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(Bloomberg) -- He was known to authorities as Brazil’s black-market central banker, a career criminal who smuggled cash for the rich and powerful by private jet and armored car.

Now Alberto Youssef -- a rum-runner turned money-launderer turned reputed billionaire -- has emerged as a principal player in the biggest corruption scandal Brazil has ever seen. He’s told prosecutors how he spirited hundreds of millions of dollars through Brazil and beyond as part of a kickback scheme involving state-controlled oil company Petroleo Brasileiro SA, the nation’s biggest builders and top politicians.

The story of Alberto “Beto” Youssef, 47, is a tale of low finance and high living -- of offshore accounts, clandestine money drops and $75,000 party bills. More than that, it is a portrait miniature of Brazil’s economic promise and failure, and of the nation’s long struggle with crime, corruption and bureaucracy.

Over the years, Youssef has been arrested no fewer than nine times on charges ranging from smuggling to money laundering to conspiracy. He’s only ever served about a year in prison. A serial plea-bargainer, Youssef has routinely testified against other “doleiros,” or black-market currency dealers, in exchange for reduced sentences. Along the way, that enabled him to tighten his grip on the black market, the federal police say.

Polite and Quiet

Described by at least three prosecutors as polite and quiet, Youssef isn’t denying that he had a role in the Petrobras scandal. But he also said he wasn’t the mastermind and that the operation went all the way up to top levels of government. He claims that President Dilma Rousseff, who was chairwoman at Petrobras from 2003 to 2010, knew about the kickbacks, though he provided no specific details or proof. Rousseff has denied the allegations and declined to comment for this article.

“They say I’m the mentor, the head of a criminal organization -- well, I’m not,” Youssef said in video testimony on Oct. 8. “I’m just a cog.”

More than a thousand pages of court documents and interviews with over a dozen law enforcement officials, lawyers and Youssef associates provide a glimpse into his modus operandi and his role in some of Brazil’s biggest scandals over the past two decades. Many of the officials who commented for this article asked not to be named for fear of retaliation.

Youssef’s lawyer said his client is cooperating with the investigation and the terms of his plea bargain prevent him from commenting on the case.

Smuggler

Born in Londrina, about 500 kilometers (300 miles) from Sao Paulo, Youssef first came to the attention of authorities in the 1980s when he and an older sister allegedly used to smuggle whiskey and other goods across the border from Paraguay.

He was arrested five times for alleged smuggling, including once after a high-speed chase as VHS players, bound for the black market, fell from the back of his truck, said a law enforcement official who asked not to be named.

In Londrina, a city with a half-million people, it’s difficult to find someone who hasn’t heard stories about Youssef and his exploits.

Two waiters who declined to be identified recalled how Youssef was a generous tipper who was often surrounded by women. He was also known for his epic parties and for running up bills of as much as 200,000 reais ($75,000) a night, said a local businessman familiar with the matter.

Youssef’s former mistress from Londrina is on the cover of this month’s Playboy magazine in Brazil. Photos from the shoot show her entering a private jet with a wad of $100 bills.

By the 1990s, Youssef had moved from smuggling to money laundering, becoming one of Brazil’s top five doleiros, said Claudio Esteves, the head of the Parana state task force on organized crime in Londrina.

Armored Car

Before long, Youssef’s business had grown so big that he was using an armored car to make daily cash deliveries, said a federal police agent involved in the investigation who asked not to be identified by name.

Youssef was arrested in 2000 and 2001 in an alleged corruption scheme in Londrina, Esteves said, who led the case against him. Youssef was accused of bribing bank employees to cash city checks, including ones that were unsigned.

“At the time, he was very arrogant,” Esteves said. “He said he would never stay in prison.”

Youssef was right. He was never brought to trial and spent a total of about 25 days in jail.

Around the same time, Youssef was swept up in an embezzlement scandal in Maringa, a town not far from Londrina. He was later indicted on criminal conspiracy charges. He eventually struck a deal with prosecutors, who agreed to drop the charges if he named public officials involved.

Another Plea Bargain

In the midst of the Maringa affair, he was accused of laundering more than $830 million in a case involving Banestado, a state-run bank. Youssef reached a plea bargain in that case, too, agreeing to testify against rival doleiros, said Luiz Fernando Delazari, who was Parana state’s security secretary at the time.

Some of Youssef’s biggest rivals were jailed, enabling him to come back “stronger than ever,” Delazari said.

As part of another plea bargain in a simultaneous investigation, Youssef detailed to prosecutors a scheme to manipulate tax credits at a state power utility. In his testimony, he named government authorities, public servants and those he identified as black-market dealers.

Then, in 2006, Youssef associate Jose Janene was indicted in a cash-for-votes scandal in Brazil’s Congress. Prosecutors now say some of the cash Youssef laundered through a gas station in Brasilia was obtained by Janene in the scheme.

Janene and that gas station were a turning point for Youssef -- and the Petrobras case.

Cash-for-Votes

At the time of the cash-for-votes scandal, Janene was a lawmaker in the Progressive Party, part of Rousseff’s ruling coalition in Congress. When Janene died in 2010, still denying his involvement in the scandal, Youssef said he took over his network in Brasilia and at Petrobras, including ties to former Refining Director Paulo Roberto Costa, who was arrested in March and reached a plea bargain in August.

Costa declined to be interviewed through his lawyer for this article.

The Petrobras investigation was dubbed The Carwash, after the gas station used by Youssef to launder cash.

How Youssef managed to keep going for so long, despite his many arrests, reflects the dysfunctions of Brazil’s legal system, said Alejandro Salas, regional director for the Americas at Transparency International.

“Justice in Brazil is very slow,” Salas said from Berlin.

Youssef’s M.O.

Today Youssef sits in a prison in Curitiba, after being sentenced to four years and four months in September for breaking the terms of his plea bargain in the Banestado case.

His M.O. is unchanged.

As part of his plea bargain in the Carwash case, his fourth such deal in a little over a decade, Youssef is asking to serve out the term from home. His lawyer, Antonio Figueiredo Basto, said Youssef has heart problems and has lost 18 kilograms (40 pounds) since he was imprisoned last March.

Youssef has provided his account of how the Carwash worked: Builders bribed politicians and executives to look the other way as they inflated contracts with state-run companies like Petrobras. Youssef said he served as the banker. Costa, the ex- Petrobras director, backed up Youssef’s account in testimonies and transcripts made public.

Youssef’s finger-pointing has already gotten him a cell of his own, while the CEOs and executives of companies accused of paying kickbacks crowd into cells down the hall. Some sleep on mattresses on the floor.

“Without my client, there is no Carwash,” Basto, the lawyer, said. “He is the link between all involved.”

--With assistance from Arnaldo Galvao in Brasilia Newsroom and Anna Edgerton in Brasilia.

To contact the reporters on this story: Francisco Marcelino in Sao Paulo at mdeoliveira@bloomberg.net; Sabrina Valle in Rio de Janeiro at svalle@bloomberg.net To contact the editor responsible for this story: Jessica Brice at jbrice1@bloomberg.net Jessica Brice, David Gillen, Steve Dickson

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