COLUMBUS, Ohio – A federal trial over a $100 million investors’ lawsuit against Venezuela includes allegations of fraud, hints of an international criminal conspiracy, and references to diamonds, German junk bonds and a mysterious house fire in Switzerland.
At issue in the 2004 complaint are three-decade old promissory notes issued by a now-defunct government-sponsored Venezuelan bank.
Venezuela has confirmed the debts belonging to an agricultural development bank known as Bandagro are the government’s obligations and must be paid, argue attorneys for Skye Ventures in Columbus, where the 2004 purchase of the notes happened.
“This case is straightforward: It’s about a bank’s refusal to honour a debt,” Charles Cooper, a Columbus attorney representing Skye Ventures, wrote in a Jan. 27 court document summarizing investors’ arguments.
Lawyers for Venezuela say the notes are fakes with forged signatures and were never guaranteed by the government.
“The evidence will show not only that the purported notes are fake, but also that the plaintiff seeks to capitalize on a long-running international fraud,” Albert Lucas, a Columbus attorney representing Venezuela, said in a Jan. 27 filing summarizing the Venezuelan government’s case.
The trial began last week before federal Judge Edmund Sargus and is expected to last four to six weeks.
The legitimacy of the promissory notes is at the heart of the case, which includes more than 700 individual filings and thousands of pages of documents.
Skye Ventures says it based its decision to purchase the notes on a 2003 opinion by the Venezuelan attorney general and a 2003 report by the country’s Ministry of Finance that said the notes were valid and must be paid.
Venezuela said that the opinion and report weren’t binding and that Skye Ventures had every reason to know the notes were fraudulent.
Venezuela says the fraud was perpetrated by “a notorious international criminal” who, before he died in a house fire in Switzerland, had previously been convicted of crimes related to fake Bandagro promissory notes.
Lawyers for the country also deny claims by Skye Ventures that a group affiliated with that criminal purchased such bonds “in exchange for ‘much more’ than $250 million, supposedly comprised of an unspecified combination of diamonds, German junk bonds and cash.”
“This is a farce. It never happened,” said attorneys for Venezuela.
In turn, Skye Ventures says Venezuela has created a story “that requires the listener to believe that an unbelievably wide-ranging conspiracy existed” to create fraudulent notes and later fool the country’s minister of finance and attorney general.
“The truth is, as always, much simpler,” said attorneys for Skye Ventures.
Before the case went to trial, numerous courts settled issues related to the timing of the complaint, whether Venezuela was immune from being sued and whether the case could be tried in the U.S.