NEW YORK – The U.S. is considering sanctions against Wall Street billionaire David Martinez as part of its effort to topple Nicolas Maduro’s regime by cutting off its access to financing, according to three people familiar with the matter.
Treasury Department officials have also discussed naming Martinez, the founder of the Delaware-domiciled hedge fund Fintech Advisory Inc., as a specially designated national for his business dealings with sanctioned Venezuelan officials, including Finance Minister Simon Zerpa and Economy Vice President Tareck El Aissami, two of the people said, asking not to be identified because the information is private. Martinez visited Caracas as recently as December to pitch deals that would ease the government’s cash squeeze.
An SDN label on Martinez, a Mexican national who also holds British citizenship and spends much of his time in New York, could restrict his travel and limit his access to U.S. bank accounts, among other repercussions. He’s the sole owner of Fintech, which has an office on Manhattan’s Park Avenue, regulatory filings last year showed.
Martinez and his legal adviser in South America didn’t respond to calls and emails, nor did Venezuela’s Finance Ministry. A Fintech representative based in New York declined comment. The Treasury’s press office declined comment on Fintech or Martinez.
In taking action against Martinez, the Trump administration would be looking to send an even sterner message to financiers that it won’t tolerate efforts to raise funds for Maduro’s autocratic government. The U.S. and more than 50 other governments recognize National Assembly leader Juan Guaido as the rightful leader of Venezuela and have stepped up measures over the past month to try to drive out Maduro. The Treasury intensified financial punishments on Venezuela in 2017, and last month set much tougher oil sanctions, effectively cutting off the government from the U.S. market.
In April 2017, Fintech gave the Maduro government a $300 million loan backed by bonds with a face value of $1.3 billion. While that deal didn’t violate rules at the time, it irked U.S. officials who saw it as providing a lifeline to a despotic regime, the people said. It was one of the last known transactions between a U.S. or European firm and Caracas — the other being Goldman Sachs Asset Management’s purchase the following month of almost $3 billion of bonds — before the Trump administration further tightened sanctions.
Since then, the distressed-debt veteran has traveled to the Venezuelan capital to pitch Zerpa, El Aissami and others on potential financial deals, including oil-related debt-for-equity swaps with the Russian and Chinese governments, three people familiar with the matter said.
“Venezuela is under a microscope and the leading edge of Washington’s Venezuela policy is financial strangulation,” said Benjamin Gedan, a former South America director at the White House’s National Security Council who said he had no direct knowledge of Fintech’s practices or Treasury’s plans for the firm. “If you engage in these types of transactions, you’re undermining that.”
Martinez had a net worth of $2.4 billion as of December 2016, according to the Bloomberg Billionaires Index. That would make him among the wealthiest Mexicans, though he spends most of his time in London and New York, visiting his native Monterrey only to see family. In 2003, he caught the attention of Manhattan socialites when he plunked down $42 million for a condominium in the Time Warner Center.
The investment manager has tried to profit from just about every financial basket case that appeared over the past three decades, from Greece to Pakistan. He invested heavily in Argentina, where he became known as a “friendly vulture,” an affable take on the scavenger-bird invoked by former President Nestor Kirchner to describe hedge funds looking to profit off the nation’s woes.
Martinez crossed swords with hedge-fund billionaire Paul Singer in that epic default saga as well as a contentious debt-restructuring orchestrated by Mexican glassmaker Vitro SAB. Other hedge fund managers refer to him as a “ghost investor,” who’s incredibly active yet frustratingly opaque.
“The U.S. is pulling out all the stops and the question is what’s the next most painful thing we could do to the Maduro regime?” said F. Amanda DeBusk, chair of the law firm Dechert’s international trade practice in Washington, who added she’s unaware of any potential Treasury actions related to Fintech. “They really want to stop transactions with the government and send a strong warning signal to others.”