Venezuela's Central Bank Probes Effor...

Venezuela's Central Bank Probes Effort to Sell Bogus Bonds

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Since: Jul 11

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#1 Nov 17, 2011
Venezuela's Central Bank Probes Effort to Sell Bogus Bonds
Nov. 13 (Bloomberg)-- Venezuelan authorities are investigating an attempt by four people to cash $250 million of bonds that the central bank says were fraudulently issued in its name, said three bank officials who asked not to be named.
Some of the 15-year notes -- each with US$25.000.000.00 printed in red ink on top and the central bank's seal beneath in black -- had
certificate numbers that matched bonds promoted in a 52-page prospectus distributed by Coral Gables, Florida-based Capital Investment Services Inc. The central bank said in a statement that it never hired the firm and has asked U.S. authorities to assist in the probe.
Robert Escobio, president of Capital Investment, said he was asked by the central bank to sell the bonds and met with officials at the bank's Caracas headquarters as recently as Oct. 14.``We're in a state of shock,'' Escobio said in a telephone interview with Bloomberg News.``If it were a scam, the only ones who could have benefited would be the central bank.''
The investigation may hinder Venezuela's efforts to raise almost $3 billion from international bond sales next year, said Erik Bruun, who helps manage $25 million of emerging-market assets, including Venezuelan bonds, at Lenox Capital Inc. in Great Barrington, Massachusetts. The country needs to borrow money to finance a growing budget deficit after a two-month strike idled the oil industry and caused the economy to contract 19 percent in the first half of the year.

Since: Jul 11

Location hidden

#2 Nov 17, 2011
Part 2
`Legal Actions'
``The central bank of Venezuela is advancing legal actions and cooperating with the investigations that authorities in Venezuela and the U.S. have opened in relation with the attempt to commit fraud,'' the central bank said in a statement.
Central bank spokesman Txomin Las Heras declined to identify the four individuals who were questioned by police and then let go or say which U.S. regulators were participating in the probe. U.S. Securities and Exchange Commission spokesman John Nester, U.S. Office of the Comptroller of the Currency spokesman Dean Debuck and Department of Treasury spokesman Taylor Griffin declined to comment.
Two Venezuelan federal investigators yesterday visited the Caracas office of Bloomberg LP, the parent company of Bloomberg News,
seeking information on how some of the bonds were listed in Bloomberg's database. Bloomberg spokeswoman Chris Taylor said a
description of the 13 5/8 percent dollar-denominated bearer bonds due Sept. 14, 2018 was posted on Oct. 24. Taylor said the listing was removed four days later at the request of the central bank.
Three-Year-Old Company
Escobio said his company, which was formed three years ago and has seven employees, has previously arranged preferred share sales for
companies. The proposed debt sale was ``our first venture in bond offerings,'' Escobio said. Escobio said he never sold any of the bonds and was waiting for final central bank approval to do so.
Capital Investment Services is a member of the NASD, a financial-services regulatory organization that changed its name from the
National Association of Securities Dealers in June 2002. Capital Investment's clients include American Ammunition Inc., a Miami-based manufacturer that sells to the U.S. government and exports to Latin America and other regions. Escobio is responsible for American Ammunition's investor relations, Andres Fernandez, the company's spokesman, said through his secretary.
According to an NASD Web site that describes the background of its members, Escobio worked for Smith Barney Inc. between 1991 and
1996. Before his current position, he worked at Brill Securities. He is also an instructor at ADF Airways, Inc., a pilot training school based in Coral Gables, the Web site said.
Dollar Bonds
The central bank needs to determine whether its officials participated in the fraud, said John Shockey, a retired special assistant with the Office of the Comptroller of the Currency. Shockey has led investigations and prosecutions of promoters of so-called prime bank note frauds.
``The possibility of collusion with central bank personnel dictates that the central bank conduct a thorough internal investigation,'' Shockey said in a telephone interview from McLean, Virginia.``The central bank would not engage a very small, relatively new brokerage firm in the U.S. to become involved in such a transaction.''

Since: Jul 11

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#3 Nov 17, 2011
Part and final part (3)

