Thin Veneer

The way the information reads it seems that this is the way Julius Baer does business?

A former Julius Baer banker, Matthias Krull was arrested in Miami in connection with a case involving an alleged $1.2 billion scheme to launder money embezzled from Venezuelan state-owned oil company Petróleos de Venezuela (PDVSA) using Miami real estate and false investments, according to US federal prosecutors. Krull is charged in a criminal complaint with conspiracy to commit money laundering, the DOJ said. Six more people were also charged in the case.

According to the DOJ statement, the conspiracy started in December 2014 with a scheme to embezzle about $600 million from PDVSA ‘obtained through bribery and fraud, and the defendants’ efforts to launder a portion of the proceeds of that scheme.’

‘By May 2015, the conspiracy had allegedly doubled in amount to $1.2 billion embezzled from PDVSA,’ the statement continued.

The criminal complaint charging the defendants alleges that money managers, brokerage firms, banks and real estate investment firms in the US and abroad were complicit in the scheme, ‘operating as a network of professional money launderers,’ according to the DOJ.

According to a criminal complaint filed in Miami federal court, Krull in his role at Julius Baer specialized in Venezuelan clients.

44-year-old Krull, previously worked at Credit Suisse and UBS and lived for a long time in Caracas, where he had excellent relationships with the very highest levels of society, including many politically relevant persons."

For security reasons Krull moved to Panama but he was still able to continue serving Venezuelan clients and ensured high cash flows at Julius Bär. In June Krull with five other senior Julius Baer bankers left the company to join Gonet & Cie. in the Bahamas.

A Gonet & Cie spokesperson confirmed that Krull would no longer be joining the firm.

‘The facts stated obviously have nothing to do with Gonet either near or far. Mr. Krull has not joined Gonet yet. It was anticipated that he would join by the end of the year, but in view of the facts […] this is no longer relevant,’ the spokesperson said.

US authorities became aware of the scheme when an unnamed ‘confidential source’ who had been involved in it surrendered 78 million euros that originated from a loan contract with PDVSA to law enforcement in 2016 and agreed to cooperate, according to the complaint.

Krull, according to the document, managed through Julius Baer ‘banking’ activities for Venezuelan officials and kleptocrats.

In October 2016, the complaint states, Krull met with the DOJ’s confidential source. Krull told the source he was seeking a bank to deposit $600 million on behalf of a client, a reported billionaire.

The DOJ source asked Krull for a contract to prove the source of the funds. In November 2016, Krull provided the informant with a document that linked the money to one of the fake loans connected to the case, according to the complaint.

Eventually, Krull representing Julius Baer agreed to use a scheme that involved fake investments set up by ‘professional money launderer’ Hernandez Frieri, who, according to the complaint, has used his Miami-based firms Global Security Advisors and Global Strategic Investments to launder money with false mutual funds in the past.

According to the document, Krull was allegedly involved in other money laundering schemes. One included a relative of a Venezuelan official ‘who needed a way to receive kickbacks from foreign law firms who had been hired by the Government of Venezuela,’ the document stated.

The Swiss Financial Market Supervisory Authority, Finma, opened an enforcement probe against Julius Baer earlier this year. Such a procedure is opened in case of abnormalities or indications of breaches of supervisory laws. In regard to the PDVSA affair, the bank is accused of not exercising due diligence while taking on and supervising clients.

Julius Baer bank is now linked to several corruption cases and possible money laundering matters — from football association FIFA to Brazilian companies Petrobras and Odebrecht, and now PDVSA. If the allegations against Krull are confirmed, it could be a serious problem for Julius Baer