Keeping track of DOJ Foreign Corrupt Practices Act actions against individuals can sometimes be tricky.
Many individual actions are announced through DOJ press releases, but some enforcement actions are not and just quietly appear on a court docket.
For instance, you probably have not heard much about the FCPA enforcement action against brothers Enrique Pere Ycaza and Antonio Pere Ycaza.
The criminal informations (see here and here) were filed in October 2020: (i) shortly after the September 2020 FCPA enforcement action against Sargeant Marine Inc. (SMI – a Florida based asphalt company) (see here for the prior post) concerning conduct in Brazil, Venezuela and Ecuador; and (ii) shortly before the December 2020 FCPA enforcement action against Vitol (an energy trading company – see here for the prior post) concerning conduct in Brazil, Ecuador, and Mexico.
As to the Ecuador Bribery Scheme in the SMI matter, the DOJ alleged:
“In or about 2014, SMI, through certain of its employees and agents, knowingly and willfully conspired and agreed with others to corruptly offer and pay bribes to, and for the benefit of, foreign officials in Ecuador, including Petroecuador Official #1, to secure an improper advantage in order to obtain and retain business with Petroecuador and win lucrative contracts with Petroecuador.
To facilitate the bribery scheme and to conceal the true nature of the bribe payments, SMI and its co-conspirators, among other things, created fake consulting contracts and fake invoices and made payments from bank accounts in the United States to offshore bank accounts held in the name of shell companies that were controlled by [an] Intermediary and the Intermediary close relative.”
As to the Ecuador bribery scheme in the Vitol matter, the DOJ alleged under the heading “The Ecuador and Mexico Bribery Scheme” as follows:
“In or about and between 2015 and 2020, Vitol, through certain of its employees and agents, knowingly and willfully conspired and agreed with others to corruptly offer and pay more than $2 million in bribes to, and for the benefit of, officials in Ecuador and Mexico to secure an improper advantage in order to obtain and retain business in connection with the purchase and sale of oil products.
In furtherance of the scheme, Vitol and its co-conspirators entered into several sham consulting agreements, set up shell companies for the purpose of laundering the corrupt payments, created fake invoices for purported consulting services and used email accounts with pseudonyms to transfer funds to offshore shell companies involved in the conspiracy. The illegal payments were made through multiple bank accounts in the United States, including in the Eastern District of New York, and abroad in an effort to conceal the bribes.”
The enforcement action against the Ycaza brothers concerned the same core Ecuador conduct at issue in the SMI and Vitol matters. Although SMI and Vitol are not named in the Ycaza informations, the allegations appear to be substantively similar to the Ecuador allegations in the SMI and Vitol matters (matters that were also prosecuted from the E.D. of N.Y.).
As stated by the DOJ, Enrique is a citizen of Ecuador and Spain who provided consulting services, incorporated consulting businesses, and opened bank accounts in the U.S. and elsewhere to facilitate the bribery scheme and Antonio (a citizen of Ecuador, Spain and U.S. who resided in Miami) exercised control over companies and bank accounts in the U.S. and elsewhere that were used to facilitate the payment of bribes. In FCPA speak, the DOJ alleged that Enrique was an agent of a “domestic concern” and that Antonio was a “domestic concern.”
According to the DOJ, between January 2013 and 2019, Vitol and SMI made payments totaling more than $70 million to bank accounts controlled by the Ycaza brothers who in turn made and caused to be made bribery payments totaling approximately $22 million to Ecuadorian officials and others on behalf of the companies.
As to the Vitol bribery scheme (the so-called Trading Company #1 and #2 schemes), the DOJ alleged that the Ycaza brothers paid bribes to Ecuadorian officials in order to secure an improper advantage for Vitol in connection with potential contracts to purchase oil products that Petroecuador might award to a state-owned entity in Asia. According to the DOJ:
“Specifically, in or about June 2011, Trading Company #1 agreed with State-Owned Entity #1 to perform the work, assume the risk and keep the product purchased under any contract State-Owned Entity #1 entered into with Petroecuador to purchase oil products.
In or about October 2012, to facilitate the payment of bribes and to conceal the bribery scheme, the defendant Enrique Pere Ycaza executed a corrupt consulting agreement between Trading Company #1 and Consulting Company #1. Pursuant to the agreement, Trading Company #1 agreed to pay Consulting Company #1 a commission per barrel of Ecuadorian oil products that Trading Company #1 purchased from Petroecuador under the contract between Petroecuador and State-Owned Entity #1.
Thereafter, beginning in or about January 2013, pursuant to the corrupt consulting agreement, Trading Company #1 wired payments to Consulting Company #1 and later Consulting Company #2, part of which were passed on to Ecuadorian Official #1 by the defendant Enrique Pere Ycaza and Antonio Pere in furtherance of the bribery scheme.
