April 8, 2010
SIX INDICTED IN $102 MILLION AGRICULTURAL COMMODITIES FRAUD SCHEME
(HOUSTON) – Six individuals have been charged as a result of their respective roles in an alleged scheme to defraud the United States Department of Agriculture (USDA) of millions of dollars for the export of agricultural commodities to Mexico, United States Attorney José Angel Moreno announced today along with Internal Revenue Service (IRS) - Criminal Investigations Special Agent in Charge Rodney Clarke, United States Postal Inspection Service (USPIS) Inspector in Charge Manuel Gonzalez-Latimer, Immigration and Customs Enforcement (ICE) Special Agent in Charge Jerry Robinette and USDA – Office of Inspector General Special Agent in Charge Abelino Farias Jr.
The sealed 16-count indictment charging mail fraud, wire fraud, making false statements to a bank or financial institution, bribery, conspiracy to commit mail, wire and bank fraud as well as conspiracy to commit money laundering was unsealed today following the arrests of four of six defendants. Joel Villalon, 49, of La Feria, Texas, Robert Wayne See, 56, of Houston; Jorge Eduardo Gonzalez Pizana aka Eduardo Pizana, 46, of Brownsville, Texas; and Javier Heriberto Hinojosa, 43, also of Brownsville, were arrested today and later appeared before U.S. Magistrate Judge John R. Froeschner. Each has been ordered released upon posting bond.Warrants remain outstanding for others charged but as yet not in custody - Fernando Pablo Villarreal Cantu, 57, of Monterrey, Mexico, and Jovenal Miranda Cruz aka Jerry M. Cruz, 62, of Manila, Philippines.
The scheme to defraud alleged in count one of the indictment involved loans guaranteed by USDA for exports of agricultural commodities from the United States to Mexico. The U.S. exporters and Mexican importers are alleged to have been related parties. The export companies applied and received USDA guarantees under the Supplier Credit Guarantee Program (SCGP) which they were ineligible to receive because of their relationship with the import companies. The guarantees were then assigned to financial institutions in the United States along with the promissory note signed by the importer. Once a guarantee was assigned, the exporter made draw requests against a line of credit established at the bank as a result of the exporter’s participation in the SCGP. Prior to funding, the exporter was required to provide evidence of an export, covered by the guarantee, to the financial institution. It is alleged that on numerous occasions beginning in 1998, the named export companies falsely reported exports to both the financial institutions and to USDA through wire transmissions and United States mail and/or through private commercial carriers. It is further alleged that the funds obtained as a result of the scheme were laundered to conceal and disguise the true nature, source, location, ownership and control of the proceeds.
Beginning in April 2005, each of the six export companies named in the indictment - U.S.A. Grain Co., U.S.A. Meat and Grain Co. Inc., Virgo Commodities Corp., Mid-Valley Grain Co., Alamo Feeders Inc. and The Laredo Grain Company - defaulted on their outstanding loans. The total amount of defaults by these six import companies exceeded $102 million.
The indictment alleges Cantu exercised control over the six export companies purchasing USDA guarantees as well as the six import companies providing promissory notes for credit. According to the indictment, See, worked in the grain business as the Export Sales Manager of Vista Trading and later incorporated Vista Grain and Corvus International to facilitate the export of grains on behalf of the six export companies affiliated with Cantu and to receive funds on behalf of Cantu. Cruz was a vice president of the Houston agency of BNP Paribas where he served as the manager of trade finance for general corporate banking. He was allegedly instrumental in establishing lines of credit and approving loans guaranteed by the USDA export program, as well as allegedly receiving bribes from Cantu proceeds which he funneled into various bank accounts to disguise the source of the funds. Pizana was a representative of several of the American export companies under the control of Cantu who participated in the USDA’s SCGP. Hinojosa is alleged to have incorporated one of the export companies, Virgo Commodities, and is alleged to have played a role in establishing two of the export companies used to apply for USDA guarantees under the SCGP. The sixth defendant, Villalon, worked for Cantu and functioned as the manager of one of the export companies and allegedly submitted documents to BNP Paribas in support of draw requests on the lines of credit.
The conspiracy to commit mail, wire and bank fraud alleged in count one and the mail and wire fraud counts alleged in counts two through four of the indictment each carry a possible punishment of up to 20 years imprisonment and $250,000 fine. Counts five through nine, making false statements to a bank, and counts 10 through 15, soliciting or paying a bribe to an officer or employee of a financial institution, each carry a possible punishment of up to 30 years imprisonment and a $1,000,000 fine. The money laundering conspiracy alleged in count 16 carries a possible punishment of up to 20 years imprisonment, a $500,000 fine or twice the amount involved in the financial transaction, whichever is greater.
The investigation was conducted by the IRS - Criminal Investigation Division, USPIS, ICE and the USDA. Assistant U.S. Attorney Melissa Annis is prosecuting the case.
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