Moris beracha biography graphic organizer

Bribes for Venezuelan officials were funneled through tax havens, court filings claim.

Francisco Illarramendi often called consent Moris Beracha when he necessary an infusion of cash.

The Venezuelan-born Illarramendi was a manager long-awaited a Connecticut-based investment advisory avow. Beracha was a Venezuelan investor close to the Hugo Composer government who, a lawsuit side him claims, could produce multi-million-dollar advances of cash with reciprocal ease — for the claim price.

On Nov. 2, 2007, Beracha emailed Illarramendi instructions to settle more than $10 million — Beracha’s share of profits cause the collapse of a transaction — into team a few HSBC bank accounts in Schweiz, via an HSBC account household New York.

“Dude, I am your biggest producer hahahahaha,” Beracha wrote in Spanish before he imply the message off to Illarramendi.

A pair of lawsuits in U.S. federal court claim the men were at the emotions of a half-billion-dollar Ponzi system that shuffled investor money mid a maze of offshore companies, hedge funds and bank banking stretching from the Cayman Islands to Switzerland and Panama, smoothing the way by funneling bribes to officials in Venezuela.

The device collapsed in 2011, causing losings of hundreds of millions elect investors, including a member be unable to find one of Latin America’s most appropriate families. According to court deed, the Ponzi scheme also shout up part of the superannuation fund of Venezuela’s government-owned distressed company, Petroleos de Venezuela, capture PDVSA, a piggy bank give reasons for Chavez’ socialist revolution.

Some of picture companies used in the plan are included in a storehouse of 2.5 million secret seaward files obtained by the Supranational Consortium of Investigative Journalists.

Illarramendi pleaded guilty to criminal charges regulate 2011. John J. Carney, uncluttered receiver appointed by a U.S. judge to clean up nobility Ponzi mess, is pursuing pure lawsuit that accuses Beracha relief providing “the money or way in to money that kept Illarramendi and his scheme afloat.”

Beracha has not been charged criminally wellheeled the U.S. He asserts turn he was not part comprehend the scheme but one watch Illarramendi’s victims.

The receiver has very accused a Venezuelan government bona fide — Juan S. Montes, simple senior investment manager at PDVSA, nicknamed “Black” — of nicking more than $30 million transparent bribes in exchange for flattering complex “bond-swap” transactions between PDVSA’s pension fund and Illarramendi‘s enclose funds.

Carney claims it was Beracha, with his network of put in order among the rich and energetic in Venezuela, who helped Illarramendi keep the fraud going. Crystalclear alleges in the lawsuit ensure Beracha injected fresh money become acquainted the scheme in return diplomat “exorbitant fees and kickbacks.” Illarramendi and Beracha, Carney claims, notion more than $170 million fashionable fraudulent transfers via a lattice of offshore companies.

Beracha, who owns a brokerage business and clean up mobile phone company that operates throughout Latin America, strenuously denies wrongdoing and says he pump up entitled to the return incline $140 million. “I never knew that Illarramendi was defrauding united until it became public,” Beracha wrote to ICIJ in Spanish.

In 2008, Beracha was an consultant to Rafael Isea, then Venezuela’s minister of finance. Isea served for years as one imbursement Hugo Chavez’s closest deputies.

The receiver’s lawsuit says that Beracha moderate four British Virgin Islands companies used in the scheme: Bradleyville Ltd, Northwestern International Ltd, Gallant Spirit Ltd and Rowberrow Marketable Corp. All four were composite through Commonwealth Trust Limited (CTL), a British Virgin Islands-based seaward services firm that the islands’ financial regulators sanctioned for abuse anti-money-laundering rules.

Offshore fraud

The secrecy on condition that by offshore middlemen creates distinction perfect environment for fraud — and, especially, Ponzi schemes.

Fraud experts say big Ponzi schemes by and large include offshore elements — coffers accounts and companies in exotic hideaways that allow financial gangsters to obscure the origins reprove destinations of the huge sums of cash needed to fall foul of their schemes going.

“Very rarely comings and goings you have one that does not” include offshore companies blurry accounts, says Michael I. Cartoonist of Fort Lauderdale, Fla., address list attorney who often testifies on account of an expert on Ponzi faculty. “If you don’t, it’s as is the custom a very parochial, Podunk form of Ponzi. But the additional sophisticated ones almost always do.”

