Execs Duck RICO Claims over $1B Venezuelan Energy Deals

A New York federal judge on Monday trimmed racketeering and conspiracy claims from a former U.S. ambassador's civil lawsuit against three energy executives accused of bribing their way into Venezuelan energy construction contracts worth $1 billion.


Caracas, Venezuela -- (ReleaseWire) -- 08/28/2014 --U.S. Judge J. Paul Oetken said that former ambassador Otto Reich, who owns a company with interests in Venezuela, failed to plead a sufficient pattern of illegal activity to put the trio on the hook for violating the Racketeering Influenced Corrupt Organizations Act. Of the predicate acts that may add up to RICO, two exist in this case, according to the court: wire fraud and violations of the Travel Act.

Reich also failed to show that the defendants intended to profit from hurting his reputation and business via wire fraud and defamation, the decision found.

"Without relatedness between the bribery and the wire fraud, each must be judged independently," Judge Oetken wrote. "Neither is sufficient to plead a RICO claim on its own."

The judge also dismissed a conspiracy claim because without actual RICO violations, there can't be a conspiracy to commit RICO violations. The claims were dismissed with prejudice.

"We never thought this was a RICO case. We thought it was an abuse of the RICO statute, so we're very pleased with this decision," Joseph A. DeMaria of Fox Rothschild LLP, who represents Trebbau Lopez.

"Given that the litigation is in its early stages, Mr. Reich's last remaining claims involving Mr. D'Agostino – those of alleged defamation – have not yet been dismissed, but given that they also lack merit, we look forward to vigorously pursuing their dismissal, as well," added Shawn Rabin, an attorney for D'Agostino.

Counsel for Reich wasn't immediately available for comment.

After his retirement as ambassador in 2004, Reich frequently spoke out about corruption in Venezuela and assisted various companies and groups in Venezuela, often those opposed to the regime of former president Hugo Chavez. His business, Otto Reich Associates LLC, also had interests in Venezuela.

Reich filed a complaint in 2013 claiming Derwick Associates execs Leopoldo Alejandro Betancourt Lopez and Pedro Jose Trebbau Lopez, as well as their alleged partner Francisco D'Agostino Casado, offered Venezuelan officials “multimillion-dollar kickbacks” to secure lucrative contracts to construct power plants in the country and siphoned millions off the agreements into personal accounts. He also accused the defendants of lying to companies that Reich had worked with them in order to make him lose clients.

According to court documents, Reich began working with Venezuelan bank Venezolano de Credito SA Banco Universal during its dispute with the defendants, who had filed a $300 million defamation lawsuit against it in Florida because bank officials were critical of the businessmen. Reich claims the defendants tried in vain to bribe him to not help the bank.

Afterward, they allegedly represented to Venezolano executives that Reich worked for them, which caused the bank to stop talking to Reich and his company, Reich said, adding that the execs allegedly did the same with one of his clients, causing him to break relations with ORA.

Venezolano de Credito settled the defamation suit against it in April. Details of the settlement were not made public.

In that suit, filed in September, Derwick had claimed that Oscar Garcia Mendoza, the bank's president and board chairman, enlisted employees to operate the website He and others allegedly used the site to accuse Derwick's directors of money laundering, extortion and other offenses — allegations the complaint said were read and disseminated by an international audience.

One statement accused Derwick of participating in a "criminal group that [has] amassed a pot of up to about $2 billion," and another claimed the company was under investigation by U.S. intelligence agencies. These claims destroyed Derwick’s relationship with investors and could cause the company to founder, the complaint alleged.

Derwick maintained that every allegation on Mendoza’s website was false, and that Mendoza and his employees started the website with the “intentional, unlawful and malicious purpose of attempting to injure and destroy plaintiffs’ personal, professional and business reputations.”

The Derwick's directors are: Francisco Convit Guruceaga, Edgard Romero Lazo, Iker Candina, Alejandro Betancourt López and Pedro Trebbau López.