FROM: U.S. JUSTICE DEPARTMENT
Friday, March 27, 2015
CEO and Managing Director Of US Broker-Dealer Sentenced for International Bribery Scheme
The former chief executive officer and former managing director of a U.S. broker-dealer (the Broker-Dealer), were sentenced to prison today for their roles in a scheme to pay bribes to a senior official in Venezuela’s state economic development bank, Banco de Desarrollo Económico y Social de Venezuela (Bandes), in return for trading business that generated more than $60 million in commissions.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Preet Bharara of the Southern District of New York made the announcement. The sentences were imposed by U.S. District Judge Denise L. Cote of the Southern District of New York.
Benito Chinea, 48, of Manalapan, New Jersey, and Joseph DeMeneses, 45, of Fairfield, Connecticut, were each sentenced to four years in prison. They were also ordered to pay $3,636,432 and $2,670,612 in forfeiture, respectively, which amounts represent their earnings from the bribery scheme. On Dec. 17, 2014, both defendants pleaded guilty to one count of conspiracy to violate the Foreign Corrupt Practices Act and the Travel Act.
“These Wall Street executives orchestrated a massive bribery scheme with a corrupt official in Venezuela to illegally secure tens of millions of dollars in business for their firm,” said Assistant Attorney General Caldwell. “The convictions and prison sentences of the CEO and Managing Director of a sophisticated Wall Street broker-dealer demonstrate that the Department of Justice will hold individuals accountable for violations of the FCPA and will pursue executives no matter where they are on the corporate ladder.”
“Benito Chinea and Joseph DeMeneses paid bribes to an officer of a state-run development bank in exchange for lucrative business she steered to their firm,” said U.S. Attorney Bharara. “Chinea and DeMeneses profited for a time from the corrupt arrangement, but that profit has turned into prison and now they must forfeit their millions of dollars in ill-gotten gains as well as their liberty.”
Chinea, the chief executive officer, and DeMeneses, a managing director in the Broker-Dealer, admitted that they worked with others, to arrange bribe payments to the Bandes official, Maria De Los Angeles Gonzalez, in exchange for her directing Bandes’s financial trading business to the Broker-Dealer. Previously, Gonzalez, along with two employees of the Broker-Dealer, Tomas Alberto Clarke Bethancourt (Clarke) and Jose Alejandro Hurtado (Hurtado), pleaded guilty for their involvement in this bribery scheme. A managing director of the Broker-Dealer, Ernesto Lujan, also pleaded guilty for his role in the scheme.
Background on the Broker-Dealer and Bandes
According to court documents, and as admitted by Chinea and DeMeneses at their guilty pleas, the Broker-Dealer, which was headquartered in New York City and had offices in Miami, established a group called the Global Markets Group in 2008, which included DeMeneses, Lujan and Clarke, and which offered fixed income trading services to institutional clients. One of the Broker-Dealer’s clients was Bandes, which operated under the direction of the Venezuelan Ministry of Finance. The Venezuelan government had a majority ownership interest in Bandes and provided it with substantial funding. Gonzalez was an official at Bandes and oversaw the development bank’s overseas trading activity. At her direction, Bandes conducted substantial trading through the Broker-Dealer. Most of the trades executed by the Broker-Dealer on behalf of Bandes involved fixed income investments for which the Broker-Dealer charged Bandes a mark-up on purchases and a mark-down on sales.
The Bribery Scheme
In pleading guilty, Chinea and DeMeneses admitted that, together with three Miami-based Broker-Dealer employees, Lujan, Clarke and Hurtado, they participated in a bribery scheme running from late 2008 through 2012, in which Gonzalez directed trading business to the Broker-Dealer, and in return, agents and employees of the Broker-Dealer split the revenue the Broker-Dealer generated from this trading business with Gonzalez. During this time period, the Broker-Dealer generated over $60 million in commissions from trades with Bandes.
Chinea and DeMeneses also admitted that in order to conceal their conduct, they and their co-conspirators routed the payments to Gonzalez, frequently in six-figure amounts, through third-parties posing as “foreign finders” and into offshore bank accounts. In several instances, Chinea personally signed checks worth millions of dollars that were made payable to one of these purported “foreign finders” and later deposited in a Swiss bank account. Chinea and DeMeneses also admitted that they agreed to use Broker-Dealer funds to reimburse DeMeneses and Clarke for the approximately $1.5 million from their personal funds they used to bribe Gonzalez. To conceal their true nature, Chinea and DeMeneses agreed to hide these reimbursements in the Broker-Dealer’s books as sham loans from the Broker-Dealer to corporate entities associated with DeMeneses and Clarke.
This case is being investigated by the FBI, and prosecuted by Senior Deputy Chief James Koukios and Trial Attorney Kevin R. Gingras of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Harry A. Chernoff and Jason H. Cowley of the Southern District of New York. Assistant U.S. Attorney Carolina Fornos of the Southern District of New York is responsible for the forfeiture aspects of the case. The U.S. Securities and Exchange Commission also assisted with this investigation.
