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Venezuelan convict at center of ‘suitcase scandal’ didn’t raise flags for Panama Papers firm


Starting in 2008, Franklin Durán was front-page news in Miami, Caracas and Buenos Aires for all the wrong reasons. He had been busted in an Argentine political scandal that featured a suitcase stuffed with $800,000 in cash, a South Florida cover-up, a Playboy pinup and a behind-the-scenes cameo by President Hugo Chávez.

And yet, in 2011, while he was serving time in a Texas penitentiary for acting as an undeclared agent for the government of Venezuela, documents show that Durán became a customer of Mossack Fonseca.

And it would be another four years before the beleaguered law firm at the center of the Panama Papers shell company scandal realized it needed to dump the controversial figure.

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There’s nothing illegal about having an offshore entity. And according to documents and the Venezuelan courts, the nature of Durán’s international work might merit offshore operations.

But his involvement in the election scandal, his subsequent conviction and his jailhouse signature raise questions about how rigorously Mossack Fonseca followed Panama’s and its own “know your customer” rules. And his case sheds light on how chains of shell companies can obscure the ultimate owner.

The Miami Herald, in association with the International Consortium of Investigative Journalists, spent months poring over 11.5 million documents from the firm.

One has to peel back layers to find Durán’s fingerprints in the MF files.

In early 2012, Panama-based Infante & Pérez Almillano, a law firm that routed clients to Mossack Fonseca, set up a shell company in the British Virgin Islands called REFPROVEN LTD. Records show that the shareholder of that company was listed as REF PRO LTD, a Mossack Fonseca entity registered in BVI in 2010. The shareholder of REF PRO, in turn, was the Curaçao-based Redes Private Foundation, established in 2009.

Here’s where Durán enters the picture: On Feb. 22, 2011, while federal records show Durán was still in prison, he signed a document that gave him control of Redes. With Durán’s pen stroke, his ownership cascaded through companies, and Mossack Fonseca effectively began doing business with a convicted felon with an FBI dossier and a paper trail that stretched across two continents.

Calls to Mossack Fonseca went unanswered Thursday. Its offices were raided earlier this week by organized-crime prosecutors in Panama. But, in a statement on its website, the company said it conducts due diligence “at the outset of a potential engagement and on an ongoing basis” and that it routinely denies clients who are “compromised … or when we identify other red flags.”

The most cursory of web searches would have turned up Durán’s name, his four-year prison sentence and his role in the Argentina affair that became known as el maletinazo — or the suitcase scandal. But it's possible the web of offshore companies Durán controlled was so opaque that not even Mossack Fonseca knew who it was really working with.

“Because of the lack of regulation, there are jurisdictions and companies that will set up offshore entities without any identifying information,” said Shima Baughman, a professor of law at the University of Utah. “It doesn’t surprise me at all that someone sitting in federal prison could acquire a shell company. … It’s easier to get a shell company than to get a library card.”

In 2014, Baughman and her colleagues published a study showing that Panama was one of the world’s worst violators of international transparency regulations.

Cash Flight

Durán’s journey from entrepreneur to inmate began on Aug. 7, 2007, when a privately-chartered Cessna Citation flew from Caracas to Buenos Aires. On board were eight people, including Guido Alejandro Antonini, a dual U.S.-Venezuelan citizen who lived in South Florida.

Also on that flight, according to an FBI affidavit, was a suitcase with almost $800,000 in cash that had been put on board by an assistant to the CEO of Venezuela’s state-run PDVSA oil company. According to media reports, the cash was allegedly an illicit contribution from the administration of Hugo Chávez to the presidential campaign of Cristina Fernández de Kirchner, his ideological ally.

It was Antonini’s job to get the suitcase through customs. But when he couldn’t explain the money to Argentine authorities (he initially told them the case was full of books and documents), it was seized. As it turns out, the customs official who made the bust drew attention of her own. Thanks to the scandal and media limelight, María del Luján Telpuk ended up on the cover of Playboy in Latin America.

South Florida Squeeze

A few days after that alleged political donation failed, Durán and two other men purportedly traveled from Venezuela to South Florida to put the squeeze on Antonini. According to the FBI affidavit, Antonini was told to lie about the cash and say it was his.

Durán, known to carry an ID that identified him as a member of Venezuela’s Naval Intelligence, warned Antonini that if he didn’t stick to the story, Venezuelan and Argentine authorities would pursue him. Another man at the meeting was more menacing, telling Antonini that his children’s lives were at risk if he blew the whistle, records indicate.

“Franklin Durán further asserted to [Antonini] that people in Venezuela and Argentina wanted Antonini’s mess to be solved so that the truth wouldn’t come out,” the affidavit states. According to the document, the men were worried that Fernández’s presidential victory was at stake if the scheme were revealed.

In 2009, Durán and others were charged with acting in the United States as undeclared agents of Venezuela. Durán was sentenced in Miami federal court to four years in prison and fined $175,000, but he was released early, on June 3, 2011.

It’s unclear from the files what prompted Mossack Fonseca to take a second look at its storied client more than four years after he was on their books and six years after the scandal first broke. But in May of last year, in response to a query from MF, Durán sent a letter stating that his money came from two sources: his role as a board member of Industrias Veneco, a maker of petroleum-based lubricants; and as a founder of Ruibal & Durán, a company that has the distribution rights for Jacksonville-based Armor Holdings, which manufactures military, law enforcement and security gear. Armor was bought by BAE Systems in 2007.

On Sept. 23, 2015, Mossack Fonseca reacted. The company’s compliance department fired off an email to the Panamanian law firm that brought them Durán with details about the Argentina scandal, the conviction and the four-year sentence.

“In light of the information detailed above, we would be grateful if you would send us your comments as soon as possible,” the letter stated.

The following day, the law firm of Infante & Pérez Almillano responded: “We authorize you to resign, effective immediately, as the resident agents of the entity in question.” The firm goes on to flag three other companies “related to the same intermediary.”

Over the course of the next two weeks, Mossack Fonseca decided to dump all four companies: BETOXI, International Olefin and Petrochemical, REF PROVEN and REF PRO. It’s not clear from the documents what the connection is, if any, between the first two firms and Durán.

A call and email from the Miami Herald to Infante & Pérez Almillano asking for information were not immediately returned. And calls to Veneco and a Venezuelan phone listed as Durán’s went unanswered. But Durán is likely to see Mossack Fonseca’s decision to abandon him as one more low blow.

During the Miami trial, Durán always maintained his innocence, saying his crime was to “not send a letter” to the U.S. attorney general identifying himself as an agent of a foreign government. He also suggested the suitcase scandal was part of a larger U.S. plot to sully the socialist administrations in Venezuela and Argentina.

“I’m a man of principles and convictions, which were put to the test when they tried to force me to accept a set-up against the institutions of Venezuela,” he wrote in an open letter from his Texas prison cell, four months before he became a Mossack Fonseca customer. “Despite all the weight of the empire’s media, and having spent more than nine months in solitary confinement, I never gave up my values.”

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