(CN) - Three contractors dubbed the "ChavezKids" "amassed enormous fortunes" bribing Venezuelan officials for lucrative energy contracts and then silenced critics with threats and "abusive business practices," a former U.S. ambassador to Venezuela claims in court.
Otto Reich and his consultancy firm, Otto Reich Associates, filed a racketeering and defamation lawsuit Tuesday against Leopoldo Alejandro Betancourt Lopez, Pedro Jose Trebbau Lopez and Francisco D'Agostino Casado in Manhattan Federal Court.
He claims they "profited wildly from the corrupt and anti-democratic" regime of late Venezuelan President Hugo Chavez, who died in Caracas in March after "battling hard against an illness over nearly two years," according to Venezuelan government officials.
Reich says the defendants have been dubbed the "ChavezKids," "BoliBoys" and "the mafioso (sic) of the Fifth Republic" by the press. They allegedly secured contracts for their U.S.-based companies, Derwick Associates USA and Derwick Associates Corp., by offering "multimillion-dollar kickbacks" to Venezuelan officials. They would then "skim millions off the top, which they deposit[ed] in U.S. banks," Reich says.
The defendants subcontracted the actual work to other companies based in the United States, including one in Missouri, according to the 48-page lawsuit.
"The scheme has been a huge financial boon to defendants Betancourt, Trebbau, and D'Agostino, all of whom enjoy lifestyles of extreme wealth in the United States," Reich claims.
Reich says the contractors try to silence anyone who takes a stand against the corruption.
"In recent years, a number of respected individuals and institutions in the United States have begun to speak out against the 'ChavezKids' and their ilk, unwilling to allow the continued fleecing of Venezuela," the lawsuit states. "Fearing exposure, defendants have gone to extreme lengths to conceal their illegal actions, using abusive business practices, threats of legal action in U.S. courts, and other improper means to silence their opponents and send an unmistakable message of intimidation to anyone who might expose their illegal practices and alter the status quo."
The contractors made good on their threats in September 2012 when they sued Banco Venezolano de Credito S.A., "one of the oldest and most respected banks in Venezuela," in a Florida state court for $300 million, Reich claims.
"The leaders of Banco Venezolano are known as vocal critics of the Chavez regime - so much so that Banco Venezolano refuses to do business with the Venezuelan government," Reich says.
Derwick Associates accused the bank of defaming it by financing an anti-Chavez, anti-Derwick website, according to the former ambassador's lawsuit.
Reich says the "outrageous" $300 million demand signaled "a clear effort to bully the bank into quiescence, prevent others from threatening to expose their scheme, and provide comfort to defendants' New York bankers that the allegations being spread about them were false."
The bank decided to vigorously defend itself, Reich claims, and turned to the former ambassador and his consultant firm for help.
Fearing the bank and Reich "posed too great a threat to [their] scheme," the defendants "conspired to discredit Ambassador Reich in the eyes of Banco Venezolano in the most effective way they knew how -- tying Ambassador Reich to Derwick Associates."
Reich claims the contractors and their agents told bank officials that he was working for Derwick Associates.
"That, of course, was blatantly false," he says.
But the damage had been done, Reich claims, and the bank withdrew from negotiations with his firm. Reich says the bank had been ready to pay his firm at least $20,000 a month.
He demands at least $6 million plus punitive damages for alleged racketeering, tortious interference with prospective economic advantage, defamation, trade libel and civil conspiracy.
The former ambassador is represented by Mark Smith of Smith Valliere in Manhattan.
Reich was appointed by then-President George W. Bush in 2001 and retired in June 2004.