Columbus, Ohio: A federal judge on Friday rejected a $100 million (Dh 367.20 million) investors’ lawsuit against Venezuela in a case that included allegations of fraud, hints of an international criminal conspiracy and references to diamonds, junk bonds and a mysterious house fire in Switzerland.
At issue were 3-decade-old promissory notes issued by a now-defunct government-sponsored Venezuelan bank.
Lawyers representing Venezuela said the notes were 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 capitalise on a long-running international fraud,” Albert Lucas, a Columbus attorney representing Venezuela, said in a January 27 filing summarising the Venezuelan government’s case.
Judge Edmund Sargus agreed, calling the notes fraudulent in a 101-page opinion and saying the “bank in question never issued the debt and received no consideration for it”.
Sargus presided over a trial lasting nearly five weeks this year after Skye Ventures’ 2004 lawsuit survived multiple legal challenges.
Andrew Schwartz, whose firm Foley Hoag LLC represents Venezuela in the case, said the ruling is “a significant victory for Venezuela and its citizens”.
“Venezuela has long maintained that the notes are fraudulent, and the Court’s decision fully vindicates Venezuela’s position,” Schwartz said in a statement.
Chip Cooper, a Columbus attorney representing Skye Ventures, said the company was still reviewing the lengthy decision and couldn’t immediately comment.
The legitimacy of the promissory notes was at the heart of the case, which included more than 700 individual filings and thousands of pages of documents.
Skye Ventures said 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 believe the notes were fraudulent.
Siding with Venezuela, Sargus noted in his decision that even a Skye Ventures lawyer “believed that the question of the validity of the notes was an extremely close call”.
Sargus pointed out that Skye Ventures itself discovered evidence that the notes weren’t valid.
Venezuela said the fraud was perpetrated by “a notorious international criminal” who, before he died in a house fire in Switzerland, had been convicted of crimes related to fake Bandagro promissory notes.
Lawyers for the country also denied 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.”
In turn, Skye Ventures said Venezuela 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.
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 US.
