Seven individuals from broker-dealer Direct Access Partners settled charges last week for their role in a massive kickback scheme to secure the bond trading business of a state-owned Venezuelan bank, the Securities and Exchange Commission announced.
Judge Jesse Furman of the U.S. District Court for the Southern District of New York last week entered final judgments against defendants Iuri Bethancourt, Benito Chinea, Tomas Alberto Clarke Bethancourt, Joseph DeMeneses, Jose Hurtado, Ernesto Lujan, and Haydee Pabon.
As Compliance Week previously reported, the SEC and Department of Justice unsealed criminal charges in May 2013 brought against two employees of U.S. broker-dealer Direct Access Partners (DAP) and a senior executive of Venezuelan state-owned bank Bandes, arising from a massive kickback scheme. The indictment accused Tomas Clarke and Jose Alejandro Hurtado of paying at least $3.6 million in bribes to Maria de los Angeles Gonzalez de Hernandez, vice president of finance for Bandes, in exchange for directing trading business to DAP from April 2009 through June 2010.
According to the allegations, Hurtado and Clarke received millions of dollars in salary, bonuses, and finder's fees, while Gonzalez received monthly kickbacks that were frequently in six-figure amounts. In its amended complaint filed in federal court in Manhattan, the SEC had also brought charges against Lujan, a managing partner of DAP’s global markets group, and others for their role.
The final judgments brought on April 6, 2016, and April 7, 2016, permanently enjoin all defendants from violating Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, and ordered defendants Chinea, Clarke, DeMeneses, Hurtado, and Lujan to pay $42.5 million in disgorgement and prejudgment interest. The disgorgement and prejudgment interest ordered by the judgment was deemed satisfied by forfeiture orders in entered in parallel criminal cases brought against the defendants by the U.S. Attorney’s Office for the Southern District of New York.