Sunday, April 27, 2014


The recent filing of personal bankruptcy, by a noted British financial professional, due to his reported involvement with a $3bn fraudulent Venezuelan bond, reminds us that there are more counterfeit, and outright fraudulent, Venezuelan Government bonds and financial instruments out there, than there are genuine ones. Please, due to the high incidence of fraud, avoid any and all Venezuelan paper like the plague.

It seems that investors are failing to perform even the most rudimentary forms of due diligence on bonds being offered for sale. Here are some of the red flags:

(1)  The official language of the Bolivarian Republic of Venezuela is Spanish; any "original" document in English is probably part of a scam.

(2) Are there any typos, grammatical errors, errors in syntax, errors in the fill name of the relevant agencies, or title of officers, with their full legal names ? Bank counsel always double- and triple-check their documents, especially financial instruments, as mistakes can be extremely costly, and potentially effect the legal interpretation of an instrument. If there are errors, it is a fake.

(3) Have you independently verified, through a trusted third party, the bona fides of the instrument, including whether the signatures are genuine ?

(4) Has the seller/holder/vendor shown you a bill of sale, evidencing exactly how he or she obtained ownership of the instrument ?

(5) Is the issuing entity or agency legally authorized to issue the instrument ? Did you contact them ? Some fraudsters are even working inside the issuing Venezuelan government agencies; watch for this.

(6) Have you ruled out the possibility that it is merely a very good color copy of the original ? Watermarks, holograms, or other means of authentication, please.

The risk levels for ANY Venezuelan financial instrument that is being offered for sale, from anyone, is extremely high at the moment, and I advise you to ignore any such offers, period. There are far too many fraudsters out there hawking counterfeits.  

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