U.S. investigators searched the New York offices of FTC Capital Markets Inc for evidence in a suspected investment fraud possibly involving hundreds of millions of dollars, a source familiar with the probe said on Wednesday.
The source, who asked not to be identified because of the ongoing investigation, said officers from the U.S. Postal Inspection Service were looking into whether two FTC Capital executives misled companies over purported investments.
One of the executives, Lina Lopez, was arrested in Miami, the source familiar with the case said.
No further details were immediately available about the search, which took place on Tuesday night.
Criminal charges have not been filed. The case stems from a civil lawsuit by Citgo Petroleum Corp and PDV Holding Inc in March that accused FTC, several related entities and two executives of fraud.
Representatives of New York-based FTC, which is a registered broker-dealer that also has an investment advisory business, did not answer telephone calls seeking comment on Wednesday.
In a civil lawsuit on March 9 in Manhattan federal court, Citgo and PDVH alleged that FTC executives Lopez and Guillermo David Clamens diverted and misused the plaintiffs' investment funds. Houston-based Citgo is a subsidiary of PDVH, which is owned by Venezuelan state oil company PDVSA.
The lawsuit charges the two with creating a slush fund 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.
Clamens and Lopez made undisclosed and unauthorized purchases into the Citgo account of $10 million worth of bonds issued by Venezuela, the complaint said. It said they diverted $19.3 million of Citgo's $100 million investment to self-dealing, risky and unauthorized note and bond purchases.
It said that in April 2008, FTC opened accounts at BNP Paribas bank in the name of Citgo and PDVH. The complaint said that instead of investing $200 million into 7-day BNP CD's for Citgo, Clamens and Lopez deposited the money into a daily income money market fund.
Several related entities were also being investigated, including FTC Group, which advertises offices in New York, Miami, London, Caracas, Lima and Mexico. The group's website says it provides investment banking services to foreign banks, pension funds, insurance companies, asset managers and financial advisers.
Clamens, is president and chief executive based in New York, and Lopez is employed in Miami, according to the lawsuit.
The civil case is Citgo Petroleum Corp and PDV Holding Inc v FTC Capital Markets Inc, FTC Emerging Markets Inc, FTC Holdings LLC, FTC Group, Guillermo David Clamens and Lina Lopez 09-2116 in U.S. District Court for the Southern District of New York (Manhattan)
(Reporting by Grant McCool; Editing by Lisa Von Ahn)