Former Nodus International Bank CEO Tomás Niembro Concha has been sentenced to over nine years in prison for orchestrating a multimillion-dollar fraud scheme and evading sanctions against Venezuela. The Spanish and Venezuelan national, who led the Puerto Rico-based bank, will serve 112 months in prison followed by three years of supervised release. Judge Kathleen M. Williams also ordered him to forfeit more than $16.9 million in proceeds from the fraud conspiracy.
Collapse of Nodus Bank
Nodus International Bank, founded in 2009 and largely operated by Venezuelans, collapsed in 2023, leaving approximately $80 million in deposits frozen. Hundreds of customers, including many Venezuelans residing in South Florida, have struggled to reclaim their funds.
The case has deep connections to Miami. Prosecutors revealed that Niembro and former Nodus Chairman Juan Francisco Ramirez, also from Miami, exploited the bank to siphon $11 million from a Miami-based lender to benefit themselves. Both men owned Nodus Finance, a Miami company instrumental in the fraudulent activities.
Pleading Guilty
On March 19, Niembro pled guilty to conspiracy to commit wire fraud and conspiracy to violate the International Emergency Economic Powers Act. Assistant Attorney General A. Tysen Duva stated that Niembro abused his position for personal gain and to evade U.S. sanctions.
According to court documents, Niembro and his associates concealed the benefits they received from investments and loans from other board members, executives, and Puerto Rican regulators, breaking Puerto Rican law.
Details of the Fraud
From 2017 to 2023, Niembro and Ramirez engaged in activities that ultimately allowed them to borrow $11 million from the bank for their own personal use, disguising these actions as legitimate investment activities.
Between January 2018 and September 2021, they convinced the bank’s board and comptroller to buy 47 promissory notes worth around $25.3 million from Nodus Finance, using the funds for personal expenses like mortgages and credit-card bills.
As of early March 2023, Puerto Rico’s Office of the Commissioner of Financial Institutions had informed Nodus that it was heading towards liquidation. Niembro and Ramirez attempted to manage their debt by accepting loan portfolios from Nodus Finance.
Ramirez’s Role and the Scheme
Ramirez, 60, pled guilty last year to conspiracy to commit wire fraud linked with this scheme. He agreed to forfeit at least $13.6 million but has yet to be sentenced. His lawyer requested the scheduling after Niembro’s sentencing, highlighting Ramirez’s cooperation with prosecutors.
Evasion of Venezuela Sanctions
Niembro also conspired to violate U.S. sanctions on Venezuela between 2021 and 2023. He engaged in unauthorized financial transactions with a person designated by the Treasury Department for supporting Venezuela’s state-owned PDVSA. The Justice Department did not disclose the individual’s identity.
Despite foreclosure authorization, Niembro arranged a secret agreement for the property resale through a front company, violating sanctions.
Charles Miller, acting special agent in charge of IRS Criminal Investigation’s Florida field office stated, “The defendant’s scheme extended beyond fraud to include evading U.S. sanctions designed for national security protection.”
Impact on Depositors
Customers dealt with uncertainty over trapped funds for years. As U.S. sanctions on Venezuela expanded, banks hesitated to serve Venezuelan customers, leaving Nodus as a crucial alternative.
By 2024, $80 million remained frozen. Nodus, having been chartered as an international bank in Puerto Rico, lacked FDIC insurance, causing significant losses.
Venezuelan businesswoman Adelaida Cedeño expressed feeling victimized after losing $35,000 deposited at Nodus. She noted fraud allegations threatened her international trade business.
Nodus experienced more trouble after the Treasury Department deemed it had violated U.S. sanctions related to Venezuela. Subsequent liquidation was handled by Puerto Rico’s financial authorities.
Puerto Rican regulators uncovered irregular payments to directors and shareholders against liquidation plans. They revoked shareholder participation in liquidation and considered remedies for damages.
Attorney Carlos Calderon voiced depositors’ worries about recovering minimal funds, stating, “The losers were the account holders.”