Posts Tagged ‘Juan Montes’

Illarramendi’s Funds Receiver Beats Record, Sues Now For “About” US$ 171 Million in Fraudulent Transfers

February 7, 2012
View this document on Scribd

Well, when I said last night to stay tuned because something more was coming from the Receiver of Illaramendi’s funds,  I really did not think it would be so soon, but via the same source as yesterday, as well as Setty’s publishing of the suits against Venezuelan Moris Beracha and an even smaller one for “only” US$ 7.6 million, the receiver for Illarramendi’s funds, topped his own record in less than 24 hours, claiming Beracha and affiliated companies received US$ 171 million in illegal payments and transfers.

That is 4.8 times the amount of the suit against Juan Montes I wrote about last night.

Pretty soon, the Receiver will not be able to top himself, the funds had, after all, only US$ 540 million, hard to fraudulently take more than that.

But you never known with these clever Venezuelans. Stay tuned, just in case.

But there is no mincing of words in the accusation:

“For nearly five years, Moris Beracha (“Beracha”) and his affiliated entities, described below, (the “Defendants”) participated in numerous, suspect transactions with Francisco Illarramendi (“Illarramendi”) and the Receivership Entities. Beracha and these affiliates received exorbitant fees, excessive and outlandish rates of interest, kickbacks and other improper payments. Beracha and his entities received this money as Beracha knowingly served as Illarramendi’s source of liquidity to perpetuate Illarramendi’s Ponzi scheme and pay debts and redemptions as they came due. Beracha’s funding came in various forms, including the loaning of money for short periods of time at annual interest rates often exceeding 80%, and the introduction to Illarramendi of investors and important Venezuelan government officials, bankers and financiers who could engage in transactions with Illarramendi. Beracha provided the money or access to money that kept Illarramendi and his scheme afloat.”

and I particularly liked this one:

“Finally, upon information and belief, Beracha assisted Illarramendi with the payment of millions of dollars in bribes to at least one Venezuelan government official. The totality of Beracha’s involvement clearly shows that he was someone who knew about the massive fraud in which Illarramendi was engaged.”

as well as the conclusion:

“The Receiver’s investigation is ongoing. To date, in total, the Receiver has identified approximately $171,675,738 in fraudulent transfers to the Defendants, comprising investor proceeds and other monies that must be recovered for distribution to Illarramendi’s victims and creditors”

Jeez, US$ 171,675,738

These Venezuelans really know how to think big, no?

The rest of the document, I will not bore you with it, the small number of comments shows you are not as interested as I am, show each of the steps taken by Beracha and his companies, 4A Star Corp, Frctal Management, Fractal Factoring Fund, Fractal Holding, Hermitage Coinsultants, La Signoria, etc. etc. to, according to the Receiver, fraudulently transfer assets from Illarramendi’s funds.

Last nights’ brief was more fun, more picturesque, this one is more dense, more legalese. But the result is the same, the Receiver accuses a Venezuelan and in this case, some of his companies, of fraud.

And in Venezuela, little is being said, PDVSA is fine, The National Assembly thinks this has nothing to do with them and the silence in the press, so far, is quite total.

It’s called self-censorship…

Note added: From Setty, more suits:

Against Illarramendi, for “Only” US$ 300 million.

Against Francisco Lopez and relatives: US$ 29 million

Against Odo and Nacy Habeck: US$ 7.6 million

 

Advertisements

Receiver of Illarramendi Funds Sues A Former PDVSA Executive For Receving US$ 35.7 Million In Bribes

February 6, 2012
View this document on Scribd

I wrote a few posts last year about the Ponzi scheme set up by Francisco Illarramendi and his MK funds, which involved money invested from PDVSA’s pension plans (One, Two, Three). Our friend Setty has also devoted a few posts to it, here is one, there are many others. The jist of this case, was that Illarramendi, a former PDVSA adviser and  consultant, set up some investment funds that  did not work out well and then were involved in a series of complex transactions to hide the losses, which included using PDVSA funds as investments, but also using PDVSA to make transactions. PDVSA pension funds/Savings Plans lost US$ 475 million or so, if my memory serves me right, in the process, but somehow nobody in Venezuela was responsible, as both The Board of PDVSA and the Venezuelan National Assembly found that there was no responsibility for the loss within the company, exonerating every one.

Only in Venezuela and the revolution can there be so much irresponsibility, US$ 475 million missing and it was nobody’s fault.

But today, the receiver for the MK Funds, the funds that were involved in the Ponzi scheme, the man who is in charge of trying to recover the investors money, brought suit in US Court in Connecticut against “Juan Montes, corporate manager of finance, investments and property insurance at PDVSA and its pension funds” for receiving bribes and other fraudulent transfers in the amount of…drum roll…US$ 35,744,561. Yeap, you read it right thirty five million dollars…in bribes…in only five transactions.

Only in Venezuela…

Just to make it clear and put it in black and white: The PDVSA funds lost almost half a billion dollars and just one PDVSA official, functionary, whatever, received bribes in the process for US$ 35.7 million dollars. Pocket change, no? No wonder investigators found nobody responsible.

Such are the ways of the Chavez revolution.

I will not go into all the details of the accusation, you can read the document above, it reads like a detective  story, but essentially, Illarramendi is accused of using fake emails and ID’s to have Montes help him in investing the money and setting up the transactions, so that the funds could make money and hide or try to hide the huge losses in his investment funds. Montes took the fifth amendment on all the charges. The case may go to a jury trial.

Other people are mentioned, but not accused, of helping Illarramendi funnel the bribes to Montes through their banks/companies/structures. It does not sound like the case or the story ends here. Stay tuned.

At this point, let me clarify something. In the above document, the receiver, not an expert on Venezuelan financial affairs, mentions the “permutas” made by IIlarramendi’s funds with PDVSA to make money to cover its losses. But these were not “permutas” in the traditional sense, from what I have been able to gather. In the now forbidden “permuta” market, you would swap a bolivar denominated  security for a dollar denominated security. But in the defunct “permuta” market, the difference between the “buy” and the “sell” prices was typically small Bs. 0.05 or Bs. 0.1 at most.

But what the receiver seems to be saying is that PDVSA sold dollar securities for Bolivars to Illarramendi’s funds at the official rate of exchange and Illarramendi’s funds resold those dollars at the parallel rate of exchange, essentially arbitraging the Government via PDVSA. The difference was as much as Bs. 4, 5 or even Bs. 6 per dollar depending on when these transactions took place. Just recall that when the Government banned the permuta market, the “official rate” was at Bs. 2.6 per dollar , while the parallel rate was near Bs. 8 per dollar.

And this is where these bribes apparently came from, from the huge difference between the two. Buy a million dollars with Bs. 2.6 million, sell the dollars for say, Bs. 8 per dollar, the difference (8-2.6)=Bs. 5.4 million was pure profit. 207% profit to be more precise.

And we are to believe nobody else knew about this at PDVSA? Only Montes knew? He could have access to “official dollars” with nobody knowing?

Yeah, sure…