In or about and between 2013 and July 2019, the defendant Enrique Pere Ycaza and his co-conspirators, including Trading Company #1 Employee, continued the bribery scheme and made additional payments to Ecuadorian officials in connection with similar agreements between Petroecuador and two other state-owned entities in Asia, the identities of which are known to the United States.
In furtherance of the scheme, Trading Company #1 wired payments, some of which passed through the Eastern District of New York, to bank accounts in the Cayman Islands controlled by the defendant Enrique Pere Ycaza and Antonio Pere, knowing that they would be used, at least in part, to pay bribes to Ecuadorian officials. Enrique Pere Ycaza and Antonio Pere then caused a portion of the payments to be wired to bank accounts in Panama and Portugal, and Antonio Pere caused a portion of the payments to be wired to a bank account in the United States, from a bank account in the Cayman Islands for the benefit of Ecuadorian Official #1.
Beginning in or about 2015, the defendant Enrique Pere Ycaza and Antonio Pere agreed to secretly pay Trading Company #1 Employee kickbacks from the funds paid by Trading Company #1 to Consulting Company #1, in addition to the bribes they were paying to Ecuadorian officials.
In addition, beginning in or about 2017, with the knowledge of Trading Company #1 Employee and others, the defendant Enrique Pere Ycaza and Antonio Pere also wired a portion of the payments they received from Trading Company #1 from a bank account in the Cayman Islands to bank accounts in Panama for the ultimate benefit of Ecuadorian Official #2 and Ecuadorian Official #3.”
As to the Trading Company #2 Scheme, the DOJ alleged that the Ycaza brothers agreed with Trading Company #2 employees to pay bribes to Ecuadorian officials, including Ecuadorian Official #1, to secure an improper advantage for Trading Company #2 in connection with potential contracts related to Petroecuador. Specifically, the DOJ alleged:
“In or about 2016, Trading Company #2 agreed with a state-owned entity located in the Middle East (“State-Owned Entity #2”), the identity of which is known to the United States, to perform the work, assume the risk and keep the product purchased under a contract for State-Owned Entity #2 to purchase fuel oil from Petroecuador.
On or about December 22, 2016, to effectuate and conceal the bribery scheme, the defendant Enrique Pere Ycaza and Antonio Pere, with the knowledge and involvement of Trading Company #2 Employee, devised a scheme in which payments for the bribery scheme would be sent to Consulting Company #3 from two shell companies registered in Curacao. To effectuate the payments, Enrique Pere Ycaza and Antonio Pere executed sham consulting agreements between Consulting Company #3 and the shell companies in Curacao.
Trading Company #2 thereafter caused the shell companies in Curacao to wire payments to a bank account of Consulting Company #3 in the Cayman Islands. After receiving those payments, with the knowledge of Trading Company #2 Employee, the Enrique Pere Ycaza and Antonio Pere wired a portion of the proceeds from accounts under their control to bank accounts in Panama for the benefit of Ecuadorian officials, including Ecuadorian Official #1, in order to obtain and retain business for Trading Company #2.”
As to the SMI bribery scheme (the so-called Asphalt Company scheme), the DOJ alleged:
“In or about June 2014, at a meeting in Miami, Florida, Antonio Pere, Asphalt Company Employee and Asphalt Trading Employee agreed that Antonio Pere would receive a commission if Petroecuador awarded Asphalt Company an asphalt supply contract in an upcoming tender process. They further agreed that Antonio Pere would seek Ecuadorian Official #1’s assistance in securing the contract for Asphalt Company. The defendant Enrique Pere Ycaza and Antonio Pere intended, and Asphalt Company Employee and Asphalt Trading Employee knew that there was a high probability, that Antonio Pere would make bribe payments to Ecuadorian Official #1 out of Antonio Pere’s commission.
After the Petroecuador contract was awarded to Asphalt Company, the defendant Enrique Pere Ycaza executed a corrupt consulting agreement between Consulting Company #1 and a Swiss affiliate of Asphalt Company to facilitate the bribery scheme and to conceal the bribe payments. Pursuant to that corrupt agreement, Asphalt Company paid Consulting Company #1 approximately $471,881 through its Swiss affiliate, knowing that there was a high probability that those funds would be used, at least in part, to pay bribes to benefit Ecuadorian Official #1.”
Based on the above allegations, the DOJ charged the Ycaza brothers with conspiracy to commit money laundering and to violate the FCPA’s anti-bribery provisions.
According to docket entries, the Ycaza brothers pleaded guilty and agreed to forfeit approximately $46 million.
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