LEGAL ALERT | U.S. INVESTIGATION INTO ECUADORIAN MEDICAL SUPPLY PROVIDERS

Executive Summary

The FBI and Homeland Security Investigations (HSI) are investigating 33 suppliers linked to contracts with Ecuador’s Social Security Institute (IESS) and Ministry of Public Health for alleged money laundering and illicit enrichment through shell companies and international transfers. Funds were reportedly channelled into the U.S. financial system and used to purchase high-value assets (e.g., real estate in Miami) and companies incorporated in Florida and Delaware.

Origin of the Investigations

The initial complaints were filed by Ecuadorian anti-corruption organisations, which reported a potential corruption scheme exceeding USD 200 million. U.S. authorities became involved due to the suspected use of their financial system to route illicit funds.

How U.S. Jurisdiction Is Triggered

U.S. authorities act in such cases under the principles of extraterritorial jurisdiction, international criminal cooperation, and anti-money laundering enforcement.

Federal law allows investigations into acts committed outside the United States when transactions or assets pass through its financial system or are located within its territory. This empowers agencies to:

• Freeze, seize, or confiscate assets allegedly connected to international financial crimes.

• Request cooperation from Ecuador to obtain corporate, banking, or tax information on those involved.

• Issue judicial mutual assistance orders or migration-related requests if the individuals hold U.S. residence or citizenship.

A case falls under U.S. jurisdiction if even a single transaction was executed through a U.S. bank account, or if the acquired assets (real estate, companies, shares) are located within its territory.

Legal Basis

Foreign Corrupt Practices Act (FCPA), Bank Secrecy Act, and U.S. Code Title 18, §§1956–1957, which empower federal agencies to investigate suspicious operations involving foreign public funds.

Judicial Cooperation Between Ecuador and the United States

Ecuador and the U.S. have active mutual legal assistance agreements allowing U.S. authorities to request documentation on:

• International transfers made by Ecuadorian individuals or companies.

• Information on company incorporation or ultimate beneficial owners (UBOs) registered in Ecuador.

• Copies of public contracts, award decisions, and payment records issued by Ecuadorian state entities.

This cooperation also enables the identification and repatriation of assets derived from corruption, provided there is a final court ruling or a bilateral agreement.

Implications for Ecuadorian Suppliers

Companies and individuals with assets, bank accounts, or entities in the U.S. may receive information requests and face parallel proceedings in both jurisdictions, even without a criminal case opened in Ecuador.

Information gathered by U.S. authorities may be shared with Ecuador’s Prosecutor’s Office, Comptroller General, or SERCOP for potential verification of criminal or administrative liability. In practice, this means strict deadlines, full documentation requirements, and legal coordination across two jurisdictions.

Conclusion

The situation reflects growing international scrutiny of public procurement in the health sector and the traceability of funds. Acting with diligence, transparency, and strong documentation mitigates reputational and legal risks and enables an effective response to official requests.

We recommend immediately strengthening traceability controls and reviewing corporate structures to avoid any appearance of concealment or laundering.

Recommendations

• Audit: Map fund flows with/from the U.S., correspondent accounts, third-party payments, and contracts with IESS/MSP.

• Evidence preservation: Secure contracts, awards, purchase orders, invoices, and transfer records (chain of custody).

• International corporate review: Assess structures, powers, and ultimate beneficial owners (UBOs) of U.S. entities.

• Response protocol: Designate a focal point (Legal/Compliance), activate litigation hold, and prepare standard reply templates.

• Document matrix: Develop a checklist of potentially requested records (banking, corporate, contractual) and assign internal accountability by area.

For assistance, please contact us at info@lmzabogados.com.

Sources:

• Expreso. (2025, 13 de octubre). EE. UU. revisa las fortunas de 33 proveedores hospitalarios de Ecuador. https://www.expreso.ec/actualidad/ee-uu-revisa-las-fortunas-de-33-proveedores-hospitalarios-de-ecuador-260524.html 

• Expreso. (2025, 11 de octubre). Red de proveedores de insumos médicos del IESS, en la mira de Estados Unidos. https://www.expreso.ec/actualidad/red-de-insumos-medicos-en-la-mira-de-estados-unidos-260344.html 

• Organisation of American States. (1992). Inter-American Convention on Mutual Assistance in Criminal Matters (Nassau, 1992).

• United Nations. (2000). UN Convention against Transnational Organized Crime (Palermo, 2000).

• Organisation of American States. (1996). Inter-American Convention against Corruption.