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Guilty Pleas In Broker-Dealer Enforcement Action

This [1] previous post highlighted the May FCPA enforcement action against Tomas Clarke (an Executive Vice President of broker-dealer Direct Access Partners (DAP) who worked out of the company’s Miami office) and Alejandro Hurtardo (a back-office employee of DAP in Miami) in connection with an alleged bribery scheme involving an alleged “foreign official” at Bandes, an alleged Venezuelan state-owned banking entity that acted as the financial agent of the state to finance economic development projects.  As noted here [2], in June, Ernesto Lujan (a managing partner at DAP and a branch manager of its Miami offices) was also charged in connection with the same alleged bribery scheme.

Last week, the DOJ announced [3] that Lujan, Hurtardo and Clarke pleaded guilty.

Typically FCPA defendants plead guilty to reduced charges compared to the original charging documents, however the above defendants all pleaded guilty (see here [4], here [5] and here [6] for the plea agreements) to the original six charges:  (i) conspiring to violate the FCPA, to violate the Travel Act, and to commit money laundering; (ii) violating the FCPA; (iii) violating the Travel Act; (iv) committing money laundering; (v) conspiring to obstruct justice; and (vi) conspiring to violate the FCPA.

As noted in the DOJ release, the informations (see here [7] and here [8]) to which the defendants pleaded guilty also included additional allegations concerning another alleged state-owned banking entity in Venezuela.  Specifically, the DOJ alleged that:

“Banfoandes Bank, including its 2009 successor, Banco Bicentenario, was a state-owned and state-controlled economic development bank of the [Republic of Venezuela].  It operated under the direction of the Venezuelan People’s Ministry of Planning and Finance.  Banfoandes acted as a financial agent of the Venezuelan government in order to promote economic and social development by, among other things, offering credit to low-income Venezuelans.  Bandoandes was an ‘agency’ and ‘instrumentality’ of a foreign government, as those terms are used in the FCPA.  […]  [T]he Banfoandes Foreign Official’ served as a vice president of Banfoandes who, among other things, was responsible for some of Banfoandes’s foreign investments.”

As noted in the DOJ release, Lujan and Clarke are scheduled to be sentenced on Feb. 11, 2014 and Hurtardo is scheduled to be sentenced on March 6, 2014.  Given the plea agreements, the sentences are likely to be among the longest FCPA sentences ever imposed.