A former top financial officer in Venezuela’s state-owned oil company was sentenced to two years and four months in prison Wednesday after admitting that he played a supporting role in allowing wealthy Venezuelan “kleptocrats” to make loans to the government entity that yielded fortunes for them.
Abraham Edgardo Ortega, the former executive director of financial planning at Petroleos de Venezuela, S.A. (PDVSA), admitted he accepted more than $12 million in bribes that were secretly wired to U.S. and other financial institutions. Ortega, who was facing about five years in prison, was given a significant sentence reduction by U.S. District Judge Kathleen Williams because he was the first Venezuelan official to cooperate with federal authorities in a massive $1.2 billion money-laundering conspiracy case.
Ortega, 55, teared up as he told the judge in Miami federal court that he was sorry for his wrongdoing. He acknowledged that rampant “corruption” schemes involving his former employer, PDVSA, and politically connected business elites propelled Venezuela into its “deplorable” condition today.
Ortega’s defense attorney, Lilly Ann Sanchez, said that he deserved a significant break on his punishment because “he immediately came to this country and did the right thing” after the nine-defendant case was filed in the summer of 2018. Five of those defendants are still at large in Venezuela, including the ringleader.
Ortega, who over a decade had risen through the ranks of the Venezuelan-owned oil company, has provided insider information on the main PDVSA money-laundering indictment and related criminal cases that might be filed in the coming months by the U.S. Attorney’s Office in Miami.
Federal prosecutors Kurt Lunkenheimer and Paul Hayden recommended that Ortega receive a reduction below the low end of the sentencing guidelines, or five years, because of his “substantial assistance,” but Sanchez pushed for an even lesser prison term. The judge sided with her.
According to court records, Ortega allowed the Venezuelan ring’s members to embezzle hundreds of millions of dollars from the national oil company through loan- and currency-exchange schemes that ended up in European, Caribbean and U.S. banks as well as luxury South Florida real estate and other investments. Ortega admitted he used his official role to give “priority” status to Venezuelan companies that did business with the government so they could tap into its vast oil income to make overnight fortunes.
Ortega, who served as PDVSA’s top financial officer from 2014 to 2016, admitted in a statement filed with his 2018 plea agreement that he conspired with the leader of the money-laundering ring, Venezuelan billionaire Francisco Convit Guruceaga, who has not been arrested and remains in Venezuela.
Ortega also said he conspired with a Miami-based investment broker, Gustavo Adolfo Hernandez Frieri. Hernandez pleaded guilty to accepting $12 million from Ortega to invest in fake mutual funds in the United States so that the transactions looked legitimate, prosecutors said. Hernandez was sentenced to nearly four years in prison by Judge Williams last week.
Ortega and Hernandez each face $12 million forfeiture orders, but court records reflect that the former PDVSA official only kept $3 million of that amount and Hernandez kept the rest. Prosecutors are targeting Hernandez’s New York City residence and a Miami home as substitute assets for his forfeiture order.
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 Ortega, the PDVSA official.
Some of the so-called Venezuelan kleptocrats charged in the indictment with Ortega and Hernandez have connections with Venezuelan President Nicolás Maduro, who is a suspect in the ongoing investigation, according to federal law enforcement sources familiar with the case. Maduro’s three stepsons are also under investigation, along with a wealthy Caracas TV mogul, Raúl Gorrín.
Gorrín’s banker, Matthias Krull, a defendant who was charged separately in connection with the $1.2 billion money-laundering case, pleaded guilty to a conspiracy charge and was sentenced to 10 years in prison. But Krull, who has cooperated extensively with prosecutors and Homeland Security investigators, remains free on bond and has received a significant sentence reduction to three years and six months.
Krull, a Swiss banker who was based in Panama and provided banking services to Gorrín and other wealthy Venezuelans, was tapped to move $600 million in stolen Venezuelan funds from a European bank to the United States for the benefit of Maduro’s three stepsons, Gorrín, PDVSA officials and others involved in the racket, according to sources familiar with the investigation. Krull, however, did not complete the transfer of those funds.
U.S. authorities say the stolen funds were initially washed through the Venezuelan government’s currency exchange to boost their value before being transferred to Portmann Capital Management in Malta. Some of those embezzled funds were eventually invested in Miami-area luxury real estate and other assets.
In a separate South Florida federal case, Gorrín was charged in 2018 with conspiring with former Venezuelan national treasurer Alejandro Andrade to embezzle more than $1 billion from the government. Andrade pleaded guilty to a money-laundering conspiracy charge and was sentenced to 10 years in prison.
Andrade helped the U.S. Attorney’s Office and Homeland Security Investigations make the case against Gorrín, who also had ties to the late Venezuelan President Hugo Chávez.