As if the embattled government of Venezuelan President Nicolas Maduro didn’t have enough problems, a former rainmaking banker with Swiss asset manager Julius Baer has been sentenced to 10 years in prison for his involvement in a money laundering scandal that siphoned off $1.2 billion (or 1.2 billion Swiss francs) from PDVSA, Venezuela’s deteriorating state oil company, in a scandal that allegedly involved three of Maduro’s stepsons, according to Swissinfo.ch and Bloomberg.
Matthias Krull, 45, was sentenced Monday in US federal court in Miami after entering a guilty plea on Aug. 22. As part of the plea, he admitted that he had joined a network of money launderers who used real estate and fraudulent investment schemes to conceal funds taken from Petroleos de Venezuela. According to his attorney, Krull is cooperating and his sentence could be reduced if he provides “substantial assistance” to the investigation, which could apparently give the US government justification for pressing sanctions against more members of Maduro’s family, given the step-sons’ involvement. None of the stepsons have been charged.
The money laundering scandal is only the latest headache for Baer in South America.
According to Bloomberg, the bank is in its third year of a deferred-prosecution agreement with the DOJ after admitting two years ago that it helped thousands of Americans evade taxes, a scandal for which it paid nearly $550 million in fines and for which two bankers pleaded guilty. Another former banker at Baer pleaded guilty last year in a federal courtroom in New York for his role in funneling money from an Argentinian sports-marketing company to FIFA in part of the wide-ranging international corruption scandal that tarnished the reputation of the international sports association.
As we reported a few months back, Baer has launched an internal investigation into how billions of dollars were laundered from PDVSA. Swiss banks, which still do business with Venezuelans in defiance of US sanctions (though the Swiss government has long since cracked down on Russian depositors), are a key resource for the Venezuelan elite.
Julius Baer said in a statement that Krull is no longer employed at the bank and clarified that the bank hadn’t been implicated in any wrongdoing.
“Mr. Krull is a former employee who has been sentenced to charges brought against him in his personal capacity – the bank is not charged of any wrongdoing,” said Julius Baer spokeswoman Larissa Alghisi. “The charges brought against Mr. Krull are not related to the matters covered in the bank’s DPA, and we have no indication that these events will have any impact on the DPA.”
The US District Judge who sentenced Krull also imposed a $50,000 fine and ordered Krull to forfeit $600,000, or the amount in fees that he earned for helping launder funds, as part of his punishment. However, there’s still a chance that Krull could avoid his stiff sentence in a US prison: As part of his agreement, prosecutors have agreed to lessen Krull’s sentence if he provides them meaningful information about his co-conspirators, including the aforementioned step sons of Maduro, who haven’t been charged in the case. This suggests that the case could eventually grow to implicate more family members of Maduro, and expose what for the Venezuelan leader would probably be an uncomfortable truth: That even his own flesh and blood has seized every opportunity to steal from his government.
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