Group loses appeal in its $100M claim

A Columbus investment group seeking $100 million from Venezuela lost a second round when a federal appeals court found that the South American country owes it nothing.

The investment group, Skye Ventures, had claimed that Venezuela owed the money on two promissory notes issued by its agricultural bank in 1981. Each note had a maturity amount of $50 million.

After a five-week trial last year in Columbus, U.S. District Judge Edmund A. Sargus Jr. agreed with Venezuela’s attorneys that the notes were forgeries. The 6th U.S. Circuit Court of Appeals in Cincinnati upheld Sargus in an opinion issued last week.

Venezuela’s Finance Ministry argued that the notes contained obvious typographical and graphical errors and that the three signatories to the notes denied signing them. The government had warned about fake notes as early as 1998.

Skye Ventures had based much of its argument on a Venezuelan attorney general’s opinion in 2003 guaranteeing payment on the notes. The notes were written on the Banco Desarollo Agropecuario, also called Bandagro, which went bankrupt soon after issuing $1 billion in notes.

Venezuelan officials also argued that Skye Ventures bought the bonds in 2004 from a known criminal who had been convicted of pulling a similar scam in Europe.

Sky Ventures paid $2 million for the notes from Gruppo Triad-FCC SPA, a Panamanian corporation. Less than a month later, Skye sued Venezuela to collect the $100 million on the notes, which had matured 10 years after their issue.

The investment group said the lawsuit gave the Hugo Chávez government a chance to show it lived up to its obligations.

However, the Venezuelan Supreme Court ruled in 2007 that the attorney general’s opinion was only advisory.

Testimony during the trial indicated that Skye Ventures knew that Gruppo Triad was owned by James Paolo Pavanelli, who had been convicted in Italy of trading in fake Bandagro promissory notes.

European media called Pavanelli an “international swindler.” He died in a fire in a Swiss chalet in 2010.

Venezuelan officials testified there was no record of the numbered notes that Skye Ventures bought ever being issued.

If Venezuela had to pay Skye Ventures, the amount with interest could have totaled more than $1 billion.

Considering that Venezuela’s economy is crumbling as its oil industry suffers from lower prices, there would be little it could offer investors except some nationalized industry, experts have said.

Skye Ventures’ trial attorney, Charles “Chip” Cooper of Columbus, said the investment group would not comment on the appeals court’s decision. Nor would it identify its members besides its president, David Richards.

The investment group now has a couple of options: Only three judges heard the appeal, and they unanimously agreed. Skye Ventures could ask the entire 6th Circuit bench to consider the case. Failing that, it could request a hearing before the U.S. Supreme Court.

U.S.-Venezuela relations deteriorated under the Chavez regime and have remained poor under his successor as president, Nicolas Maduro.