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Thursday, May 23, 2024 | Back issues
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A Window into Venezuelan Politics

MIAMI (CN) - One of two Venezuelan oil millionaires convicted in connection with an Argentinean political scandal claims his Miami civil attorney, who represented both men, used his position to "secure information from, and feed misinformation to the plaintiff for the secret benefit of the preferred client," who got off with a lighter sentence.

The 23-page filing includes allegations that U.S. nemesis Hugo Chavez, the president of Venezuela, meddled in Argentine politics through what became known as the "suitcase scandal." The suitcase contained $800,000.

Franklin Duran sued Mario A. Lamar and his Miami law office, in Miami-Dade County Court, alleging malpractice, fraud and conversion. "The damages in question potentially reach into the millions of dollars," Duran says.

Duran says his complaint "arises from defendants' simultaneous, continuous and persistent legal representation of two clients that had an active and fundamental conflict of interest. In the context of this conflict of interest, defendants successfully feigned the role of honest broker, all the while using his fiduciary position of trust to both, [to] secure information from, and feed misinformation to the plaintiff for the secret benefit of the preferred client and to plaintiff's detriment."

Duran says Lamar represented him and his former business partner, Carlos Kauffman, who testified against him in his criminal case.

Duran served 42 months in prison; Kauffman, who is not a party to this case, did 13 months, according to the complaint.

Duran, a Venezuelan, was convicted in 2008 in Miami for acting as an unregistered agent for his country in a plot to deliver $800,000 in cash to the campaign of Argentinean presidential candidate Christina Fernandez de Kirchner.

Duran claims Kauffman, an exiled Venezuelan living in Miami, cooperated with the prosecution and testified against him in exchange for a lighter sentence and political asylum.

Though they had different criminal attorneys, "M. Lamar simultaneously served as a civil attorney for both Duran and Kauffmann in Florida," according to the complaint. "He did so regarding their joint-worldwide-commercial holdings and transactions for a period of time that began a few months after both men were arrested in connection with the criminal case on December 11, 2007, and continued until shortly after Duran completed his criminal sentence and returned to Key Biscayne in July 2011. Throughout the entire time that defendants continuously represented both men, Kauffmann and Duran had direct, conflicting interests that multiplied and became more acute, obvious, and irreconcilable with the passage of time."

According to the complaint, Duran's and Kauffman's criminal troubles began in 2007 when Argentine customs officials seized $800,000 in cash that Alejandro Antonini was carrying into the country in a briefcase.

"Within days, news of the seizure of the funds was reported in the Venezuelan media, generating a widespread media storm that became known as the 'suitcase scandal.' Various facets of the Venezuelan media claimed that the funds represented a secret donation by the Chavez government to the Argentinean presidential campaign of Cristina Kirchner. Other facets of the Venezuelan media inaccurately attempted to link the money to Industrias Venoco C.A., Venezuela's largest privately held petroleum products company owned jointly by Duran and Kauffmann. This allegation, in turn, created a business problem between Venoco and its principal supplier, PDVSA (Petroleos de Venezuela S.A.), which is an agency of the government of Venezuela," according to the complaint.


It continues: "From early August 2007 through December 11, 2007, acting upon the instructions of the FBI, Antonini planned and orchestrated a number of recorded meetings, including meetings with Kauffmann and Duran regarding his misadventures in Argentina. Duran and Kauffmann attempted to persuade Antonini to secure counsel in Argentina to resolve his problem there and to put an end to the scandal that was affecting Venoco's business. It was the government's contention that Duran and Kauffmann did so while acting as unregistered agents of the DISIP, the Venezuelan Intelligence and Prevention agency. Duran's defense was that he was pressing Antonini to hire an Argentine lawyer for his own business reason to end the scandal that was affecting Venoco's business in Venezuela.

"Kauffmann initially maintained the same position in the criminal case as Duran. He soon changed his position, however, and pled guilty to a reduced charge. He was promised a reduced sentence upon the condition that he would testify against Duran in the criminal case. Kauffmann's testimony was that he and Duran, as partners, made their considerable fortunes in Venezuela corrupting government officials. He also testified that they were acting as agents for the Venezuelan government in the Antonini matter in expectation of securing payoffs from the Venezuelan government."

Duran adds: "At the time of their arrest, Kauffmann and Duran were in effect 50-50 business partners over a sprawling, very significant and very lucrative business empire worth tens of millions of dollars, if not more. The business empire contained dozens of businesses together with significant land holdings, stocks and bank accounts. ...

"Of the investments that Duran and Kauffman held together on a 50-50 basis at the time they were arrested in December 2007, there were several that stood out for their size or required prompt oversight and attention. Among these were an investment account with the Smith Barney firm that held tens of millions of dollars, the various companies that made up Venoco, two private jets, an approximate 10-million-dollar investment in a yacht distributorship ('Oceanika'), and other significant and valuable land holdings.

"Kauffmann and Duran had different criminal attorneys representing their different criminal interests since the time of their arrest. However, the same was not true of their first civil attorney, Lamar. Duran and Kauffmann hired him together and agreed to share the cost of Lamar's legal fees on a 50-50 basis as to the assets they held jointly. Defendants were first hired by both Duran and Kauffmann shortly after Kauffmann pled guilty and agreed to testify against Kauffmann on February 29, 2008.

"Defendants were hired by both men to deal with issues facing the joint investments identified above, together with other issues related to the parties' joint investments that would emerge from time to time. Duran and Kauffmann each paid defendants a retainer of $125,000. Duran paid defendants the $125,000 retainer in or about March 2008.

