BRIDGEPORT, Conn. – A Venezuelan-American hedge fund manager was sentenced Thursday to 13 years in prison for running a Connecticut fraud scheme involving hundreds of millions of dollars from Venezuela’s state oil company.
Francisco Illarramendi expressed remorse but told the judge he should not be considered a typical Ponzi scheme artist, arguing he committed his crimes only to cover up investment losses under pressure from corrupt Venezuelan government officials.
“This is certainly not Bernie Madoff,” the balding, heavyset 45-year-old Illarramendi said before he was sentenced in federal court in Bridgeport.
Despite the apology and Illarramendi’s work to help recover investment losses, Judge Stefan Underhill noted the defendant took $20 million for himself and disregarded an asset freeze after pleading guilty by using a state tax refund to pay off his Mercedes-Benz rather than reporting it to federal authorities.
Illarramendi pleaded guilty in March 2011 to several counts of fraud and conspiracy to obstruct justice.
As the director of several funds in Stamford, prosecutors say Illarramendi lied repeatedly to investors and creditors as he tried to cover up investment losses exceeding half a billion dollars. A court-appointed receiver recovered much of the money, but the judge said it was still unclear exactly how much the victims would lose.
Prosecutors urged Underhill to sentence Illarramendi to at least 12 years in prison. Illarramendi argued he deserved no more than six months of home confinement in addition to the time he’s already spent in jail. He was initially free on bail, but Underhill ordered him locked up after the court discovered in January 2013 that he spent the state tax refund.
The 45-year-old son of a former Venezuelan diplomat, Illarramendi has lived in the U.S. for years and developed an expertise in Latin American financial markets, serving for a time as an adviser to Venezuela’s oil company. As part of the fraud, prosecutors say, Illarramendi paid millions of dollars in bribes to Venezuelan government officials to reward them for steering the oil company’s money to him for investment.
Venezuelan officials have said the state oil company, Petroleos de Venezuela, ended a contract with Illarramendi in 2004, a year before the scheme began.
An attorney for the state oil company, Jerome Fortinsky, told the judge that his clients are victims and that anybody at the oil company who took a bribe was a “rogue” employee.
“We emphatically reject the defendant’s repeated efforts to slander PDVSA and government of Venezuela by claiming they had unclean hands or were somehow responsible for his criminal conduct,” he said.