A PUBLICATION OF RANDOM U.S.GOVERNMENT PRESS RELEASES AND ARTICLES
Showing posts with label INTERNATIONAL BRIBERY. Show all posts
Showing posts with label INTERNATIONAL BRIBERY. Show all posts
Monday, March 30, 2015
Tuesday, July 8, 2014
RETIRED NAVY OFFICIAL PLEADS GUILTY IN BRIBERY SCANDAL
FROM: U.S. JUSTICE DEPARTMENT
Thursday, July 3, 2014
Former U.S. Navy Officer Pleads Guilty in International Bribery Scandal
Defendant Admits Overcharging Navy by up to $2.5 Million for Port Services in Japan
A retired Navy official who started a second career working for defense contractor Glenn Defense Marine Asia (GDMA) pleaded guilty in federal court today, admitting that he and others overcharged the Navy by up to $2.5 million for port services to American ships and then used some of the proceeds to treat Navy officials to lavish dinners, cocktails and entertainment.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Laura E. Duffy for the Southern District of California, Director Andrew L. Traver of Naval Criminal Investigative Service (NCIS) and Acting Deputy Inspector General of Investigations James R. Ives of the Department of Defense (DCIS) made the announcement.
“There is an old Navy saying: ‘Not self, but country.’ Edmond Aruffo instead put self before country when he stole from the U.S. Navy as part of a massive fraud and bribery scheme that cost the U.S. Navy more than $20 million ,” said Assistant Attorney General Caldwell.
“This corruption scandal continues to lead us in new directions, and we continue to marvel at the extent of it,” said U.S. Attorney Laura Duffy. “If there are others who, like Edmond Aruffo, have traded integrity and honesty for greed and profit, we will find them and prosecute them.”
“Retired U.S. Navy Lieutenant Commander Edmond A. Aruffo, who previously held a position of trust and responsibility conferred on him by the Navy, betrayed his former service for personal gain by rigging invoices and deserves to be held accountable for his criminal actions,” said Director Traver. “NCIS will continue to work with DCIS and the Department of Justice in vigorously investigating and prosecuting these crimes of corruption and fraud.”
“The guilty plea of Edward Aruffo is part of an ongoing effort by the DCIS and its law enforcement partners to bring to justice individuals who seek to illegally enrich themselves at the expense of U.S. taxpayers,” said Acting Deputy Inspector General Ives. “While the vast majority of DOD contractors engage in lawful business practices, a few are driven by greed to break the law. Those who do will be caught and punished. American taxpayers will accept nothing less.”
Edmond A. Aruffo, who retired in 2007 at the rank of lieutenant commander after a military career spanning more than 20 years, is the seventh defendant charged – and the fourth to plead guilty – in the expanding corruption scandal involving GDMA’s illicit relationships with Navy officials. GDMA is a Singapore-based contractor that has serviced Navy ships and submarines in the Pacific for decades.
Aruffo, who became manager of GDMA’s Japan operations in 2009, entered his plea before U.S. Magistrate Judge Karen S. Crawford of the Southern District of California to a single count of conspiracy to defraud the United States. Aruffo’s bond was set at $40,000; however, he indicated to the court he not post bond and immediate self-surrender. A sentencing hearing was scheduled for Oct. 3, 2014, at 9 a.m. before U.S. District Judge Janis L. Sammartino of the Southern District of California.
According to court documents, GDMA owner and CEO Leonard Francis enlisted the clandestine assistance of Navy personnel – including Commander Michael Vannak Khem Misiewicz, Commander Jose Luis Sanchez, NCIS Special Agent John Beliveau and Petty Officer First Class Daniel Layug – to provide classified ship schedules and other sensitive information about an ongoing criminal investigation of GDMA. Court documents also allege that Francis and his cousin, GDMA executive Alex Wisidagama, conspired to defraud the United States through a number of overbilling schemes. In total, GDMA allegedly overcharged the Navy under its contracts and submitted bogus invoices for more than $20 million. Wisidagama, Beliveau and Layug have pleaded guilty while the others are awaiting trial.
According to Aruffo’s plea agreement, Aruffo was hired by GDMA’s Francis, who is accused of bribing Navy personnel with cash, luxury travel, expensive meals, consumer electronics and prostitutes in exchange for classified and proprietary information to win contracts and favorable treatment for his company.
According to the plea agreement, Aruffo was serving as the operations officer of the USS Blue Ridge when he met Francis. GDMA was providing “husbanding” services, such as tug boats, harbor pilots, trash removal, line handlers and transportation to that ship and numerous others.
In the plea agreement, Aruffo admitted that he and others defrauded the U.S. Navy in connection with charges for port services provided to nearly every Navy ship that came to port in Japan from July 2009 to September 2010.
As part of its contract with the Navy, GDMA was required to coordinate various vendors to provide port services for the Navy ships. Those vendors were to submit invoices directly to the Navy, rather than through GDMA.
The plea agreement said that Aruffo and others obtained letterhead from the Japanese vendors and used it to prepare bogus invoices which inflated the cost for services by tens of thousands of dollars. Aruffo admitted he arranged kickbacks to GDMA from the vendors, once they were paid by the Navy.
For example, according to the plea agreement, in February of 2010 the USS Lake Erie visited the port of Sukomo, Japan. Aruffo arranged for a Japanese vendor to provide a variety of husbanding services. The vendor invoiced the Navy $145,229.77 – an amount inflated by about $50,000, which the vendor ultimately gave to GDMA as a kickback.
A few days later, Aruffo arranged for another Japanese vendor to provide such services to the USS Blue Ridge at the port of Otaru, Japan, the plea agreement said. The vendor billed the Navy in the amount of $432,476.14 and then kicked back $204,961.20 to GDMA.
The ongoing investigation is being conducted by NCIS, DCIS and the Defense Contract Audit Agency. The case is being prosecuted by Director of Procurement Fraud Catherine Votaw and Trial Attorneys Brian Young and Wade Weems of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Mark Pletcher and Robert Huie of the Southern District of California.
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