{"id":695,"date":"2018-09-07T16:39:38","date_gmt":"2018-09-07T16:39:38","guid":{"rendered":"http:\/\/ielrblog.com\/?post_type=article&p=695"},"modified":"2018-09-07T16:39:38","modified_gmt":"2018-09-07T16:39:38","slug":"former-julius-baer-executive-in-panama-pleads-guilty-to-money-laundering-in-embezzled-funds-from-pdvsa","status":"publish","type":"article","link":"https:\/\/ielrblog.com\/index.php\/article\/former-julius-baer-executive-in-panama-pleads-guilty-to-money-laundering-in-embezzled-funds-from-pdvsa\/","title":{"rendered":"Former Julius Baer Executive in Panama Pleads Guilty to Money Laundering In Embezzled Funds From PDVSA"},"content":{"rendered":"

On August 22, 2018, Matthias Krull, a German national and Panamanian resident who was the former managing director and vice chairman of Julius Baer, pleaded guilty for his participation in a billion-dollar scheme to launder funds embezzled from Petr\u00f3leos de Venezuela, S.A. (PDVSA), the Venezuelan state-owned oil company.[1]<\/a><\/p>\n

Krull, 44, pleaded guilty to one count of conspiracy to commit money laundering.\u00a0 U.S. District Judge Cecilia M. Altonaga of the Southern District of Florida accepted his plea and scheduled his sentencing on October 29.<\/p>\n

In his plea Krull admitted that his prior work with Julius Baer helped attract private clients, especially from Venezuela, to the bank.\u00a0 In particular, Francisco Convit Gurceaga, who was indicted on money laundering charges on August 16, was a client, as well as three unnamed conspirators described in the August 16 indictment.[2]<\/a><\/p>\n

On July 25, 2018, U.S. law enforcement announced the arrest of Krull, Gustavo Adolfo Hernandez Frieri, 45, a Colombian national and naturalized citizen, in a criminal complaint charging them with conspiracy to commit money laundering. The complaint also charges Francisco Convit Guruceaga. 40; Jose Vincente Amparan Croquer, aka \u201cChente,\u201d 44; Carmelo Urdaneta Aqui, 44; and Abraham Eduardo Ortega, 51, all Venezuelan nationals; and Hugo Andre Ramalho Gois, 39, a Portuguese national, and Marcelo Federico Gutierrez Acosta y Lara, 40, a Uruguayan national, for their alleged participation in the scheme.\u00a0 Krull was arrest the preceding night in Miami while Hernandez was arrested in Sicily on July 25 and faces extradition proceedings. [3]<\/a><\/p>\n

The complaint alleges that the conspiracy started in December 2014 with a currency exchange scheme that was meant to embezzle approximately $600 million from PDVSA, obtained through bribery and fraud, and the defendants\u2019 efforts to launder part of the proceeds of that scheme.\u00a0 By May 2015, the conspiracy had allegedly doubled in amount to $1.2 billion embezzled from PDVSA.\u00a0 For Venezuela PDVSA is the main source of income and foreign currency.<\/p>\n

According to the complaint, surrounding and supporting the false-investment laundering schemes are complicit money managers, brokerage firms, banks and real estate investment firms in the U.S. and elsewhere, operating as a network of professional money launderers.<\/p>\n

Included in the alleged conspirators were former PDVSA officials, professional third-party money launderers, and members of the Venezuelan elite, sometimes referred to as \u201cbiliburgu\u00e9s.\u201d[4]<\/a><\/p>\n

Hernandez allegedly used Global Securities Advisors and Global Strategic Investments to launder money with false mutual-fund investments.\u00a0 The two brokerage companies have offices at 701 Brickell Ave.\u00a0 They are affiliated.\u00a0 Hernandez allegedly used them for meetings with members of the money-laundering network.\u00a0 However, representatives of Global Strategic Investment claim Hernandez was not involved in the firm, which is headed by Cesar Hernandez, Gustavo\u2019s brother. [5]<\/a><\/p>\n