"The pattern thereafter emerged between defendants and their clients, Duran and Kauffmann, where defendants abandoned their alleged neutrality and nonpartisan promises to their clients and began favoring Kauffmann.

"At first, they did so slowly and imperceptibly. However, defendants' partisan advocacy for Kauffmann picked up speed and became more pronounced with the advent of important dates in the criminal case. Eventually, defendants gave explicit notice to Duran that they would only represent Kauffmann against Duran as to specific joint assets that Duran and Kauffmann were dividing. However, even in this context, defendants promised and represented to Duran that they could and would continue their joint representation of Duran and Kauffmann regarding those of their clients' joint assets that they were not then specifically negotiating against Duran in an honest, nonpartisan and fair manner.


"Defendants' evolution into Kauffmann's partisan within the context of their joint representation of Kauffmann and Duran occurred within the background of Kauffmann's continuing cooperation with the United States government to help it convict Duran in a very high-profile case where Duran refused to plead guilty and Kauffmann's testimony became the linchpin to the government's criminal case against Duran.

"In addition, the specific nature of Kauffmann's testimony against Duran that he and by extension Duran made their fortunes through corrupt practices in Venezuela, significantly magnified the conflict between the two men regarding their commercial relations. After his testimony, Kauffmann could never return to Venezuela or openly have Venezuelan interests. The same, however, was not true for Duran, who contested the testimony as an unsubstantiated fabrication. Consequently, Kauffmann's interest regarding the division of his partnership with Duran had two overriding goals and one basic assumption. The first goal was to secure as much cash outside of Venezuela as possible from the division of those joint assets that required negotiations with Duran. The second goal was to hide and thereafter steal those assets from Duran that could be kept hidden from Duran, or that once found out, Duran would be powerless to contest. These were assets that Kauffmann had primary control of or could secure control of while Duran was incarcerated and he was free and in the Unite States.

"In their representation of Duran, defendants assisted Kauffmann to achieve the commercial goals Kauffmann was seeking to achieve against Duran. They did so in two ways. First, they used their fiduciary position of trust to feed lies and misinformation to Duran on behalf of Kauffmann to help Kauffmann secure concessions against Duran regarding the specific assets that the two men were dividing. For example, defendants would knowingly lie to Duran about the value and status of assets that Kauffmann controlled so that Duran could not use his 50 percent share of such assets as offsets to the cash Kauffmann wanted Duran to pay him for assets that Kauffmann wanted to liquidate.

"A specific example of this would be lies made by defendants to Duran regarding payments they knew Kauffmann had received from other investments, including Oceanika, but which defendants specifically informed Duran had not arrived or been received. Thus, rather than Duran demanding payment of his share of such received funds, or negotiating or demanding that he receive a credit for his share of such payment into the calculations of monies he was paying Kauffmann in the liquidation of other assets, Duran got neither. Instead, he ended up paying more cash out of pocket to Kauffmann for the division of specific assets than what he should have paid. Moreover, defendants continue to deny that Kauffmann was paid or secured monies from investments on which Duran is owed 50 percent, despite evidence to the contrary.

"A potentially blatant example is the case of the monies owed Duran from the Oceanika investment. Here, defendants not only knew and lied to Duran about monies that Oceanika paid Kauffmann, but also physically assisted Kauffmann in doing so by accepting Oceanika monies into their trust account at the same time they were jointly representing both Duran and Kauffmann regarding their joint Oceanika investment. Unbelievably, it is very likely defendants did so at the very same time that they were negotiating for Kauffmann against Duran on the division of other assets.

"As with the status of the Oceanika investment, defendants have likely lied to Duran regarding their knowledge of monies that Kauffmann has received or is hiding from Duran on which Duran is owed a 50 percent share.

"The other separately inappropriate consequence of defendants' joint representation of both men was that M. Lamar had conversations with Duran regarding Duran's views and thoughts about the various assets he held jointly, that he almost certainly advised Kauffmann about, as Kauffmann and defendants planned a strategy against Duran regarding the division of the parties' multimillion-dollar joint holdings that defendants spearheaded against Duran on behalf of Kauffmann.

"M. Lamar never thought that his treachery against Duran and in favor of Kauffmann would be found out and brought to light because he was confident that Duran would be banished to Venezuela after his incarceration without the ability to sort out defendants' misdeeds on behalf of Kauffmann. M. Lamar never counted on Duran being provided a period of time in the United States after his incarceration to see to his business affairs here, including uncovering the potential smoking-gun evidence that Oceanika made direct payments to defendants' trust account of approximately $250,000 at the time defendants represented both men jointly. Duran was told this directly by one of Oceanika's principal[s], Francisco Ibanez."

In sum, Duran says: "As a result of each and every one of defendants' breaches of fiduciary duty, Duran was damaged in that he overpaid millions of dollars in his division of assets with Kauffmann. This was because defendants assisted Kauffmann in hiding from Duran, millions in joint assets that Kauffmann controlled or knew he would be able to control. This prevented Duran from either collecting his share of such assets directly, or claiming such share as a 'set off' to the monies Duran would end up paying Kauffmann on those assets previously divided."

Duran seeks return of his attorney fees, an accounting of the money Lamar received from any business Duran in which has an interest, and damages of 50 percent of all money received in trust from Oceanika.

He is represented by Leoncio de la Pena.

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