DOJ Charges Two Austrian Bankers with Money Laundering
The Department of Justice is starting to launch its FCPA enforcement profile after a brief lull in DOJ’s transition to a new administration. This enforcement lull occurred in the transition to the prior administration in 2016, and there is nothing to glean from it since it is a natural occurrence when a new Justice Department administration takes the reins of power.
Last week, we had some rumblings of FCPA enforcement with
the announcement of three separate criminal cases against individuals. Each enforcement actions deserves a separate
blog posting. DOJ’s criminal FCPA
program continues to ramp up and mature.
But for COVID-19 last year, DOJ’s criminal case numbers would have
increased steadily year-over-year for the last three years.
In the first interesting criminal case, the US Attorneys
Office for the Eastern District of New York (Brooklyn) unsealed an indictment
charging Peter Weinzierl, 55, and Alexander Waldstein, 73, with laundering more
than $170 million as part of the Odebrecht bribery scheme.
In 2016, Odebrecht, the Brazilian engineering and
construction conglomerate, reached a global settlement of $2.6 billion with
Brazil, the U.S. and other international law enforcement, as part of Operation
Car Wash, for its conduct of a massive global bribery operation.
Weinzierl and Waldstein used their high-ranking positions in
banks in Antigua and Austria to facilitate the bribery scheme and facilitate
Odebrecht’s evasion of more than $100 million in tax liabilities. Both men were charged with four counts of
money laundering, including one count of an overarching money laundering
conspiracy.
As charged in the indictment, Weinzierl and Waldstein used
fake transactions and sham financial service to move more than $170 million
from Odebrecht’s books to offshore shell company accounts using an Austrian
bank. Odebrecht falsely deducted the
transfers as business expenses to evade large tax liabilities in Brazil.
Weinzierl was arrested in the United Kingdom and is being
extradited to the United States.
Waldstein has not been apprehended.
In addition, Weinzierl and Waldstein transferred millions of
dollars in illicit proceeds to a brokerage account in the U.S., where they
invested in corporate stocks, bonds and U.S. treasury securities. In exchange, Weinzierl and Waldstein earned
million in fees.
Weinzierl and Waldstein helped Odebrecht set up offshore
accounts for shell companies for “tax planning purposes.” Starting in 2010, the bankers implemented a
back-to-back transaction scheme in which Odebrecht wired millions from a
subsidiary to a foreign bank in accordance with a sham service agreement. After earning a substantial fee, the bankers
secretly sent the remaining funds to Odebrecht shell companies in order to
disguise the pass through to another entity.
Weinzierl was the CEO and Waldstein an officer of an
Austrian bank, and both served as board members of an Antiguan bank. The off-the-books slush funds were used by
Odebrecht to pay hundreds of millions of dollars in bribes to government
officials around the globe.
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