The case results from efforts by the Organized Crime Drug Enforcement Task Force\u2019s (OCDETF) \u201cOperation Money Flight,\u201d a partnership among federal, state and local law enforcement agencies.\u00a0 The OCDETF mission is to identify, investigate and prosecute high-level members of drug trafficking enterprises, bringing together the combined expertise and unique abilities of federal, state and local law enforcement.\u00a0 Homeland Security Investigations (HSI) Miami, HSI London, HSI Rome and HSI Madrid investigated the case.\u00a0 The Criminal Division\u2019s Office of International Affairs furnished substantial assistance in the case, as well as U.S. Customs and Border Protection, the National Crime Agency of the U.K.; and Italian, Spanish and Maltese law enforcement authorities.[6]<\/a><\/p>\n

The court has granted the U.S. Attorney\u2019s Office\u2019s motion to freeze the assets of nine defendants in the case.\u00a0 The assets include 17 South Florida homes, condos and horse ranches with a total value from $22 million to $35 million, based on property assessments in public records and real estate market estimates.\u00a0 According to prosecutors, their assets are typically put in other people\u2019s names or corporate entities to disguise the defendants\u2019 ownership interests.\u00a0 The prosecutors will be able to seize the properties if they obtain convictions.[7]<\/a><\/p>\n

According to one media report, Venezuelan President Maduro is under investigation, along with his three stepsons and a TV network mogul, Ra\u00fal Gorr\u00edn.\u00a0 Maduro is reportedly mentioned in court documents as \u201cVenezuelan Official 2\u201d.\u00a0 His stepsons are said\u00a0 to have received an estimated $200 million from PDVSA that were wired to a European bank in late 2014 and early 2015.[8]<\/a><\/p>\n

A major contributing factor to the ouster of Manuel Noriega was an indictment for corruption in and money laundering conspiracy in the Southern District of Florida.\u00a0\u00a0\u00a0 The criminal complaint and investigation are one of many targeting corruption arising from PDVSA.\u00a0 The case illustrates the use of Southern Florida by Latin Americans to invest in the U.S.\u00a0\u00a0 Unfortunately, some of the money is\u00a0 not legal.\u00a0 The Treasury has issued Customer Due Diligence rules that took effect on May 11, 2018,[9]<\/a> and Geographic Target Orders (GTOs).\u00a0 FinCEN has the authority to impose additional data collection and reporting requirements through GTOs, on financial institutions and other trade or business activities for geographic areas.[10]<\/a> FinCEN\u00a0 has applied GTOs\u00a0 to Miami and requires title companies to identify the natural persons behind holding companies and\/or straw men used to pay for luxury residential real estate.\u00a0 By the terms of authorizing statutes GTOs can be effective for only up to 180 days at a time, but may be renewed.\u00a0 There is a strong possibility that the GTOs will be made permanent.<\/p>\n

A potential implication for Julius Baer is the Deferred Prosecution Agreement (DPA) between it and the U.S. Attorney\u2019s Office for the Southern District of New York on February 2, 2016.\u00a0 The bank promised in paragraph 14 as part of its consent to the filing of a one-count information, charging the bank with conspiring with others to various tax crimes that it would<\/p>\n

\u201cbring to this Office\u2019s attention (a) all criminal conduct by, and criminal investigations of, Julius Baer or its employees related to any violations of the federal laws of the United States that come to the attention of Julius Baer, and (b) any administrative or regulatory proceeding or civil action brought or investigation conducted by any U.S. governmental authority that alleges fraud by Julius Baer or any other violations of the federal laws of the United States in the operation or management of Julius Baer\u2019s business.\u201d[11]<\/a><\/p>\n

Paragraph 16 states the obligations of Julius Baer continued for three years from the signing of the agreement.\u00a0 Since the Krull plea mentions other Julius Baer officials were involved in the PDVSA wrongdoing during at least 2014 and 2015, the questions will be when the bank knew of the wrongdoing and whether it reported the same to the U.S. Attorney for the Southern District of New York once it became aware of the wrongdoing.\u00a0 One adverse consequence of a DPA is that it puts the signatory\/defendant under broad requirements to discover and self-report all bad conduct for the entire duration of the agreement.<\/p>\n

