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Venezuelan Bankers Charged with Allegedly Receiving Over $5 Million in Bribes

Preet Bharara, the United States Attorney for the Southern District of New York, David
O’Neil, the Acting Assistant Attorney General for the Criminal Division of the United States
Department of Justice, and George Venizelos, Assistant Director-in-Charge of the New York
Office of the Federal Bureau of Investigation (“FBI”), announced the arrests and indictment of
BENITO CHINEA and JOSEPH DEMENESES, the former Chief Executive Officer and former
Managing Director, respectively, of a United States broker-dealer (the “Broker-Dealer”), on
felony charges arising from a conspiracy to pay bribes to Maria De Los Angeles Gonzalez De
Hernandez (“Gonzalez”), who was a senior official in Venezuela’s state economic development
bank, Banco de Desarrollo Económico y Social de Venezuela (“BANDES”). CHINEA and
DEMENESES, working with others, arranged the bribe payments to Gonzalez in exchange for
her directing BANDES’s financial trading business to the Broker-Dealer. DEMENESES was
also charged with participating in a conspiracy to obstruct justice by concealing facts about the
scheme from the U.S. Securities and Exchange Commission (“SEC”) during a periodic
examination of the Broker-Dealer.
CHINEA, 47, was arrested today in Manalapan, New Jersey, where he resides, and
DEMENESES, 44, was arrested today in Fairfield, Connecticut, where he resides. Both
defendants were presented today in Manhattan federal court before Judge Denise L. Cote.

