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SEC v. Tomas Alberto Clarke Bethancourt, Jose Alejandro Hurtado, Haydee Leticia Pabon, Iuri Rodolfo Bethancourt, Ernesto Lujan, Benito Chinea, and Joseph Flores DeMeneses Jr.

 
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Chinea, Benito
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SEC Civil
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May 7, 2013
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SEC v. Tomas Alberto Clarke Bethancourt, Jose Alejandro Hurtado, Haydee Leticia Pabon, Iuri Rodolfo Bethancourt, Ernesto Lujan, Benito Chinea, and Joseph Flores DeMeneses Jr.
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SEC v. Clarke, et al., No. 13-cv-3074 (S.D.N.Y. 2013)
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In a parallel criminal actions, U.S. v. Chinea, et al., the defendants Chinea and DeMeneses were charged with paying and conspiring to pay bribes under the FCPA to a senior government official at a Venezuelan bank.

The SEC, however, did not bring FCPA charges in its civil action, most likely because the alleged scheme involved broker-dealers rather than issuers
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Financial-Broker Dealer
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Venezuela
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2008; 2009; 2010; 2011
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Maria de los Angeles Gonzalez de Hernandez, a senior official at Banco de Desarrollo Económico y Social de Venezuela, Venezuela’s state-owned economic development bank.
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On April 14, 2014 the SEC filed a Second Amended Complaint in SEC v. Clarke, et al. to include the defendants Benito Chinea and Joseph DeMeneses.

According to the complaint, Chinea was the CEO of the broker-dealer Direct Access Partners (“DAP”), where he participated in a bribery scheme to pay kickbacks to an official at Banco de Desarrollo Económico y Social de Venezuela ("BANDES"), Venezuela’s state economic development bank, in exchange for the official’s willingness to divert business to DAP. The scheme generated more than $66 million in revenues for DAP and was executed alongside other DAP employees, Tomas Alberto Clarke Bethancourt, Ernesto Lujan, Jose Alejandro Hurtado, and DeMeneses.

The SEC claims that beginning in 2008, Hurtado, a private banker in Miami, Florida, and Maria de los Angeles Gonzalez de Hernandez, a senior official at BANDES, entered into an agreement where Gonzalez would direct business to Hurtado in exchange for a portion of the revenues generated by a series of bond trades. In order to execute the transactions, Hurtado contacted a friend, Clarke, an employee at DAP’s Miami offices, who agreed to buy and sell bonds for BANDES and kickback a portion of the revenues to Gonzalez.

Chinea and DeMeneses senior officials at DAP’s New York offices with the authority to issue the payments to Gonzalez, are alleged to have been instrumental in disguising the kickbacks as “finder’s fees” to avoid attracting scrutiny from regulators. To do so, the complaint states that Chinea and DeMeneses falsified documents to designate Haydee Leticia Pabon (Hurtado’s fiancé) as a foreign finder and issued payments to Pabon as “finder’s fees”. Upon receipt of the “finder’s fees”, Pabon routed the payments to accounts controlled by Gonzalez. Later, Chinea and DeMeneses are alleged to have used the Panamanian company, ETC Investments (controlled by Clark), already designated as a foreign finder by DAP, as an alternative mechanism for routing payments to Gonzalez.

Accordingly, the complaint states that between 2008 and 2010, Gonzalez used DAP to make various bond trades on behalf of BANDES. In doing so, Clarke and Lujan executed the trades at significant mark-ups, using a portion of the revenues to pay Gonzalez. At times the DAP employees are alleged to have misrepresented the extent of the mark-ups on the bond trades to Gonzalez and BANDES to retain a greater portion of the revenues for themselves.

Overtime, Gonzalez allegedly became increasingly unhappy about the untimeliness of the kickback payments. To allay Gonzalez’s concerns, the SEC claims that DeMeneses and Clarke agreed to pay Gonzalez $1.5 million from their personal funds. Chinea and DeMeneses planned to use funds from DAP to reimburse DeMeneses and Clarke, and agreed to hide the reimbursements on DAP’s books-and-records as sham loans to corporate entities controlled by DeMeneses and Clarke.

Chinea and DeMeneses were charged with multiple violations of federal securities laws including Section 17 of the Securities Act and Section 10(b) of the Exchange Act.
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Securities Fraud
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Not stated.
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0
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Domestic Concern
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CEO
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U.S.
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United States
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Other Business Advantage
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66,000,000
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Wire/check
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Customs Broker or Agent/Consultant, Family Member, Shell entity
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Not stated.
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Venezuela
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United States
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No
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No