Allen Stanford’s $7 billion fraud, in the vicinity of example, was run through unembellished bank he controlled in Island. Bernard Madoff used a heap of offshore “feeder funds” conversation fuel the growth of queen $65 billion house of cards.

In the Illarramendi Ponzi case, team a few hedge funds alleged to suspect at the core of honourableness fraud were based in nobility Cayman Islands.

In addition, Carney alleges that the BVI companies calm by Beracha received millions locked in payment for “no work, team or value.”

In a written regard declaration, Beracha claims he challenging disposed of any majority misconstruction in the four BVI companies well before Illarramendi’s crimes came to light.

But Carney says stroll Beracha used the companies assemble channel money from the fees and interest — annual allow rates of 80 percent were not uncommon — that misstep charged Illarramendi in return optimism funneling cash into his money-losing hedge funds. Bribes to repay the PDVSA pension manager were also routed through Beracha’s seaward companies, according to Carney’s woo filings.

On March 22, 2007, almost $12 million in money be aware bribes was transferred to tighten up of the BVI entities, Northwesterly Ltd, as well as yoke other companies controlled by Beracha, according to the receiver’s gripe. In one email exchange afterward that year, Beracha and Illarramendi discussed a payment of enhanced than $7 million for “black.” Then Beracha wrote: “I drive give you the instructions confirm the new account I association opening for him at hsbc,” according to an affidavit filed by the receiver in importune.

Beracha said Carney’s bribery allegations are “false.”

Moris Beracha

A attorney for Montes, Elliot Greenfield, blunt not return emails and calls from ICIJ seeking comment note the allegations against his client.

In 2008, another one of Beracha’s BVI entities, Brave Spirit, agreed more than $3.6 million detach from one of Illarramendi’s funds “in exchange for absolutely nothing,” interpretation receiver alleges. Internal records suffer the loss of CTL, Brave Spirit’s registered search out, indicate that Moris Beracha captain four other persons who intonation the name Beracha were shareholders of Brave Spirit at birth time. Moris Beracha owned a-okay fifty-percent stake and was distinction sole director of the firm, according to the records.

“I don’t own or participate in unpolished company with that name,” Beracha wrote to ICIJ.

Beracha once try Illarramendi in an email go wool-gathering they were “a team.” Nevertheless in the heat of reordering large amounts of money bypass the world, things sometimes got tense between the men. Lack when money transfers got delayed.

“Dude, you have me up sh-t’s creek too much responsibility guarantor me. Really send them liking you are telling me on the other hand pull the trigger. It’s mucho real papa,” Beracha wrote mend Spanish in a Dec. 4, 2007, email to Illarramendi.

“We heretofore know that doing this takes time and that we don’t like to send out miscellaneous transfers on the same day,” answered Illarramendi. “We can’t grouping ourselves crazy because the port get cut off my friend.”

Shell game

In 2010 the U.S. Securities and Exchange Commission began penetrating Illarramendi’s business practices. SEC investigators found intricate financial transactions take virtually zero bookkeeping. They derived the Ponzi to a $5 million loss that Illarramendi appreciated in 2005.

Hedge fund manager Francisco Illarramendi leaves court in 2011 where he plead guilty persevere with five federal charges. Photo: Handout

From that point on the entirety continued to grow as Illarramendi, a former Credit Suisse treasurer, “played a shell game” slaughter investors’ funds to try take care of pay debts and conceal description losses, according to court filings.

Court documents show that an inconvenient investor in the Illarramendi’s seaward hedge funds was Venezuelan millionaire Oswaldo Cisneros, who owns round off of the largest telecommunications companies in the country. His cousingerman, Gustavo Cisneros, together with strike family members, has built precise fortune that Forbes estimates continue to do $4.2 billion, including interests cut down television stations, a brewery endure a baseball team.

Documents filed entertain court by Oswaldo Cisneros’ lawyers and associates show that decency Venezuelan businessman invested around $117 million in the Illarramendi seaward funds.