Venezuela's central bank only sells bonds denominated in bolivars, the domestic currency. The Finance Ministry sells the government's
dollar-denominated debt. No public agency in Venezuela sells dollar bonds in bearer form, which are payable to those holding the securities.
Increased Borrowing
President Hugo Chavez's administration has stepped up its borrowing as the country's budget deficit may more than double as a percentage of gross domestic product to 3 percent next year, according to the Finance Ministry. Venezuela this year sold $1.5 billion in 10-year dollar-denominated bonds outside the country. The yield on Venezuela's benchmark 9 1/4 percent bond due 2027 has fallen this year as oil prices have climbed. The bonds now yield about 11.53 percent down from 15.7 percent in January.
Bruun at Lenox Capital said the possibility that fraudulent central bank securities were sold ``doesn't help'' inspire confidence among investors.``One of the essential risks of Venezuela is that it's become a sketchy country and this is further evidence of that,'' he said.
The prospectus prepared by Capital Investment, dated Oct. 17, 2003, was fake, said the central bank officials who asked not to be named.
The document says the bearer bonds aren't registered anywhere and can't be sold to U.S. individuals.
Signatures
Capital Investment sent Bloomberg the prospectus, as well as a one-page ``validation'' letter dated Oct. 22, 2003 on central bank
letterhead. The letter bears the signatures of Jose Leonardo Nunez, the central bank's legal counsel, and Luisa Viso, a lawyer who is his assistant. It also named David Contreras as a contact person in the bank's department of control and supervision.
Central bank officials who asked not to be identified said the signatures were falsified. They said there is no employee named David Contreras and no department of control and supervision of operations. They said bank officials first spoke with Escobio on Oct. 28 when he demanded payment of a fee for preparing the prospectus. Nunez and Viso declined to comment.
``People I met at the bank are all of a sudden saying they never met me,'' Escobio said.``It's their bonds. They are the ones who told me to do this. They have to pay me.''
1998 Offering
The prospectus prepared by Escobio says the central bank is selling $185 million of securities that were part of a $500 million offering authorized in 1998 by former Venezuelan President Rafael Caldera. According to Bloomberg data, Venezuela sold all $500 million of those 13 5/8 percent bonds in 1998. Those bonds were sold by the Finance Ministry.
Central bank officials said some fraudulent bonds may be in circulation because the four people who sought to cash in the securities presented three of the nine obligations described in the prospectus prepared by Capital Investment. Those notes they presented had a face value of $75 million. In addition, they sought to cash other securities that matured in 2018 with a face value of $175 million.

http://www.bloomberg.com/apps/news...
Cheever

United States

#4 Nov 18, 2011
You are a flaming idiot and this becomes more apparent every day. This is an internal financing situation and has nothing to do with Hugo or anything that is ever posted here. It is a bond offering that happens hundreds of times every day in every country. Reuters will confirm that and how do you think countries subsidize their infrastructure??? BONDS!!!. This happens all the time...unfortunately but as uusal......you are mixing apples and oranges. The end.FIND BUYERS FOR lTNS ETC. Nobody neeed you to monitor thew world.

Since: Jul 11

Location hidden

#5 Nov 18, 2011
Peter Tucker, once again, you show lack of experience and you are dipping your toes into a lake foreign to you. Your comments not only show ignorance, but proves your opinion is one to be ignored by all.

Give it a rest ignorant fool.
Cheever wrote:
You are a flaming idiot and this becomes more apparent every day. This is an internal financing situation and has nothing to do with Hugo or anything that is ever posted here. It is a bond offering that happens hundreds of times every day in every country. Reuters will confirm that and how do you think countries subsidize their infrastructure??? BONDS!!!. This happens all the time...unfortunately but as uusal......you are mixing apples and oranges. The end.FIND BUYERS FOR lTNS ETC. Nobody neeed you to monitor thew world.
peter tucker

United States

#6 Nov 18, 2011
What a boring repetitive, condescending scuzz ball. YOU HAVE NO IDEA WHAT WHO DRIVES WORLD MARKETS. Grow some hair and use a real name. AOL????? Give me a break. Gone beyond dial up yet???

Since: Jul 11

Location hidden

#7 Nov 19, 2011
peter tucker wrote:
What a boring repetitive, condescending scuzz ball. YOU HAVE NO IDEA WHAT WHO DRIVES WORLD MARKETS. Grow some hair and use a real name. AOL????? Give me a break. Gone beyond dial up yet???
Ignorant fool.
peter tucker

United States

#8 Nov 19, 2011
You are so redundant and limited...it is ridiculous..like pushing the button on one of those talking dolls: loud, but say the same thing over and over, and over etc.

Since: Jul 11

Location hidden

#9 Nov 19, 2011
peter tucker wrote:
You are so redundant and limited...it is ridiculous..like pushing the button on one of those talking dolls: loud, but say the same thing over and over, and over etc.
Amazing! By now I expected you to be so drunk you could not be able to hold the sitting position and you would be flat on your face in the middle of your bedroom. I guess in a few more minutes it will happen.

Cheers joker broker drunk!

Since: Jul 11

Location hidden

#11 Nov 21, 2011
peter tucker

United States

#12 Nov 22, 2011
Almost funny...Mr. Jersey Shore
Nuisance Busters

Saint Louis, MO

#13 Nov 22, 2011
Peter Tucker,

Ya barking up the wrong tree.

Frauds involving bonds are on the rise.

Too many have been taken in by swindler peddling fake Venezuela's bonds. Includes Mexicans, Germans and Chinese bonds on the list.

Kudos for David to post the article and the link here for those that are not on Bloomberg's mailing lists
peter tucker

United States

#14 Nov 22, 2011
Whatever...another cave dweller appears with a clever name

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