Exhibit B

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Exhibit B Page 1 of 11
KOBRE & KIM LLP 

201 SOUTH BISCAYNE BOULEVARD 

SUITE 1900 

TEL +1 305 967 6100 

MIAMI, FLORIDA 33131 

WWW. KOBREKIM .COM 

NEW YORI< 

LONDON 

HONG KONG 

SHANGHAI 

SEOUL 

WASHINGTON DC 

SAN FRANCISCO 

MIAMI 

CA YM AN ISLANDS 

BVI 

INDEPENDENT INVESTIGATOR'S FIRST INTERIM REPORT 

Kobre & Kim LLP, the independent investigator ("Independent Investigator") retained by 

the Financial Oversight and Management Board for Puerto Rico (the "Oversight Board"), acting 

by and through the Special Investigation Committee of the Oversight Board, provides this first 

interim report on the first 60 days of its engagement. Due to the ongoing nature of the investigation 

and related confidentiality considerations, this first interim report is intended to provide a general 

update to the public and any interested parties on the progress of the investigation without 

comprising the confidentiality of the investigative measures taken to date. 

INTRODUCTION 

1. On September 1, 2017, the Oversight Board, acting by and through the Special 

Investigation Committee of the Oversight Board, retained the Independent Investigator. A copy of 

the engagement letter lS available on the Oversight Board's website: 

https ://juntasupervision. pr. gov /index. php/ en/ documents. 

2. The Independent Investigator's sole interest m this matter is to find facts as 

effectively and efficiently as possible to assist the Oversight Board in achieving its mandate under 

PRO MESA, while maintaining the independence of the investigation. To that end, the Independent 

Investigator reports to the Oversight Board's General Counsel and the Oversight Board's Special 

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Investigation Committee, and has been in regular communication with them during the period 

relevant to this interim report. 1 

3. At the conclusion of the investigation, the Oversight Board will publish the 

Independent Investigator's final report. At this time, based upon discussions with the Special 

Investigation Committee and the General Counsel, the Independent Investigator believes that a· 

realistic time frame for the preparation of a final investigation report is 200 days from the 

Independent Investigator's retention, subject to adjustment if after ongoing due diligence, or in 

light of document-recovery issues that have arisen in the aftermath of Hurricanes Irma and Maria, 

a different time period appears to be more reasonable. The scope of the Informal Investigation 

authorized by the General Counsel is broad, and could expand as the Independent Investigator 

uncovers facts, identifies targets, and crystalizes the relevant legal issues to claims identified or 

policy proposals made. Given this, while the Independent Investigator believes that the size and 

complexity of the Debtors' debt issuances, claims, and issues to be examined make the proposed 

200-day timeframe an ambitious one, the Independent Investigator is committed to completing the 

investigation as efficiently and effectively as possible. 

4. The Independent Investigator understands its mandate to include maintaining the 

thematic focus of the investigation on the issues identified by the Special Investigation Committee 

and statute, and maintaining the independence of the investigation from biases that may arise from 

participating as a litigant in this or other litigation involving the matters under investigation. To 

that end, the Independent Investigator will regularly update the Special Investigation Committee 

The Special Investigation Committee of the Oversight Board comprises of Members Ana 

J. Matosantos, David A. Skeel, and Judge Arthur J. Gonzalez (Ret.), and is charged with pursuing 

investigations pursuant to the authority granted to the Oversight Board by PROMESA Section 

104( o) and such other authority invested in the Oversight Board pursuant to PRO MESA. 

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and the General Counsel on the status of the investigation and will consult the Special Investigation 

Committee and the General Counsel, as appropriate. The Independent Investigator also intends to 

make regular public reports, like this one, to keep the public apprised of its progress. 

