According to Brazilian news outlet Agência Brasil, authorities in Rio de Janeiro recently uncovered a money laundering scheme in which…
According to Brazilian news outlet Agência Brasil, authorities in Rio de Janeiro recently uncovered a money laundering scheme in which state officials misstate the budget spent on food for state-run prisons. Bitcoin was reportedly used to exchange some of the scheme’s proceeds, which totaled roughly $22.4 million.
After the scheme was discovered, search warrants were issued to 28 different sites, with seven people having been arrested so far. Among those arrested are Rio de Janeiro’s former state secretary of Prison Administration, coronel Cesar Rubens Monteiro, and delegate Marcelo Martins, director of the Department of Specialized Police of the Civil Police.
Luíz Henrique Casemiro, Superintendent of the Internal Revenue Service in Rio, revealed this was the first time cryptocurrencies were used in such an operation. He stated (roughly translated):
"We drew attention, in the Federal Revenue, regarding this specific operation, because for the first time appear operations involving bitcoin. That's a novelty, it shows that people are trying to improve in some way, maybe fly below the Central Bank and the IRS’ radar.”
At least one state official claimed the scheme was spearheaded by Sérgio Cabral, a former Rio de Janeiro Governor who was sentenced to 14 years in prison last year over money laundering and corruption charges.
The money laundering scheme has reportedly been going on since 2001 after a company headed by entrepreneur Filipe Paiva, Induspan, was hired to supply snacks to state-run prisons. An initial contract with the company ended after being analyzed in 2010, as Induspan was charging above market prices, despite employing prisoners at very low rates.
After Induspan stopped supplying the prisons, Paiva created a non-profit organization dubbed Primus Initiative. Primus started supplying Rio de Janeiro’s prisons with snacks using Induspan’s rates.
According to a prosecutor of the state’s Anti-Corruption Action Group, Silvio Ferreira de Carvalho Neto, the price being charged for bread surged every time the contract was renewed, and in 13 years grew by nearly 1,000 percent. Moreover, the number of supplied snacks supposedly went from 55,600 to 83,600 per day, although the number of prisoners that needed to be fed remained the same.
The scheme, according to Carvalho Neto, netted Primus a total of $22.4 million between 2010 and 2015. At least $13.7 million were reportedly laundered through fake tourism and exchange companies. The official stated:
"They were set up or, above all, reactivate to receive the money. In that period, none of them had employees, bank or a service rendered. In fact, receiving amounts for shortly after withdrawing from the cash and transferring to foreign exchanges is a very clear signal that the appeal was paid without any consideration. "
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