[1]<\/a>\u00a0\u00a0\u00a0 U.S. Department of Justice, Former Swiss Bank Executive Pleads Guilty to Role in Billion-Dollar International Money Laundering Scheme Involving Funds Embezzled from Venezuelan State-Owned Oil Company<\/em>, Press Rel., Aug. 22, 2018<\/p>\n

[2]<\/a>\u00a0\u00a0\u00a0 Id.<\/em><\/p>\n

[3]<\/a>\u00a0\u00a0\u00a0 U.S. Department of Justice, Two Members of Billion-Dollar Venezuelan Money Laundering Scheme Arrested<\/em>, Press Rel, June 25, 2018.<\/p>\n

[4]<\/a>\u00a0\u00a0\u00a0 Id.<\/em><\/p>\n

[5]<\/a>\u00a0\u00a0\u00a0 Jay Weaver and Antonio Maria Delgado, Feds freeze millions in assets linked to stolen Venezuelan oil funds laundered in South Florida<\/em>, Miami Herald, Aug. 22, 2018.<\/p>\n

[6]<\/a>\u00a0\u00a0\u00a0 U.S. Department of Justice, Former Swiss Bank Executive Pleads Guilty to Role in Billion-Dollar International Money Laundering Scheme Involving Funds Embezzled from Venezuelan State-Owned Oil Company, supra.<\/em><\/p>\n

[7]<\/a>\u00a0\u00a0\u00a0 Weaver and Delgado, supra.<\/em><\/a><\/p>\n

[8]<\/a>\u00a0\u00a0\u00a0 Id.<\/em><\/p>\n

[9]<\/a>\u00a0\u00a0\u00a0 81 Fed. Reg. 29397 (2016).<\/p>\n

[10]<\/a>\u00a0\u00a0 31 U.S.C. \u00a7 5326(a); 31 C.F.R. \u00a7 1010.370; Treasury Order 180-01, Federal Crimes Enforcement Network (Sept. 26, 202).<\/p>\n

[11]<\/a>\u00a0\u00a0 Bank Julius Baer & Co. Ltd. \u2013Deferred Prosecution Agreement, Feb. 2, 2016 (letter from Jason Cowley to Juan P. Morillo and Tomislav A. Joksimovic), United States v. 219,250,000<\/em>, Case No. 1:16-civ.-00886, Verified Complaint Exhibit B https:\/\/www.justice.gov\/opa\/file\/820041\/download<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

On August 22, 2018, Matthias Krull, a German national and Panamanian resident who was the former managing director and vice chairman of Julius Baer, pleaded guilty for his participation in a billion-dollar scheme to launder funds embezzled from Petr\u00f3leos de Venezuela, S.A. (PDVSA), the Venezuelan state-owned oil company.[1] Krull, 44, pleaded guilty to one count […]<\/p>\n","protected":false},"author":1,"featured_media":0,"menu_order":0,"comment_status":"open","ping_status":"open","template":"","format":"standard","meta":{"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","jetpack_post_was_ever_published":false,"footnotes":""},"categories":[],"tags":[],"issuem_issue":[54],"class_list":{"0":"post-695","1":"article","2":"type-article","3":"status-publish","4":"format-standard","6":"issuem_issue-volume-34-issue-9","7":"entry"},"yoast_head":"\nFormer Julius Baer Executive in Panama Pleads Guilty to Money Laundering In Embezzled Funds From PDVSA | IELR Blog<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/ielrblog.com\/index.php\/article\/former-julius-baer-executive-in-panama-pleads-guilty-to-money-laundering-in-embezzled-funds-from-pdvsa\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Former Julius Baer Executive in Panama Pleads Guilty to Money Laundering In Embezzled Funds From PDVSA | IELR Blog\" \/>\n<meta property=\"og:description\" content=\"On August 22, 2018, Matthias Krull, a German national and Panamanian resident who was the former managing director and vice chairman of Julius Baer, pleaded guilty for his participation in a billion-dollar scheme to launder funds embezzled from Petr\u00f3leos de Venezuela, S.A. 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