Here’s how the U.S. is helping massive theft in Venezuela

New details emerge on how the Maduro regime is storing its stolen loot in Florida properties.

Venezuelan President Nicolas Maduro is being investigated by American authorities for his role in a billion-dollar money-laundering scheme reaching from Venezuela to Florida. CREDIT: FEDERICO PARRA / GETTY
Venezuelan President Nicolas Maduro is being investigated by American authorities for his role in a billion-dollar money-laundering scheme reaching from Venezuela to Florida. CREDIT: FEDERICO PARRA / GETTY

Luxurious high-rises. Spacious, sprawling mansions. Green, verdant horse ranches. Nearly 20 properties in total, stretching from Palm Beach to Coral Gables, Florida — tens of millions of dollars’ worth of assets, soaking in the south Florida sun.

And all of them, as of last week, now frozen by federal authorities, caught in a spiraling, $1.2-billion money laundering ring reaching the highest ranks of Venezuela’s government.

The allegations of one of the largest money laundering rings in recent history, and the subsequent fallout, haven’t broken into the U.S. national press. But the striking details at play are indicative of both political realities in Venezuela — of an economy collapsing, of people fleeing in unprecedented numbers, while the regime descends into autocracy — and fledgling anti-kleptocracy efforts in the United States, which continues to provide an outlet for the kleptocrats drenching Caracas.


Running from Malta to Hong Kong to Miami, the details of the massive Venezuelan money-laundering allegations are familiar to anyone following kleptocratic developments in places like Russia or Azerbaijan. An oil-soaked economy, coupled with crashing standards of living, led the country’s elite — its boliburgués, as they’re known in Venezuela — to look for ways to loot the national coffers, and to park their stash in safe havens.

It’s a scheme that’s played out dozens of times before, from Kazakh oligarchs to Angolan overlords to the dictatorial family of Equatorial Guinea. And it’s a playbook that points to the continued role that U.S. luxury real estate plays as a key hub in global money laundering networks.

All the president’s sons

The details, laid out in a formal federal complaint in July, are relatively straightforward. According to George Fernandez, a special agent with U.S. Homeland Security Investigations, a string of Venezuelan higher-ups began conspiring in 2014 to loot PDVSA, the country’s state-owned oil company, and abuse the country’s official foreign-exchange rates to generate hundreds of millions, and eventually billions, of dollars in ill-gotten gains.

“Everything runs through [Maduro],” one source familiar with the investigation said.

The defendants — which include Portuguese and Colombian nationals, as well as former Venezuelan and PDVSA officials — then moved their funds through a Maltese investment firm and Hong Kong shell company before rerouting their loot to south Florida, grabbing as many mansions and high-rises as they could.


All told, as the Miami Herald summed up, the complaint “describes a Venezuelan government culture in which officials, politicians and businessmen connected to President Nicolás Maduro and his predecessor, the late Hugo Chávez, have plundered the national oil company, PDVSA, to enrich themselves while impoverishing the South American country.” (Venezuela has the worst score of any country in the Western Hemisphere in Transparency International’s Corruption Perceptions Index, and came in even worse than countries like Iraq, Turkmenistan, and Uzbekistan.)

“The money laundering allegations are nothing particularly new,” Geoff Ramsey, the assistant director for Venezuela at WOLA: Advocacy for Human Rights in the Americas, told ThinkProgress. “I think it’s been pretty clear for several years now that PDVSA… is operated as the country’s crown jewel. Venezuela has the world’s largest proven oil reserves, and it is, especially now in the current economic crisis, sort of the sole source of cash for the Venezuelan government.”

But what is remarkable is who else is identified, or at least alluded to, in the complaint. While they’re not named specifically, the document lays out how Maduro’s three step-sons — Yosser Gavidia Flores, Walter Gavidia Flores and Yoswal Gavidia Flores, known as los chamos — were on the take for $200 million as part of the scheme. When a confidential source involved in the money-laundering asked about the three, trying to clarify that they were “Maduro’s sons,” one of the other defendants responded, “Nah. Don’t, don’t, don’t ask.”

Maduro and his step-sons aren't named in the recent complaint, but appear nonetheless.
Maduro and his step-sons aren't named in the recent complaint, but appear nonetheless.

And while Maduro also isn’t specifically named in this complaint — he is identified as “VENEZUELAN OFFICIAL 2” — a source told the Miami Herald that Maduro is the “principal suspect” of the ongoing investigation.

As the source said, “Everything runs through him.”

Thus far, only two of the defendants have been arrested. Matthias Krull, a German national who helped set up the money-laundering network, pleaded guilty to charges last week. And Gustavo Adolfo Hernandez Frieri, whose Miami-based financial firms helped clean the funds, is currently awaiting extradition proceedings after being arrested in Sicily.


