Venezuelan insider singled out in corruption scheme spreads roots in Florida

By the time Venezuela ran out of toilet paper, the government officials that police investigators would later claim most profited by the supply shortage were already holding the positions inside the Nicolás Maduro regime that they needed to make millions, documents from a local police inquiry shows.

The toilet paper crisis of the mid 2010s, where the bathroom tissues literally held more value than some of the paper currency circulating in the troubled economy, is occasionally used by economists to explain how the country with the largest oil reserves in the world came to have one of the lowest standards of living in Latin America.

It is one more illustration of the crushing impact ill-conceived socialist policies, which in Venezuela drove local producers of consumer goods, including toilet paper, into bankruptcy. But it also shows how Venezuela’s economic collapse was spurred by widespread corruption, which siphoned billions from state coffers and which at times had links to South Florida.

A Venezuelan police investigation that was halted after the evidence began to point towards high ranking government officials found that shell companies registered in Venezuela and the U.S. were used to illegally obtain contracts totaling $125 million to import toilet paper in an emergency executive order issued by Maduro in 2014 to try to deal with the shortage, documents obtained by the Miami Herald shows.

The investigation claimed that the contract was awarded to shell companies controlled secretly by top officials at the Venezuelan Corporation of Foreign Trade, CORPOVEX, a state-run company that centralized most of the country’s imports. At the center of the alleged corruption investigation was the organization’s executive director, Jorge Amilcar González Vásquez, a well-connected Venezuelan Air Force officer turned businessman who now lives in Miami.

González Vásquez, who did not respond to messages left by the Miami Herald seeking comment, is among hundreds of Venezuelan government officials and members of the military who, after helping build Venezuela’s so-called Bolivarian Revolution, ended up moving, investing, or opening businesses in Florida, a stronghold of Venezuelan exiles who were forced to leave the South American country to escape persecution and dire economic conditions partly brought about by the regime apparatchiks now joining them.

Data obtained by the Venezuelan investigative site Armando.info and the Miami Herald show there are at least 232 members of the Venezuelan military or members of the country’s Defense Ministry who have opened companies in Florida. There are also more than 700 companies whose owners or directors are — or were at some point — mid-level or high-ranking officials in the Caracas socialist regime.

González Vásquez has wel- established roots in South Florida.

Property records show that Gonzalez Vasquez and his wife own a four-bedroom, 4,400-square-foot home in Doral currently valued at around $875,000, according to Zillow.com. His name also appears in a number of companies registered in Florida, including Exports Express LLC; Universe Logistics LLC, Risetop LLC and Vertu Style LLC.

But it was three other companies not under his name that were at the center of the Venezuelan police investigation. Two of them were shell companies registered in Venezuela — Inversiones Villaber 2007 and Representaciones Felther — and a third one, Sunflower Extra LLC, registered in Delaware.

The case file obtained by the Herald said that these shell companies not only were not qualified to conduct an operation of the scale required, but also that the contracts were awarded arbitrarily without following the regular bidding process.

Venezuela ended up importing toilet paper and toiletries at inflated prices, the investigation concluded, but the greatest benefit for the alleged members of the conspiracy was that the dollars to be used in the operation could be acquired at the official exchange rate of 6.3 bolivars per dollar, much more favorable than the 75-bolivar-per-dollar rate on the free-floating currency market.

“According to the information obtained, it can be seen that there is a well-formed organization of shell companies, whose modus operandi is well known, [and whose actions] could constitute a new fraud against the nation,” the case’s police file obtained by the Herald states, while pointing out that the Venezuelan companies had previously been suspended from the country’s national registry of providers.

“It is very respectfully recommended that… an administrative investigation be opened against [Major General] Giuseppe Yoffreda Yorio, president of CORPOVEX S.A, [that] an administrative investigation be opened against citizen Alejandro Fleming Cabrera, president of CENCOEX, (National Center for Foreign Commerce) [and that] an administrative investigation be initiated against citizen Jorge Amilcar González Vásquez, Executive Director of the Venezuelan Foreign Trade Corporation, S.A., CORPOVEX,” the investigators proposed at the end of their inquiries.

Yoffreda Yorio did not respond to emails sent by Armando.info asking for him to respond and Cabrera could not be reached to comment.

Corpovex was created in 2014 with the aim of centralizing state imports and the allocation of foreign currency, replacing the discredited and almost inoperative Foreign Exchange Administration Commission. That year Yoffreda began as president, and González Vasquez as executive director of the state entity.

The new entity, however, soon found itself involved in the same corruption scandals that plagued its predecessor and in September 2017, the U.S. Treasury Department’s Financial Crimes Enforcement Network issued an alert warning saying that Corpovex was one of a number of Venezuelan entities used as vehicles to move, launder and conceal embezzled corruption proceeds.

“Members of the regime and their allies direct government contracts to their associated companies to import goods and obtain approval from the Venezuelan Corporation of Foreign Trade (CORPOVEX) for foreign-domiciled companies — often shell companies — to participate in the import activity. Both the importers and the receiving government officials often divert a portion of the merchandise to the black market, where profits are higher,” Treasury reported in 2017.

The disparity between the official and the free-floating exchange rates also meant that any additional dollars coming out of inflated prices or hidden costs could easily be sold in the black market to make a killing in bolivars.

Corruption schemes surrounding Venezuelan foreign exchange controls over a decade are at the heart of a number of money-laundering trials conducted in South Florida involving hundreds of millions of dollars lost to the Venezuelan people. Former regime Planning Minister Jorge Giordani warned soon after he stepped down that losses due to these schemes surpassed $20 billion, but the subsequent schemes detected suggest that the real losses are much higher.

Rampant corruption and the destruction of the Venezuelan private sector — caused by the strict foreign exchange system and the introduction of price controls that forced companies to sell at below the cost of production — have often been blamed by experts for the nation’s economic collapse, which saw the economy shrink by more than 80% during the last decade.

The collapse led to what has been called the worst humanitarian crisis in Latin America’s history, which, added to the violence and persecution associated with the regime, forced more than a quarter of the population, nearly seven million people, to leave the country.

González Vásquez played a number of significant roles inside the Venezuelan government and was considered to be a rising member of the faction led by former congress president Diosdado Cabello, who until very recently was considered to be the second most powerful member inside the regime.

González Vásquez’s involvement dates back to 2006, when he was placed in charge of the main customs office at Maracaibo, Venezuela’s second largest city, before being appointed to other high posts.

His active role within the regime that routinely condemns the United States did not prevent him from deciding to purchase a home in South Florida, acquiring the Doral residence in 2012 for $435,000.

His business footprint in South Florida also began around that time. A “Jorge A. González Vásquez” appears as a director of the company GSI Exports Express LLC, incorporated in Florida in February 2011 and dissolved in September 2014, whose place of business matches the Doral home address.

The other companies followed, most of them suggesting involvement in the foreign trade business. While it is not known exactly when he finally moved to Florida after leaving his term inside the regime, he soon began to establish a long record in traffic court.

He has accumulated six traffic fines adding up to more than $1,000 and which in one instance involved running a red light.