DOJ FCPA Enforcement Activity Targets South Florida Firm Making Improper Payments to Venezuelan Bank Official
Posted on White Collar News October 21, 2013 by author
The managing partner of the Miami office for Direct Access Partners (“DAP,” a U.S. based broker-dealer), Ernesto Lujan, was arrested at his home in Wellington, Florida, today on felony charges of conspiring to violate the Foreign Corrupt Practices Act in connection with a bribery and kickback scheme involving the Banco de Desarallo Economico y Social de Venezuela (BANDES). BANDES operates under the direction of the Venezuelan Ministry of Finance, and the Venezuelan government has a majority ownership interest and provides BANDES with funding. Lujan and others allegedly arranged to pay bribes to a BANDES official in exchange for that official’s directing BANDES’s financial trading business to DAP. In other words, a U.S. firm paid bribes to a foreign government bank official to drum up business for the firm as part of a “pay to play” scheme common in some Latin and South American countries that is in direct violation of the U.S. Foreign Corrupt Practices Act. It is further alleged that to conceal the scheme, the kickbacks to the bank official were often paid using intermediary corporations and offshore accounts that were held in Switzerland, among other places. Mr. Lujan is alleged to have personally pocketed millions as a result of the scheme, all of which the government is seeking to forfeit.
An interesting fact about this case is that it resulted from the securities examination by the SEC’s New York Regional Office. The SEC only recently gained oversight over investment advisers like DAP as a result of the 2010 Frank-Dodd financial reform legislation, which among other things mandated that such firms register with the SEC.