DOJ Fraud Section 2020 Year in Review: Money Laundering Statute Remains an Overseas Enforcement Tool

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On February 24, the Department of Justice’s (“DOJ”) Criminal Division Fraud Section released its 2020 Year In Review (“the Report”) touting its white-collar enforcement successes.  Among them: four cases in which the DOJ wielded the United States’ money laundering statutes to pursue alleged overseas bribery recipients who are beyond the reach of the Foreign Corrupt Practices Act (“FCPA”).  This is a pattern we have covered previously (here, hereherehere, here, here and here).   While the FCPA imposes liability on American citizens and entities that bribe foreign officials, it does not impose liability on the foreign officials receiving the bribe.  Enter 18 U.S.C. §§ 1956 and 1957.  As illustrated in the Report’s cases, 2020 marked a continuation of the DOJ’s willingness to use the money laundering statutes to pursue corrupt foreign activity that uses U.S. financial institutions, however tangentially.

Sargeant Marine

Sargeant Marine, Inc. (“Sargeant Marine”) is an asphalt company formerly based in Boca Raton, Florida.  Between 2010 and 2018, it allegedly bribed foreign officials in Brazil, Ecuador, and Venezuela by paying them millions of dollars in exchange for contracts to sell asphalt to those countries’ state-owned oil companies.  To conceal the bribes, Sargeant Marine allegedly developed fake consulting agreements, and then wired money from its bank account to offshore accounts controlled by intermediaries involved in the scheme.  The DOJ charged Sargeant Marine and several of its agents with FCPA violations, and in September 2020, it announced that Sargeant Marine pled guilty to conspiracy to violate the FCPA and paid a $16.6 million criminal fine.

In September 2020, a criminal information was unsealed in federal court in Brooklyn charging a Venezuelan official with money laundering in connection to the Sargeant Marine scheme.  According to the information, the official – a former trader at Venezuelan-owned oil company Petroleos de Venezuela S.A. (“PDVSA”) – received $229,000 in bribes to his account held at an American bank.

Donville Inniss

Donville Inniss (“Inniss”) was a foreign official living in Tampa, Florida.  In 2015 and 2016, he was a member of the Parliament of Barbados and a Minister of Industry for Barbados.  The DOJ alleged that executives of the Insurance Corporation of Barbados Limited (“ICBL”) paid Inniss thousands of dollars in exchange for Inniss leveraging his positions of power to enable ICBL to obtain lucrative insurance contracts from the Barbados government.  This scheme fell within the ambit of the federal money laundering statutes when Inniss allegedly arranged to receive the bribes through his friend’s dental company, which held an account at a U.S. bank.  The DOJ charged Inniss with money laundering, and on January 16, 2020, a jury found Inniss guilty of two counts of money laundering and one count of conspiracy to commit money laundering.

Venezuela

The DOJ consistently has pursued Venezuelan nationals through high-dollar, high profile money laundering and foreign bribery charges, and our discussion of the saga is available herehere, and here.   As discussed above, the DOJ did not slow that pursuit in 2020. The Report noted the DOJ obtained several guilty pleas from high-ranking Venezuelan officials, and announced new charges.  The charges and pleas follow the pattern discussed here.

For example, Carlos Enrique Urbano Fermin, a Venezuelan businessman, allegedly paid bribes to PDVSA officials in exchange for inflated contracts for good or services.  According to the information filed against Fermin, payments for the scheme were made to bank accounts held in the United States.

Additionally, Lenny Rangel and Edoardo Orsoni, both former PDVSA officials, allegedly accepted bribes from Venezuelan executives in exchange for helping the businessmen obtain government contracts.  According to the information filed against Rangel, payments were made through a bank in South Florida.

Finally, as we previously blogged, the DOJ charged Venezuelan businessman Natalino D’Amato (“D’Amato”) with an 11-count indictment for allegedly laundering $160 million in bribery proceeds involving PDVSA between 2013 and 2017.  Again, those transactions allegedly flowed through U.S. bank accounts controlled by D’Amato.

Ecuador

The pattern continued in Ecuador, where the DOJ accused public Ecuadorian officials of receiving and concealing bribes in exchange for obtaining business with state-owned controlled oil company PetroEcuador and state-owned controlled insurance company Seguros Sucre S.A.  Among those charged with money laundering: the bribery intermediaries who allegedly facilitated the wrongdoing through U.S. bank accounts.

In sum, the money laundering statutes remain an overseas enforcement tool regularly utilized by the DOJ to pursue illicit foreign conduct that it could not otherwise reach under the FCPA.  We expect this pattern to continue.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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