In the continuing prosecution of a New York broker-dealer’s alleged bribery in Venezuela, the managing partner of the firm’s Miami office was arrested in Florida today, federal prosecutors in Manhattan announced.
In a related action, the Securities and Exchange Commission also announced civil charges, likewise alleging that Ernesto Lujan had participated in a kickback scheme to win business from the Banco de Desarrollo Economico y Social de Venezuela, or Bandes, the state economic development bank in Venezuela.
Lujan’s arrest, carried out this morning at his home in Wellington, Fla., followed the arrests last month of two other employees of Direct Access Partners LLC, Tomas Alberto Clarke Bethancourt and Jose Alejandro Hurtado, as well as Bandes Vice President of Finance Maria de Los Angeles Gonzalez de Hernandez, the alleged recipient of the bribes.
The SEC also brought fraud charges against Clarke Bethancourt and Hurtado, as well as Iuri Rodolfo Bethancourt, alleged to have received proceeds of the fraud and passed on bribes, and Haydee Leticia Pabon, Hurtado’s wife.
Direct Access Partners has reportedly ceased operations since the arrests were announced last month.
According to the SEC, Direct Access Partners’s global markets group took in more than $66 million in fees by executing fraudulent transactions in Venezuelan sovereign or state-sponsored bonds behalf of Bandes.
Prosecutors alleged that Gonzalez received more than $5 million in kickbacks to direct the “pay-to-play” business to DAP.
In a sealed affidavit filed Monday in New York supporting Lujan’s arrest, Adam Karczewski, a special agent in the Federal Bureau of Investigation, alleged that Lujan had sent and received emails with his codefendants in which the alleged bribes were planned.
The charges against Lujan comprise alleged conspiracy to violate the Foreign Corrupt Practices Act, the Travel Act and money laundering statutes as well as substantive violations of these laws.
Lujan faces a maximum of 60 years in prison if convicted on all six counts.
The case was noted because the alleged criminal conduct emerged following a securities examination by the SEC’s New York Regional Office.
(See Just Anti-Corruption’s previous report, ‘With Dodd Frank, SEC Gains New Window Into Investors’ FCPA Risks.’)
Foreign bribery law practitioners say investment and financial services funds are exposed to foreign bribery compliance risks that can come to light in such exams. The SEC last year gained oversight over investment advisers who for the first time were required to register with the SEC because of new provisions enacted under the 2010 Dodd-Frank financial reform legislation.
Lujan, 50, appeared before a judge in West Palm Beach today.
The SEC has not alleged foreign bribery violations because Direct Access Partners is not an SEC registrant, meaning the commission would not have jurisdiction to enforce the Foreign Corrupt Practices Act.
Southern District of New York Assistant U.S. Attorneys Harry A. Chernoff and Jason H. Cowley as well as James Koukios, an assistant chief of the Justice Department’s Fraud Section, and Fraud Section trial attorneys Maria Gonzalez Calvet and Aisling O’Shea are in charge of the prosecution, according to the U.S. Attorney’s office.
A related forefeiture action is being handled by Assistant U.S. Attorney Carolina Fornos.
According to the SEC, the civil litigation is being led by Howard Fischer. The continuing SEC investigation is being conducted by Wendy Tepperman, Amanda Straub and Michael Osnato of the New York Regional Office.
The criminal case is 13-mj-1501 in the Southern District of New York. The SEC case is 13-cv-3074 in the same district.
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