The headquarters of PDVSA, Venezuela’s state oil giant, in Caracas (Federico PARRA)

Miami (AFP) – The United States has arrested two people in a ring of ex-officials and business people who laundered $1.2 billion in funds from Venezuela’s state oil firm, authorities said Wednesday.

With Venezuelans living with grave shortages of food and services, oil firm PDVSA — the country’s cash cow — was widely used for the financial gain of regime-defiers.

“The alleged conspirators include former PDVSA officials, professional third-party money launderers, and members of the Venezuelan elite,” a federal indictment in Florida’s second district said.

The suspects’ conspiracy allegedly began in December 2014 with a currency exchange scheme designed to embezzle around $600 million from PDVSA, through bribery and fraud, that also saw them launder some proceeds.

They maximized profits by taking advantage of access to the favorable rates of the Venezuelan government’s foreign currency exchange system, converting bolivars to dollars.

By May 2015, the conspiracy had allegedly doubled in value.

Matthias Krull, a German national, and Gustavo Hernandez Frieri, a Colombian, were arrested between Tuesday and Wednesday in Miami, Florida, and in Italy.

The indicted Venezuelans, meanwhile, are Francisco Convit, shareholder of energy company Derwick Associates; Carmelo Urdaneta, former petroleum and mining ministry legal advisor; Abraham Ortega, ex-PDVSA staffer and Jose Vicente “Chente” Amparan, a businessman and “professional money launderer” with links to Spain and Malta.

Venezuela’s economic freefall continues, with hyperinflation expected to soar to another record this year — one million percent as forecast by the IMF.

On Wednesday, President Nicolas Maduro said that on August 20, five zeros would be dropped off its currency and accounts, along with a theoretical pegging of the bolivar to a new government cryptocurrency. 

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