Monday, June 17, 2013

SEC Announces More Charges in Massive Kickback Scheme to Secure Business of Venezuelan Bank

The SEC charged the former head of the Miami office at brokerage firm Direct Access Partners (DAP) for his role in a massive kickback scheme to secure the bond trading business of a state-owned Venezuelan bank.

The SEC charged four individuals last month who enabled the global markets group at DAP to generate more than $66 million in revenue from transaction fees related to fraudulent trades they executed for Banco de Desarrollo Económico y Social de Venezuela (BANDES). A portion of this revenue was illicitly paid to the Vice President of Finance at BANDES, who authorized the fraudulent trades.

The SEC alleges that the managing partner of the global markets group was an integral participant in the wide-ranging fraudulent scheme that included sham arrangements to hide the kickback payments and route money to the BANDES official through shell corporations. The managing partner and others charged in the scheme deceived DAP's clearing brokers, executed internal wash trades, interpositioned another broker-dealer in the trades to conceal their role in the transactions, and engaged in massive roundtrip trades to pad their revenue.

"For a scheme this bold to succeed, it required the sneaky collaboration of several individuals including the head of the Miami office," said Andrew M. Calamari, Director of the SEC's New York Regional Office. "[The managing partner] and the others may have believed they were covering their tracks, but the SEC's exam and enforcement teams unraveled their fraud."

In a parallel action, the U.S. Attorney's Office for the Southern District of New York announced criminal charges against the managing partner.

The attorneys at Sallah Astarita & Cox, LLC  have decades of experience in securities fraud investigations and in defending white collar criminal cases. For more information contact us by email or visit our website at For more information on this case, visit SEC Announces More Charges in Massive Kickback Scheme to Secure Business of Venezuelan Bank.

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