An executive and an employee of a broker-dealer firm were charged with defrauding Citgo Petroleum Corp, a subsidiary of PDV Holding Inc owned by Venezuelan state oil company PDVSA, court documents released on Wednesday show.
In a purported fraud possibly involving hundreds of millions of dollars, FTC Capital Markets Inc Chairman Guillermo Clamens and Nazly Cucunuba Lopez, also known as Lina Lopez, were criminally charged with conspiracy, securities fraud and wire fraud.
A parallel civil complaint by the U.S. Securities and Exchange Commission said that New York-based Clamens, 45, assisted by Lopez in the firm's Miami office knowingly caused FTC to make unauthorized purchases of securities for Citgo's and PDV's FTC accounts and prepared false statements.
The SEC complaint said Clamens and Lopez solicited a total of $560 million from Houston-based Citgo and PDV between April 2008 and November 2008. The pair invested the money in high-risk securities without the knowledge of those investors, instead of in low-risk securities.
A separate lawsuit by the companies in March accused the pair of creating a slush fund that they used to finance self-interested, unauthorized and speculative trading in unregistered, risky, illiquid investments in which they had financial interests, the full extent of which remain unknown.
Representatives of FTC, which is a registered broker-dealer that also has an investment advisory business, did not answer telephone calls seeking comment.
A lawyer for Lopez declined to comment on the allegations.
Lopez, 34, was arrested in Miami on Tuesday and the New York offices of the firm were searched on Tuesday by investigators of the U.S. Postal Inspection Service (USPIS), sources familiar with the probe said.
They asked not to be identified because of an ongoing investigation by the office of the U.S. Attorney in New York and the USPIS.
The case stems from a civil lawsuit in Manhattan federal court on March 9 by Citgo Petroleum Corp and PDV Holding Inc that accused FTC, several related entities and the two employees of fraud.
The cases are USA v Guillermo A. Clamens and Nazly Cucunuba Lopez 09-mag-1223 and SEC v FTC Capital Markets Inc et al 09-4755 in U.S. District Court for the Southern District of New York (Manhattan)
The lawsuit is Citgo Petroleum Corp and PDV Holding Inc v FTC Capital Markets Inc, et al 09-2116.
(Reporting by Grant McCool; Editing by Richard Chang)