PRELIMINARY NOTE ON THE ONGOING EFFECTS OF 

HURRICANES IRMA AND MARIA 

5. Hurricanes Irma and Maria have made the work of the Independent Investigator to 

assist the Oversight Board in regaining Puerto Rico's access to the capital markets more difficult, 

but all the more important. As of this writing, it has been estimated that 75% of Puerto Rico's 

consumers of electricity are without power and 20% are without reliable access to running water. 2 

Hundreds of press reports have detailed the devastating human cost of the damage to Puerto Rico's 

infrastructure, the financing of which is a focus of the Independent Investigator's work. Mindful 

of these developments, the Independent Investigator has prioritized in its collection and review of 

materials information that is likeliest to inform its recommendations regarding the reconstruction 

of Puerto Rico's electrical, water management, and other infrastructure most affected by the 

storms. 

6. The Independent Investigator is also mindful of the ongomg difficulties that 

Hurricanes Irma and Maria have visited upon the living and work conditions on the island. Internet 

connectivity, access to electronically-stored documents, and the normal attorney-client 

communications that witnesses require in preparing to respond to investigative requests have all 

been made unusually challenging. Accordingly, upon any reasonable request, the Independent 

Investigator has accommodated witnesses' requests for extensions of response deadlines, 

2 See, e.g., NY Governor Visits Puerto Rico, Pledges Power, Water Aid, N.Y. TIMES, Oct. 26, 

2017, https://www.nytimes.com/aponline/2017 /10/26/world/americas/ap-cb-puerto-ricohurricane-maria.html. 

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prioritizing wherever possible the specific materials likeliest to inform its focused work. 

OVERSIGHT BOARD'S PROCEDURES 

FOR CONDUCTING PROMESA INVESTIGATIONS 

7. On May 26, 2017, the Oversight Board adopted the PROMESA Investigative 

Procedures, setting forth the procedures for informal and formal investigations under PRO MESA. 

The PROMESA Investigative Procedures are available on the Oversight Board's website. 

8. Under the PROMESA Investigative Procedures, an "Informal Investigation" is 

defined as "any inquiry or review of Relevant Activities undertaken by the Board pursuant to 

PRO MESA Section 104( o) or any other authority invested in the Board pursuant to PROMESA 

for which the Board has not adopted an Investigative Resolution." See PROMESA Investigative 

Procedures, § 1.3( 10). 

9. The Oversight Board's General Counsel may authorize an Informal Investigation, 

without further Oversight Board resolution, from complaints received from members of the public, 

communications with departments or agencies of the United States, communications with the 

Puerto Rico Government, examination of publicly available information, or otherwise, if it appears 

that misconduct may have occurred in connection with Relevant Activities. See PROMESA 

Investigative Procedures, § 3 .1. 

10. A "Formal Investigation" is defined as "any formal inquiry or review of Relevant 

Activities undertaken by the Board pursuant to PROMESA Section 104(0) or any other authority 

invested in the Board pursuant to PROMESA, for which inquiry or review the Board or its 

designated agent has adopted an Investigative Resolution." See PRO MESA Investigative 

Procedures, § 1.3(6). 

11. If the General Counsel, in collaboration with the Oversight Board's counsel, 

determines that (i) evidence appears to support a finding that misconduct has occurred, is 

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occurring, or is about to occur regarding any Relevant Activities (a) based upon information 

developed in an Informal Investigation or ( b) even though an Informal Investigation has not been 

initiated, based upon information otherwise available, or (ii) an Informal Investigation has been 

initiated, but the Oversight Board's counsel has been unable to conduct such Investigation without 

access to Investigative Subpoenas, the General Counsel shall so advise the Oversight Board and 

recommend to it that a Formal Investigation be initiated. See PROMESA Investigative Procedures, 

§ 3.2.a. 

12. If, after considering the recommendations of the General Counsel and the Oversight 

Board's counsel and all available information, the Oversight Board determines to initiate such 

Formal Investigation, it shall: (1) adopt an Investigative Resolution authorizing the General 

Counsel to initiate a Formal Investigation, and (2) authorize the use of process to obtain 

Investigative Materials and compel testimony as the General Counsel, in collaboration with the 

Oversight Board's counsel, deems necessary and appropriate. See PROMESA Investigative 

Procedures§ 3.2.b. 

