of Justice and the Spanish Guardia Civil also provided assistance.
The Fraud Section is responsible for investigating and prosecuting all FCPA matters. Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa.