U.S.-Venezuelan Steel Trade Case Reveals Deep Sanctions Evasion and Money Laundering Network

In a recent high-profile case that underscores the growing complexity of international financial crime, U.S. authorities have arrested two individuals accused of orchestrating a multi-million-dollar sanctions evasion and smuggling scheme tied to Venezuela’s state-owned steel industry.

The case shines a stark light on the continuing challenges of global sanctions compliance, as illicit networks exploit industrial supply chains, front companies, and cross-border financial systems to circumvent international restrictions.

At the center of the operation are Juan Carlos Cairo-Padron, who holds dual U.S.-Venezuelan citizenship, and Thomas Michael Fortinberry, a U.S. citizen. Both men now face charges for allegedly circumventing U.S. sanctions to provide critical materials to Venezuela’s steel sector—highlighting the enduring difficulties faced by authorities and companies alike in policing international trade.

The United States has maintained extensive sanctions against Venezuela and its state-controlled industries since 2017, under Executive Orders 13808 and 13850, targeting entities and individuals to block their access to essential resources, goods, and capital. But this case exemplifies how well-organized operations can undercut the goals of these measures. Through a web of intermediaries and front companies, illicit actors are able to continue supplying sanctioned industries such as the Venezuelan steel giant, Complejo Siderúrgico de Guayana S.A. (COMSIGUA).

The operation, according to prosecutors, used an elaborate mix of trade-based money laundering (TBML) techniques to obscure the origin and final destination of goods. Cairo-Padron and Fortinberry allegedly manipulated financial flows and supply routes using companies based in the U.S., China, Germany, and Spain to funnel industrial materials to Venezuela. Funds were transferred through a network of international bank accounts, enabling the actors to mask connections to sanctioned entities.

By establishing seemingly legitimate businesses in jurisdictions with limited regulatory scrutiny or weak enforcement of U.S. sanctions, the network was able to produce misleading documentation that concealed the true end-users. For instance, industrial equipment and catalysts were shipped under paperwork indicating a Chinese or Spanish consignee, but ultimately ended up in Venezuela. Once payments were processed and compliance barriers evaded, the goods were redirected, violating U.S. export controls.

These operations often rely on what financial regulators refer to as “layering”—a process where funds are routed through multiple jurisdictions to evade detection. In this instance, money originated from Venezuelan state-linked enterprises, passed through an account in Spain, moved to Chinese entities, and finally landed in U.S. accounts held by the conspirators. Such structuring makes detection by financial institutions exceedingly difficult, especially when transaction amounts are deliberately kept below thresholds that trigger automatic reporting.

The scheme involved the movement of industrial equipment and chemical catalysts essential to steel manufacturing, highlighting that sanctions evasion is not merely a financial crime, but one deeply linked to the global flow of physical goods. U.S. law under the Export Administration Regulations (EAR), administered by the Bureau of Industry and Security (BIS), strictly regulates exports of such goods to embargoed states like Venezuela. Violating these controls carries serious civil and criminal consequences.

Trade documentation—such as bills of lading and certificates of origin—was reportedly altered or falsified to mislead customs authorities and banks. By listing front companies as consignees or buyers, the true involvement of Venezuelan state entities like COMSIGUA was effectively hidden. Effective compliance, say experts, requires more than surface-level review. It demands thorough verification of counterparties, end-users, and the goods’ ultimate destination.

“Once goods leave the U.S., they may pass through several jurisdictions, each of which presents another opportunity to obscure the transaction,” authorities warned. This complexity has made coordinated enforcement efforts between international law enforcement and regulatory agencies increasingly vital.

Under U.S. law, including the International Emergency Economic Powers Act (IEEPA) and the Trading with the Enemy Act (TWEA), engaging in prohibited trade with sanctioned entities is a federal crime. Violators face up to 20 years in prison. In addition, under 18 U.S.C. §§ 1956 and 1957, the laundering of funds tied to unlawful activity—such as sanctions evasion—is punishable by prison sentences and asset forfeiture.

The Export Control Reform Act of 2018 (ECRA), along with EAR, further criminalizes unauthorized exports of regulated goods. Collectively, these statutes serve to safeguard the integrity of U.S. financial and trade systems against exploitation by foreign regimes.

Investigations into such crimes typically involve cooperation across multiple federal agencies, including the Department of Justice (DOJ), Homeland Security Investigations (HSI), the Defense Criminal Investigative Service (DCIS), and the Treasury’s Office of Foreign Assets Control (OFAC). Authorities rely on international intelligence-sharing, as well as the private sector’s ability and willingness to detect and report suspicious activity.

International collaboration is key. Mutual Legal Assistance Treaties (MLATs), along with participation in groups like the Egmont Group of Financial Intelligence Units, enable the U.S. and its allies to coordinate across borders to track illicit funds and goods.

This case is a sobering reminder of the persistent vulnerabilities facing banks and exporters. With increasingly complex trade networks, compliance teams must maintain rigorous procedures and ongoing monitoring. Financial institutions must pay attention to subtle indicators of evasion, including inconsistent transaction patterns and opaque ownership structures, especially when dealing with high-risk jurisdictions and sectors like steel and petrochemicals.

Exporters are similarly expected to conduct stringent due diligence, including screening business partners against OFAC’s Specially Designated Nationals (SDN) List and assessing the legitimacy of intermediaries. The use of technology, third-party compliance support, and continuous training are now essential pillars of a functioning compliance framework.

As regulatory expectations increase, global firms must adapt accordingly. FATF and the Wolfsberg Group have stressed the need for proactive monitoring, deep risk assessments, and information-sharing partnerships between the private and public sectors. “Failure to do so,” authorities emphasize, “can result not only in significant penalties but also criminal prosecution and lasting reputational harm.”

Ultimately, the exposure of this elaborate sanctions evasion operation tied to Venezuela’s steel industry underscores the urgent need for vigilance and global cooperation. It’s a powerful case study in how illicit actors continue to evolve—and how the world must keep pace to uphold the rule of law in trade and finance. 

By fLEXI tEAM