WILL PROMINENT VENEZUELAN BUSINESSMAN BE CHARGED IN MASSIVE CONNECTICUT HEDGE FUND PONZI SCHEME ?

Francisco Illarramendi, the unregistered hedge fund advisor who pled guilty, two years ago, in Federal Court in Connecticut, to running a $500m Ponzi scheme, has had his sentencing rescheduled again, this time to 30 September, 2013. Though the official word is that his multiple changes in legal representation are the reason for the repeated sentencing delays, such delays are often due to the fact that a convicted defendant is engaged in cooperating with the authorities, to obtain a shorter sentence, and that said cooperation is incomplete.

Moris Beracha

The question on many minds is whether Moris Beracha, the wealthy Venezuelan businessman who has close ties to his country's government, has been, or will be, charged in the Illarramendi case,  where three other co-defendants have already pled guilty. Federal indictments are generally sealed, and not available to the public, until the defendant is taken into custody, and Sr. Beracha, who now resides in the Dominican Republic, has reportedly remained outside the United States recently, though he owns property there, so we cannot ascertain whether he is a defendant in that case, based solely upon public records.

Francisco Illarramendi

Beracha's business dealings with Illarramendi are alleged, in sordid detail, in a Federal civil suit*, filed by the court-appointed Receiver of the entities which Illarramendi operated, in connection with his Ponzi scheme. It is claimed that he received exorbitant fees, and kickbacks, for injecting fresh capital into the unregistered hedge funds that Illarramendi was managing, to pay investors, and the Receiver, citing a figure of $170m, alleges that Beracha's funding allowed Illarramendi to extend the life of his Ponzi scheme, to the damage and detriment of the victims, which include Pension schemes of PdVSA, the government-owned oil company.

The Receiver's suit alleges that Beracha engaged in:
(1) Fraud
(2) Unjust Enrichment
(3) Conversion
(4) Common Law Fraudulent Transfer
(5) Constructive Trust
(6) Breach of Fiduciary Duty
(7) Conspiracy to Breach Fiduciary Duty
A Demand for an Accounting was also included.

The attorneys for the defendants filed a Limited Appearance, to object to personal jurisdiction, improper service of process, and Forum non Conveniens ***. These motions have not yet been ruled upon, though attorneys for both sides have filed extensive citations to relevant authorities.

When the Court decides pending motions in the civil suit, we shall report back to our readers, and also shall in the event that additional defendants are named in the criminal case.
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* United States vs. Illarramendi, Case No.: 11-cr-00041-SRU (D Conn).
**Carney vs. Beracha, Case No.: 12-cv-00180-SRU (D Conn).
*** Inconvenient forum; it is a claim that the Connecticut Federal District Court should decline jurisdiction, as there is a more appropriate place to bring this action.