The Miami Herald
Tue, Mar. 30, 2004

Dominican suit: Bank fraud has S. Fla. link

A lawsuit claims that three South Florida banks were used in a loan scam that contributed to the collapse of the Dominican Republic's third-largest bank. The banks weren't accused of wrongdoing.


Authorities in the Dominican Republic have accused a prominent businessman, whose Miami lifestyle included a Ferrari and a $29 million Gulfstream jet, of plundering the country's third-largest bank and using transactions with South Florida banks to camouflage the theft.

The government's racketeering suit against Luis Alvarez Renta opens a U.S. front in the stalled battle to bring to justice a handful of powerful and connected Dominicans involved in last year's $2.2 billion collapse of Banco Intercontinental. The failure has plunged the country's once-booming economy into crisis.

Alvarez's Miami lawyer contests the charges.

The lawsuit details about $35 million in bank funds spirited out of the country and hidden in loans using three South Florida financial institutions: Fort-Lauderdale-based BankAtlantic, International Bank of Miami and the now-shuttered Hamilton Bank. They were not accused of wrongdoing.

''[Alvarez and his associates] compromised Miami banks and professionals who assisted in this illegal activity,'' the racketeering suit alleges.

Miami attorney Thomas Tew, whose law firm filed the federal lawsuit late Friday on behalf of the Dominican Republic government, said Alvarez and three foreign companies he controlled -- BankInvest, Interduty Free and Wadeville Investments -- drained millions of dollars from Banco Intercontinental, known as Baninter. They allegedly used South Florida's financial system.

''This bank threatened the stability of the Dominican Republic economy and has now infected the American banking system,'' Tew said in an interview.

The suit, written like a criminal indictment, alleges that Alvarez, 53, and the former head of the bank, Ramón Báez Figueroa, ``stole funds deposited at Baninter to enrich themselves, their relatives and companies they controlled.''


Alvarez's lawyer denied any wrongdoing on the part of his client.

''In no way is he guilty of fraud or stealing,'' A.J. Barranco said. ``He's an honorable businessman. He's had successful relations with the most successful businessmen in the Dominican Republic, Haiti and other Caribbean and Latin American countries.''

Barranco instead pointed the finger at Báez.

''They're going to find that Mr. Báez was the one who was principally involved in the majority of the transactions they describe,'' he said.

Báez, who was not named as a defendant in the Miami lawsuit because he had no apparent control over the foreign companies, has denied any wrongdoing.

Alvarez, who was briefly jailed in the Caribbean country and was released for medical reasons, is a dual U.S. and Dominican citizen and has endowed a chair at MIT's Sloan School of Management. Alvarez, who is a cousin of Oscar de la Renta, was the Dominican ambassador to France when the scandal broke.

According to a divorce suit filed in Miami by his former wife, Carmen Rita Pérez, Alvarez owned a house and two condos in South Florida, seven condos in ski resorts in Colorado, boats and a yacht, three luxury cars including the Ferrari and three airplanes including the Gulfstream jet. He also had luxury properties in the Dominican Republic in the Casa de Campo and Punta Cana resorts.

The racketeering lawsuit identifies International Bank's share of the total as $19.55 million; BankAtlantic's as $14.15 million; and Hamilton Bank's as $1.4 million. The suit alleges that just before the collapse, Alvarez drew pesos from BankInvest's accounts with Baninter and exchanged the funds for dollars, which were wired to Wadeville's account in BankAtlantic.

International Bank President Alberto Valdes said he could not comment on the case. ''I'm not in the position to tell you anything about anybody who may or may not have been my client,'' he said.

BankAtlantic declined to comment. Hamilton Bank was seized and sold by bank regulators in early 2002. A telephone call to one of the lawyers who has worked for the former executives was not returned.

Under the loan scam alleged in the lawsuit, Alvarez used one of the companies he controlled to borrow funds from the Miami banks, with the loan guaranteed by a letter of credit issued by Baninter. The loan would be repaid by Baninter, ''to the detriment'' of the bank, the lawsuit said, while the companies connected to Alvarez would simply pocket the proceeds.

Regulators discovered after they seized the looted bank in early 2003 that its owners had created a ''shadow'' bank -- with a separate set of books.

Last May, the Dominican government filed both civil and criminal charges against Báez Figueroa and two other executives accused of participating in a financial conspiracy that crippled Baninter. The following month, the government added Alvarez as a defendant in that case.


Although Báez and others were held for weeks and Alvarez one week, all were released. Under Dominican law, a judge must rule on whether the charges are sufficiently supported by evidence before the case can proceed. The judge's ruling has been delayed because of conflict charges, but last week the Supreme Court declined to remove him.

The case brought by Dominican banking regulators alleged that those who have been accused committed fraud against the bank, laundered its assets and covered up illegal operations by falsifying its balance sheets.

It claims that the executives approved sweetheart loans for themselves and their companies that were kept off the books.

The collapse of Baninter -- which sponsored everything from concerts to baseball teams and featured Chicago Cubs superstar Sammy Sosa in its ads -- triggered a financial and economic crisis in the Dominican Republic.

''It has caused the whole economy to go into a tailspin,'' said Richard Francis, sovereign risk analyst at Standard & Poor's.