Prosecutors seek big penalty for money launderer in PDVSA-linked scheme

Federal prosecutors in Miami are seeking a stiff prison sentence against a United States-based money manager they claim is hindering their efforts to seize a US$2.7-million home and other assets he agreed to forfeit when he pleaded guilty to laundering bribe payments for a corrupt Venezuelan official.

Colombia-born Gustavo Hernandez Frieri pleaded guilty in 2019 to a single count of conspiring to launder money for his role in a US$1.2-billion embezzlement scheme involving Venezuela’s state-run oil giant PDVSA.

As part of his plea deal, Hernandez Frieri agreed to assist prosecutors in the forfeiture of assets and proceeds from the scheme.

However, in their sentencing memo filed on Friday night, prosecutors portray Hernandez Frieri as an unrepentant, recalcitrant defendant who “has not learned from his past criminal conduct”.

Despite the lack of a previous criminal record, they are seeking a “more substantial” prison sentence than the one recommended by probation officers and near the maximum 10 years allowed by federal sentencing guidelines.

Prosecutors cite two instances where Hernandez Frieri allegedly failed to cooperate. In one case, without notifying the court, he allegedly manoeuvred to transfer his stake in a trust that owns a US$2.7-million home in the leafy Miami suburb of Coral Gables to his ex-wife instead of forfeiting it, as required.

In a recent court hearing, Hernandez Frieri acknowledged living with his ex-wife and their children in the same house, though the two divorced shortly after his 2018 arrest on a US warrant while on vacation in Italy. The two also share a joint defence agreement to pursue a common strategy aimed at protecting another property from seizure, prosecutors argue.

Then there are the 31 traffic citations accumulated by Hernandez Frieri since 2001.

“Based on his record, the defendant is not an individual who shows respect for the law and is someone who is not easily deterred from committing the same offence more than once,” prosecutors wrote. “He should be made to understand that the crime of money laundering is a serious federal offence, with serious consequences.”

‘Wrong-minded and ill-spirited’

Michael Pasano, a lawyer for Hernandez Frieri, called the unusual request by prosecutors – to throw the book at someone who pledged cooperation against several co-conspirators and whose guilty plea spared a lengthy trial – “wrong-minded and ill-spirited”.

“Mr Hernandez will contest these claims at his court hearing,” Pasano told The Associated Press. Hernandez Frieri is scheduled to be sentenced on Thursday.

Hernandez Frieri, a lawyer by training, pleaded guilty to helping to run a false investment scheme through an investment firm he ran with his brother and brother-in-law, Global Security Advisors.

The firm was used to launder at least US$12 million in bribe payments to Abraham Ortega, a former PDVSA official who has himself pleaded guilty for his role in the billion-dollar embezzlement conspiracy.

Ortega, the former executive director of financial planning at PDVSA, allowed the ring’s members to turn windfall profits overnight through fake loans, taking advantage of the gap between Venezuela’s official currency exchange rate and the black-market rate.

Some of the bribe proceeds were transferred to accounts in Colombia. Around US$2 million of the bribes paid to Ortega ended up being invested by Hernandez Frieri in a Manhattan-based importer of Italian wine called Domaine Select Wines & Spirits. Domaine changed its name last year to Trinity.

AP