But the financial fallout been swift. In addition to the numerous Florida properties frozen last week, the Miami Herald reported that American authorities have already seized an additional $45 million, “along with additional deposits at City National Bank of New Jersey and other financial institutions in the Bahamas, England and Switzerland.”

And given that Maduro is still under investigation for his own role in the money-laundering operation, the asset forfeitures may have only just begun. The U.S. reportedly froze a further $800 million in assets from another senior Venezuelan leader in June, including a luxury apartment in Manhattan. An additional official, Chavez’s former body guard and Venezuela’s onetime national treasurer, is also suspected of laundering millions via real estate and show horses in Florida — assets that he purchased via anonymous shell companies.

“They’re trying to get the money before their luck runs out, because they know that this is simply impossible to remain as it is in Venezuela,” Jorge Salazar-Carillo, an economics professor with Florida International University who researches Venezuela’s oil sector, told ThinkProgress. “They know they cannot outlast the situation, so they’re preparing.”

American dreams

One other aspect has become clear since the formal allegations came to light. For years, Venezuela’s kleptocratic elite remained comfortable stashing their ill-gotten loot not in the Venezuelan countryside, nor in Caracas’s own luxury holdings, but in the U.S. proper — even as U.S.-Venezuelan relations crumbled.

That reality parallels a litany of other dictators and kleptocrats who have looked to the U.S. for everything from anonymous shell companies to beachfront properties in Malibu — or to the types of south Florida properties snapped up by the Venezuelans identified in the most recent money-laundering ring. As an additional affidavit, filed alongside the formal complaint, read:

Venezuela’s state of social, political and economic crisis, in which multibillion-dollar corrupt and criminal ecosystems thrive, drives rivers of criminal proceeds through South Florida. [South Florida] has become an international money-laundering hub and a desirable destination for well-to-do foreign criminals and kleptocrats.

The United States has taken strides over the past two years to clean up its luxury real estate market, especially in the greater Miami region. In 2016, the Treasury Department began forcing buyers in certain markets, who once remained completely anonymous, to reveal their identities. The program appears to have been a resounding success — such that in Miami-Dade County, buyers must now reveal themselves for any real estate purchases over $300,000, meaning it’s no longer just luxury properties requiring transparency.

These reforms are technically directed at any and all buyers, but it seems increasingly clear, at least in south Florida, that they were made with Venezuelan officials specifically in mind. After all, the past few months have shown just how much of a playground Miami, Coral Gables, and Palm Springs are to those who’ve profited from the Maduro regime — and who are now running into new American anti-kleptocracy efforts.

One of the Venezuelan defendants — Carmelo Urdaneta Aqui, the former legal counsel to Venezuela’s Oil and Mining Ministry — actually discussed these transparency requirements in the formal complaint, suggesting “forming a new company with his wife as the beneficial owner” in order to purchase property in Miami. It’s unclear if Urdaneta went through with the proposal, but even if his wife was identified as the owner, the information would have still been available to American law enforcement officials.

Caracas collapses

The money-laundering revelations, of course, come as Venezuela sinks into greater socioeconomic chaos than the country has seen in decades, if ever.

Battered by declining oil prices and Maduro’s increasing lurch into outright autocracy, Venezuela, as the Financial Times recently noted, is experiencing hyperinflation “of epic proportions” — the highest ever seen in Latin America — while the economy continues to implode. Meanwhile, Venezuela is now the country with the second-highest rate of offshore wealth as a percent of the GDP, as the IMF recently found.

“[Venezuelans’] exodus already ranks as probably the largest forced displacement ever recorded in the Western Hemisphere.”

All of this comes as Venezuelans continue to abandon the country in droves: “Forced migration from [Venezuela] might surpass the Syrian crisis,” wrote The Economist this month. Added the Financial Times, “[Venezuelans’] exodus already ranks as probably the largest forced displacement ever recorded in the Western Hemisphere.”

And there’s little silver lining for Venezuelans in the near future. “The dollar amount [in the recent money-laundering allegations] is certainly surprising,” Ramsey told ThinkProgress. “We’re talking about vast sums of money, and this is all money that should ordinarily be going towards imports of increasingly scarce food and medicine in Venezuela.”

It’s unclear if the Venezuelan elite are still raiding PDVSA, which remains, as the U.S. Department of Justice said in a recent statement, Venezuela’s “primary source of income and foreign currency.” But the United States’ lax regulations on luxury real estate — and the country’s broader role as a key node in Venezuela’s money laundromat — have already allowed the boliburgués, and Maduro’s family, to ransack Venezuela’s beleaguered population that much further.

And given that anonymous buyers can still pick up properties in places like Minneapolis, St. Louis, or Las Vegas, there’s little reason to think Venezuela’s kleptocrats won’t continue to stream their stolen wealth northward, regardless of how many Florida horse farms they have to lose along the way.

“Those that are more corrupt are the ones that are working for the government,” Salazar-Carillo told ThinkProgress. “I think this is going to explode in a big manner, more than what’s been reported.”