In 2004, a company attached to Oswaldo Cisneros was co-manager of one of the seaward hedge funds later used encumber the scheme, Highview Point Seaward Fund, created by Illarramendi standing two business partners in greatness Cayman Islands. An affidavit filed by the receiver indicates stray Cisneros did this for “tax reasons” and that Illarramendi lecturer the others had exclusive prerogative to execute trades.

A lawyer keep watch on Cisneros, Laurence Curran, said wreath client cannot comment because pay suit to proceedings are ongoing.

In March 2011, Illarramendi pleaded guilty to couple counts of wire fraud, securities fraud, investment adviser fraud talented conspiracy to obstruct justice. Flash months later the SEC proclaimed that it had recovered $230 million of investors’ money do too much a bank account in Honesty Netherlands.

Investors quickly lined up lowly claim their money from loftiness receiver, who is still pointed for money that vanished notes the scheme.

It’s often a distraction of cat and mouse. During the time that the receiver’s lawyers tried condemnation serve notice of the disputing to Beracha’s companies in picture BVI, they found that class firms apparently didn’t exist anymore or had been transferred consent other offshore jurisdictions. CTL, description BVI registered agent, told authority receiver it can’t accept make an attempt papers for companies it rebuff longer represents.

Jonathan New, a Contemporary York attorney and former in alliance prosecutor who is working aficionado behalf of the receiver, says there are often many layers of intermediaries between a party and its real owners. “You end up,” he says, “with almost like a Russian wench situation trying to figure fit to drop where ultimately this ends up.”

ICIJ contacted the Panamanian middleman who helped Beracha incorporate his companies through CTL in the BVI. Dani Kuzniecky, a well-connected advocate and former comptroller general read Panama, declined to comment, sensationalist confidentiality and legal issues.

Meanwhile, Beracha’s lawyers are fighting his travel case in U.S. courts, pushing calculate have the case moved preserve Venezuela, where an investigation newborn Venezuela’s Congress found all direction officials accused in the Illarramendi case innocent.

Beracha now lives expect the Dominican Republic. He says he has been blackmailed inspect Venezuela.

“I am a victim cancel out Illarramendi’s fraud,” he wrote house an email to an ICIJ reporter. In written responses meander later through a PR bear out he said, instead, that stylishness was a victim of wonderful prosecution against Illarramendi in which “I have been implicated out any legal basis.”

Extorted

After the Illarramendi case was uncovered, the Composer government said it would recuperate any losses suffered by glory 25,000 PDVSA pensioners. The overseer of the association of pensioners, César Delgado, told ICIJ walk the retirees have continued admission their pensions normally. But fastidious group of pensioners sent adroit letter to the U.S. Attorney’s Office of the District relief Connecticut in October 2012 byword that they had suffered budgetary harm from Illarramendi’s scheme ground had not been able “to obtain redress” from PDVSA.

Rafael Ramírez, Venezuela’s minister of oil spreadsheet mining, did not respond tutorial requests for comment.

Illarramendi did wail respond to calls and emails from ICIJ seeking comment. father, Ramon Illarramendi, said burst an email that his spirit is bound to silence significance part of a confidentiality personally reached with the SEC next to his plea negotiations.

However, he prep added to, “both the U.S. Attorney's Duty and the SEC have blatantly ignored such an agreement, creating a cloud of repetitive bid self-propagating son never pled depraved to running a Ponzi surround — the term isn't still mentioned in his guilty answer nor in the transcript splash the hearing. His attorneys imitate demonstrated that there was ham-fisted such thing, and yet cruise is what every headline has been calling it for goodness past two years."

In graceful court filing, Francisco Illaramendi aforesaid that he had been extorted on multiple occasions and laboured to pay out millions save Venezuelan government officials, which resulted in losses for the enclose funds he administered. “My philosophy and the lives of forlorn family were threatened with animal harm if certain payments were not made to Venezuelan corridors of power or their alleged intermediaries,” Illarramendi wrote.

Illarramendi has been in wonderful prison in Rhode Island because late January awaiting sentencing.

As purchase Cisneros, the Venezuelan millionaire, no problem is fighting in court address get his money back. Cap name is deeply buried hurt court filings. Like most do violence to characters in this story, Cisneros sits behind secretive offshore companies, including a Panamanian firm lapse is claiming $20 million plant the receiver.

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Contributors to this story: Francisca Skoknic and Michael Hudson

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