Who gets to keep Venezuela's billions after assets seized in U.S.?

Despite evidence revealed in federal court of billions of dollars plundered from the coffers of Venezuela's national treasury, the U.S. government has no intention of returning those laundered funds to the South American government which it has branded as a kleptocracy, unsealed court documents reveal.

"The [U.S.] government submits that the Government of Venezuela does not qualify for victim notice or restitution under the applicable statutes," prosecutors stated in a court document filed July 27 in a case involving Alejandro Andrade, the country's former head of the National Treasury Office who was sentenced this week to 10 years in jail for his role in a $1 billion bribery and money-laundering scheme.

A former bodyguard to socialist President Hugo Chávez, Andrade rose to become one of the most trusted members of his inner circle and head the National Treasury Office between 2007 and 2010. He moved to the United States in 2010 under the temporary protection of the U.S. Drug Enforcement Administration (DEA), several sources told Univision, and settled in a wealthy horse community in Palm Beach County.

Under U.S. law, specifically the Crime Victims' Rights Act (CVRA) and the Mandatory Victims Restitution Act (MVRA), courts can order funds to be restituted where the victim can prove they were directly harmed. But prosecutors argued in court that the Venezuelan state could not be considered a victim since the scheme involved high level Venezuelan officials acting on behalf the government. "The Government of Venezuela's complicity in this conspiracy renders victim status inappropriate," according to the July court filing by Sandra Moser, acting chief of the Fraud Section of the U.S. Department of Justice.

The United Nations Convention Against Corruption (UNCAC) also requires that signatories, which include the U.S., provide notice to other countries about the proceeds resulting from corruption offenses, which often result in a transfer of wealth from poor countries more prone to corruption, to wealthier ones, with tougher enforcement of laws.

The Venezuelan treasury scheme involved a foreign exchange system that allowed the exchange of local currency (bolivars) at a fixed black-market rate for U.S. dollars well below the true economic rate "creates opportunity for fraud and abuse," Moser wrote.

"The defendant, who accepted bribe payments to authorize co-conspirators to conduct currency exchanges on behalf of the Venezuelan Government, was the Venezuelan National Treasurer," she added. "He had the ability to influence and decide which brokerage houses received government business to conduct these currency exchanges at the fixed rate, and thereby profit immensely from the exchanges."

Prosecutors say Andrade conspired with three other key players in the money-laundering ring that generated about $2.4 billion in illicit profits and they agreed to share half of their money with Andrade.

Andrade’s defense attorneys told the sentencing hearing that he only personally received about $70 million in bribes.

More ... and more ... corruption

The Andrade case is far from the only one involving Venezuelan corruption. A separate case involves $1.2 billion in money embezzled from the state oil company PdVSA and laundered using Swiss banks and Florida real estate. In 2017, U.S. officials accused Venezuela's Vice President Tarek El Aissami of holding $500 million in seized assets in the U.S..

Lawyers in Texas are seeking to recover $600 million on behalf of Bariven, a subsidiary of PdVSA, due to another corrupt scheme involving systemic overcharging. In 2015, U.S. authorities arrested two prominent Venezuelan oil businessmen on charges of violating the Foreign Corrupt Practices Act (FCPA). Both men pleaded guilty to bribing PdVSA officials in order to win lucrative contracts with Bariven.

In 2002, U.S. officials helped the Nicaraguan government track down $100 million in assets in the United States belonging to former Nicaraguan officials, including President Arnoldo Aleman and Byron Jerez, former head of the country's tax agency. U.S. officials seized recovered $5.6 million in assets that were returned to the Nicaragua government.

So far, the Venezuelan government has not come forward to claim the assets seized in the Andrade case, which include five Florida homes, 17 show horses, vehicles, including a Mercedes-Benz GLS 550, a Bentley convertible and at least 35 luxury watches.

Who gets the money?

A judge has yet to rule on what will happen to the assets. "A victim can come forward to claim the money, but I just don't see that's going to happen in this case," said one legal expert familiar with the case who asked not to be named. "Unless Venezuela files a claim there will be nothing to rule on. The forfeiture goes to the U.S. government," said another lawyer. "Someone could raise a lot of hell for Venezuela if they were inclined to do so. What hypocrisy."

The Venezuelan government badly needs cash as its economy is in free fall. The International Monetary Fund estimates hyperinflation could hit 1 million percent this year and dire shortages of food, medicine, electricity, and water have prompted three million Venezuelans to flee their homeland since 2015, according to the U.N. refugee agency.

But political reasons make it even less likely that the Venezuelan government might win restitution. The United States has imposed sweeping sanctions on Venezuelan President Nicolás Maduro, his wife and top allies, accusing them of rampant corruption and abuse of democracy. Sanctions have also been placed on investments and contracts with U.S. firms, as well as newly issued debt and gold transactions.

Maduro says he is the victim of an “economic war” led by the U.S. and accuses opposition leaders of plotting to assassinate him.

"Restitution of Andrade's money would be an inversion of what the U.S. is trying to do. The sanctions are designed to force them out of power by starving them of cash," said the legal expert.

"We would never give the money back to the government of Venezuela, especially since it involved corrupt functionaries," said former ambassador John Feeley who served as the second in charge at the State Departmenmt for the Western Hemisphere. "My guess is that it will go into seized assets. We held Iran’s for several decades. But we can’t just decide to keep it. A judge must concur with the prosecutor’s arguments for seizure and forfeiture."