In 2013, the DOJ announced charges against a number of employees of the Broker-Dealer, Direct Access Partners, in U.S. v. Clarke, et al. In the 2013 filing the DOJ cited the involvement of two unnamed employees of the DAP. The most recent charges indicate that Chinea and DeMeneses were the unnamed DAP employees.
The SEC, which is pursuing a parallel civil action against the defendants from U.S. v. Clarke, et al. for securities fraud (not FCPA violations), has amended its complaint to include Chinea and DeMeneses.
2008; 2009; 2010; 2011
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.
On April 10, 2014 the DOJ charged Benito Chinea and Joseph Flores DeMeneses for violations of various federal criminal laws including the FCPA.
According to court documents, DeMeneses was an officer and director of an unnamed broker-dealer known to be 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 indictment states 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 DOJ claims 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 indictment 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 DOJ 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.
For their part in the alleged scheme, Chinea and DeMeneses have been charged with violations of the FCPA, Travel Act, and the federal money laundering statute. DeMeneses was also charged with conspiracy to obstruct justice after he allegedly instructed employees at DAP to delete emails related to the scheme following the SEC’s initiation of a periodic examination of DAP.