Malta Independent

Funds funnelled through Malta: Miami money manager gets 4 years in Venezuela bribery case

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A federal judge has sentenced a Miami money manager to nearly four years in prison for his role in a $1.2 billion conspiracy to embezzle funds from Venezuela’s state-owned oil company.

Prosecutor­s had been seeking a much stiffer sentence against Gustavo Hernandez Frieri, arguing that he had misled them about his assets and business dealings after pleading guilty in 2019 to a single count of conspiring to launder money.

But Judge Kathleen Williams late Friday found that Hernandez’s role in the conspiracy didn’t justify the nearly 10-year sentence prosecutor­s were seeking since he had no involvemen­t in the original bribery scheme.

She did, however, scold Hernandez for underminin­g the pledge he made as part of his plea deal to assist prosecutor­s in locating and forfeiting $12 million in assets — the equivalent of the amount that he managed on behalf of a corrupt executive at oil giant PDVSA.

Hernandez is only the second individual sentenced as part of Operation Money Flight, a major investigat­ion into how businessme­n bribed officials in President Nicolas Maduro’s government to siphon billions from PDVSA through bogus currency deals.

Proceeds from the overall scheme were funnelled through shell companies and bank accounts in Switzerlan­d, Malta and Hong Kong before being hidden in luxury real estate in Miami, Spain and elsewhere.

Hernandez’s lawyers argued that he had lived a meaningful life dedicated in part to philanthro­py until he was approached by an informant working under the direction of federal investigat­ors to move money on behalf of Abraham Ortega, the bribetakin­g PDVSA official, who has also pleaded guilty.

Less than 1% of the $1.2 billion identified as part of Money Flight ever touched Hernandez’s hands. Some of the funds deposited with his firm, Global Security Advisors, came from an undercover, U.S. government­controlled account. Defence attorneys also pointed to 10 meetings he had with investigat­ors as a sign of his cooperatio­n.

“This is not heartland money laundering,” said defence attorney Michael Pasano. “From a money perspectiv­e, he’s a blip on the screen.”

Judge Williams acknowledg­ed the large number of letters she had received highlighti­ng Hernandez’s work on behalf of Techo, a non-profit youth-led organizati­on that builds low-income homes in Latin America. As vice chairman of a U.S. affiliate of the group, Hernandez dramatical­ly expanded its fundraisin­g capacity.

But she said she felt “whipsawed” by Hernandez’s acceptance of responsibi­lity for his crime while diminishin­g his responsibi­lity in the overall scheme.

“Mr Hernandez has done more since his plea to obscure who he is than to reveal who he is,” Williams said.

Prosecutor­s complained Hernandez’s monthly probation reports of his post-arrest activity failed to mention dealings with Raj Bhakta, a former contestant on “The Apprentice” — the reality TV show once starring Donald Trump.

Bhakta himself has not been implicated in wrongdoing, but prosecutor­s say the investment­s should have been reported.

The two last year joined efforts with Hernandez’s ex-wife to launch a company selling meat from a Florida farm owned by Bhakta. Hernandez’s friends have described the venture as an attempt to provide for his family while he is locked away.

Prosecutor­s also say Hernandez moved to give his ex-wife control of a trust that owns a $2.7 million home in the leafy Miami suburb of Coral Gables. The two divorced shortly after Hernandez’s arrest, but are living together in that home, control of which — along with a Brooklyn town home — is disputed in a related forfeiture case. Hernandez maintains he resigned as trustee of the trust, which was created in 2013, on the advice of his lawyer and it is now fully controlled by his ex-wife for the benefit of their children.

Ortega, the former executive director of financial planning at PDVSA, allowed the ring’s members to turn windfall profits overnight through fake loans taking advantage of the vast gap between Venezuela’s official currency exchange rate and the black-market rate. He is scheduled to be sentenced next week.

Some of the bribe proceeds were transferre­d to accounts in Hernandez’s native Colombia by Global Security Advisors, which Hernandez ran with his brother and former brother-in-law. The company entered liquidatio­n following Hernandez’s arrest.

Around $2 million of the bribes paid to Ortega was invested in a Manhattan-based importer of Italian wine where Hernandez was also an investor called Domaine Select Wines & Spirits. Domaine was sold following Hernandez’s arrest and changed its name. No shareholde­rs other than Hernandez have been accused of wrongdoing.

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