Manhattan U.S. Attorney Preet Bharara said: “These two defendants, senior executives at
a U.S. brokerage firm, are the fifth and sixth people to be charged in an alleged conspiracy to
corrupt the trading business of a state-run economic development bank of Venezuela. They are
alleged to have bribed a willing officer at the bank to steer its overseas trading business to the
defendants’ brokerage firm, reaping millions for these defendants and their partners in crime.
This Office will not tolerate the kind of outright bribery and concealment that characterized this
scheme.”
Acting Assistant Attorney General O’Neil said: “These senior Wall Street executives are
accused of paying six-figure bribes to an official in Venezuela to secure foreign business for
their firm. Today’s charges show once again that we will aggressively pursue individual
executives, all the way up the corporate ladder, when they try to bribe their way ahead of the
competition.”
FBI Assistant Director-in-Charge George Venizelos said: “As alleged in the indictment,
Chinea and Demeneses bribed Gonzalez to secure bank Bandes’s financial trading business.
Demeneses compounded the Broker-Dealer’s illegal activities by conspiring to obstruct an
investigation by regulators. The arrests today of Chinea and Demeneses should be a reminder to
all those in the business community that engaging in bribery schemes to secure business and
make a profit is illegal. Together with our law enforcement partners, the FBI will continue to
investigate bribery and fraud at all levels.”
According to the allegations in the Indictment unsealed today, and other documents
previously filed in Manhattan federal court:
Background on the Broker-Dealer and BANDES
At all times relevant to the charges, CHINEA was the chief executive officer and
DEMENESES was a managing director in the Broker Dealer, which was headquartered in New
York, with offices in Miami, Florida. In 2008, the Broker-Dealer established a group called the
Global Markets Group, which included DEMENESES, Ernesto Lujan (“Lujan”), and Tomas
Alberto Clarke Bethancourt (“Clarke”), and which offered fixed income trading services to
institutional clients. One of the Broker-Dealer’s clients was BANDES, which operated under the
direction of the Venezuelan Ministry of Finance. The Venezuelan government had a majority
ownership interest in BANDES and provided it with substantial funding. Gonzalez was an
official at BANDES and oversaw the development bank’s overseas trading activity. At her
direction, BANDES conducted substantial trading through the Broker-Dealer. Most of the trades
executed by the Broker-Dealer on behalf of BANDES involved fixed income investments for
which the Broker-Dealer charged BANDES a mark-up on purchases and a mark-down on sales.
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The Bribery Scheme
From 2008 through 2012, CHINEA and DEMENESES, along with Lujan, Clarke, Jose
Alejandro Hurtado (“Hurtado”), and Gonzalez, participated in a bribery scheme in which
Gonzalez directed trading business she controlled at BANDES to the Broker-Dealer, and in
return, agents and employees of the Broker-Dealer, including CHINEA and DEMENESES, split
the revenue the Broker-Dealer generated from this trading business with Gonzalez. During this
time period, the Broker-Dealer generated over $60 million in mark-ups and mark-downs from
trades with BANDES. Agents and employees of the Broker-Dealer, including CHINEA,
DEMENESES, Lujan, Clarke and Hurtado, devised a split with Gonzalez of the commissions
paid by BANDES to the Broker-Dealer.
To further conceal the scheme, the kickbacks to Gonzalez were often paid using
intermediary corporations and offshore accounts that she held in Switzerland, among other
places. For example, DEMENESES, Lujan and Clarke used an account in Switzerland to
transfer at least $1.5 million to an account Gonzalez controlled in Switzerland. In addition to
Gonzalez receiving the bribe payments, CHINEA and DEMENESES, as well as other
coconspirators, received millions in proceeds from the scheme.
The Conspirators’ Efforts to Obstruct the SEC Examination
Finally, beginning in or about November 2010, the SEC commenced a periodic
examination of the Broker-Dealer, and from November 2010 through March 2011, the SEC’s
exam staff made several visits to the Broker-Dealer’s offices in New York, New York. In or
about early 2011, DEMENESES discussed with others that the SEC was examining the Broker-
Dealer’s relationship with BANDES and that the SEC was asking questions regarding certain
emails and other information that its exam staff had discovered. DEMENESES, Lujan, Clarke,
and Hurtado agreed that they would take steps to obstruct justice by concealing the true facts of
the Broker-Dealer’s relationship with BANDES, including by deleting emails.
* * *
Previously, on May 3, 2013, Gonzalez, along with two employees of the Broker-Dealer,
Clarke and Hurtado, were arrested on charges relating to this bribery scheme. On June 12, 2013,
a managing director of the Broker-Dealer, Lujan, was arrested on related charges as well. Each
of these four defendants has since entered guilty pleas pursuant to cooperation agreements.
A chart containing the charges and maximum penalties for CHINEA and DEMENESES
is attached below. The maximum potential sentences in this case are prescribed by Congress and
are provided here for informational purposes only, as any sentencing of the defendants will be
determined by the judge.
4
Mr. Bharara praised DOJ’s Criminal Division and the FBI for their work in the
investigation. He also thanked the SEC for its assistance in this case and noted that the
investigation is continuing. In a separate action, the SEC announced civil charges against
CHINEA and DEMENESES.
This case was brought in coordination with President Barack Obama’s Financial Fraud
Enforcement Task Force, on which Mr. Bharara serves as a Co-Chair of the Securities and
Commodities Fraud Working Group. The task force was established to wage an aggressive,
coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20
federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition
of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud.
Since its formation, the task force has made great strides in facilitating increased investigation
and prosecution of financial crimes; enhancing coordination and cooperation among federal,
state and local authorities; addressing discrimination in the lending and financial markets and
conducting outreach to the public, victims, financial institutions and other organizations. Over
the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases
against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants. For
more information on the task force, please visit www.StopFraud.gov.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force.
Assistant United States Attorneys Harry A. Chernoff and Jason H. Cowley, and Fraud Section
Deputy Chief James Koukios and Trial Attorney Maria Gonzalez Calvet are in charge of the
prosecution. Assistant United States Attorney Carolina Fornos is responsible for the forfeiture
aspects of the case.
Additional information about the Justice Department’s FCPA enforcement efforts can be
found at www.justice.gov/criminal/fraud/fcpa.
The charges contained in the Indictment are merely accusations, and the defendants are
presumed innocent unless and until proven guilty.
14-108 ###
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United States v. Chinea and Demeneses, 14 Cr. 240 (S.D.N.Y.)
Count(s) Charge Defendant(s) Maximum Penalties1
ONE Conspiracy To Violate
the Foreign Corrupt
Practices Act and To
Violate the Travel Act
Benito Chinea
Joseph DeMeneses
5 yrs. imprisonment; 3 yrs.
supervised release; fine of the
greatest of $250,000 or twice the
gross gain or loss; $100 special
assessment; restitution.
TWO
THROUGH SIX
Violation of the
Foreign Corrupt
Practices Act
Benito Chinea
Joseph DeMeneses
5 yrs. imprisonment; 3 yrs.
supervised release; fine of the
greatest of $250,000 or twice the
gross gain or loss; $100 special
assessment; restitution.
SEVEN
THROUGH
ELEVEN
Violation of the Travel
Act
Benito Chinea
Joseph DeMeneses
5 yrs. imprisonment; 3 yrs.
supervised release; fine of the
greatest of $250,000 or twice the
gross gain or loss; $100 special
assessment; restitution.
TWELEVE Conspiracy To Commit
Money Laundering
Benito Chinea
Joseph DeMeneses
20 yrs. imprisonment; 3 yrs.
supervised release; fine of the
greatest of $500,000 or twice the
value of the property involved in
the transaction; $100 special
assessment; restitution
THIRTEEN
THROUGH
FIFTEEN
Money Laundering Benito Chinea
Joseph DeMeneses
20 yrs. imprisonment; 3 yrs.
supervised release; fine of the
greatest of $500,000 or twice the
value of the property involved in
the transaction; $100 special
assessment; restitution.
1 The maximum potential sentences in this case are prescribed by Congress and are provided here for
informational purposes only, as any sentencing of the defendants will be determined by the judge.
6
SIXTEEN Conspiracy To
Obstruct Justice
Joseph DeMeneses 5 yrs. imprisonment; 3 yrs.
supervised release; fine of the
greatest of $250,000 or twice the
gross gain or loss; $100 special
assessment; restitution

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