28 Nov 2019
A Miami investment manager pleaded guilty Tuesday to participating in a $1.2 billion money-laundering ring run by wealthy Venezuelan businessmen with political connections to the socialist government of President Nicolás Maduro.
Gustavo Hernandez Frieri, 45, was convicted of a single money-laundering conspiracy count and now faces less than 10 years in prison at his sentencing March 20 before U.S. District Judge Kathleen Williams in Miami federal court.
Born in Colombia, Hernandez is a naturalized U.S. citizen who was arrested last year during a family vacation in Italy before his extradition to Miami to face the massive money-laundering case. An indictment charged him along with seven other defendants, most of whom are still fugitives.
The indictment accused elite Venezuelan businessmen of paying bribes to government officials to secure loans with the state-owned oil company that generated astronomical profits after being washed through a favorable currency-exchange system.
Hernandez is accused of helping launder at least $12 million that prosecutors say was paid in bribes to one former senior official in Venezuela’s national oil company, PDVSA, who wanted to move the money to Miami and other parts of the United States. Hernandez’s role was to put that money into a fake mutual fund so that it looked legitimate and then launder it into U.S. banks for a fee, according to prosecutor Michael Nadler.
Hernandez’s defense attorney said his client was “deliberately ignorant” about the PDVSA official’s intentions to use the money manager’s hedge fund to hide the foreign bribery payments.
“Mr. Hernandez today took his first step in acknowledging his responsibility for closing his eyes and allowing money to be invested in his investment business that turns out came from criminal acts in Venezuela,” attorney Michael Pasano said after the plea hearing. “He regrets how he allowed his business to be used and how this mistake is a blemish on his 15-plus year career as an honest and legitimate investment adviser.”
Hernandez, who operated an investment business on Brickell Avenue, remains free on a $25 million bond co-signed by his brother, Cesar Hernandez Frieri, and his brother-in-law, Juan Carlos Gomez, who are both in the investment business. They helped Hernandez start two investment firms, Global Securities Holdings and Global Strategic Investments. Hernandez also had to put up a $1.5 million bond requiring him to make a 10 percent down payment.
Since his extradition from Italy in May, Hernandez has been allowed to stay with his family at their $2 million home in Miami’s Bay Point neighborhood. During home confinement, he has been required to wear an electronic ankle bracelet.
Hernandez got into trouble when he was approached by a Venezuelan attorney-turned-money launderer who became a confidential source for Homeland Security Investigations in 2016. The source made arrangements with Hernandez to help hide bribery payments made to the PDVSA official, Abraham Edgardo Ortega.
Ortega, the former executive director of financial planning at PDVSA, pleaded guilty in October 2018 to accepting millions of dollars in bribes that were secretly wired to U.S. and other financial institutions with the assistance of Hernandez and others.
By Jay Weaver, Miami Herald, 27 November 2019
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