13 . On October 18, 2017, and pursuant to PROMESA Section 104 and the PROMESA 

Investigative Procedures, the Special Investigation Committee approved a Resolution Initiating 

Formal Investigation for Purpose of Issuing Investigative Subpoenas (the "Investigative 

Subpoenas Resolution"). The Investigative Subpoenas Resolution is available on the Oversight 

Board's website. 

SCOPE OF INVESTIGATION 

14. At this time, the Oversight Board's General Counsel has authorized the 

Independent Investigator to conduct an Informal Investigation, as defined in Section 4.1 of the 

PRO MESA Investigative Procedures, regarding: (i) a review of the factors contributing to Puerto 

Rico's fiscal crisis, including changes in the economy, expansion of spending commitments and 

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entitlement programs, changes in the federal funding it receives, and its reliance on debt to finance 

a structural budget deficit; (ii) a review of Puerto Rico's debt, the general use of proceeds, the 

relationship between the debt and Puerto Rico's structural budget deficit, the range of its debt 

instruments, and how Puerto Rico's debt practices compare to the debt practices of states and large 

municipal jurisdictions; and (iii) a review of Puerto Rico's debt issuance, disclosure, and selling 

practices, including its interpretation of Puerto Rico's constitutional debt limit. 

15. To the extent evidence received and assessed by the Independent Investigator 

appears to support a finding that misconduct has occurred, is occurring, or is about occur, the 

Independent Investigator will escalate to the Special Investigation Committee for consideration of 

the initiation of a Formal Investigation under Section 3.2 of the PROMESA Investigative 

Procedures. 

THE INDEPENDENT INVESTIGATOR'S WORK TO DATE 

16. The Independent Investigator has been working as expeditiously and efficiently as 

possible to obtain the information needed to assist the Oversight Board in achieving its mandate 

under PROMESA. In the first instance, this has meant relying upon the powers available pursuant 

to the Informal Investigation authorized by the Board, which have in large measure resulted in 

voluntary cooperation from entities from which materials have been requested. 

A. Development of Investigative Work Plan 

17. To develop the initial scope of an investigative work plan and identify efficiencies, 

the Independent Investigator has conferred at length with the Special Investigation Committee and 

General Counsel about areas of inquiry, objectives, and priorities. As a result of these meetings, 

the Independent Investigator prepared a detailed investigative work plan setting forth the scoping 

and phasing of the investigation, including proposals for investigative case studies, which the 

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Special Investigation Committee approved on October 11, 2017. 

18. The Independent Investigator continues to discuss the status of the investigation to 

further develop investigative case studies and implement the scope, means, and proposed timing 

of the Independent Investigator's investigation at regular, standing meetings with the General 

Counsel and Special Investigation Committee. 

B. Factual Investigation 

i. Initial Data Collection 

19. In the initial days of its engagement, the Independent Investigator collected and 

reviewed voluminous documents and materials related to the bond offerings and the 

Commonwealth of Puerto Rico Fiscal Plan, including, by way of example, the March 13, 2017 

Commonwealth of Puerto Rico Fiscal Plan, the March 7, 2017 Financial Bridge Analysis prepared 

by EY, other documents prepared by the Oversight Board's professionals concerning debt 

issuances by the Debtors, and a preliminary review of all of the offering statements for debt 

issuances since 1990. 

20. In addition, the Independe.nt Investigator met with the Oversight Board's outside 

Ethics Advisor, the Oversight Board's outside legal representatives at Proskauer Rose LLP, and 

the Oversight Board's accounting advisors at Ernst & Young. 

21. The Independent Investigator has also met with counsel for various interested 

parties, including the Official Committee of Retired Employees of the Commonwealth of Puerto 

Rico and the Official Committee of Unsecured Creditors. 

22. As a result of these meetings, the Independent Investigator has already gathered 

substantial facts and evidence that are readily available and helpful in providing scope to the 

investigation and its timing. 

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ii. Identification of Potential Witnesses, Subjects, and Targets, and 

Efforts to Preserve Evidence and Claims 

23. The Independent Investigator has identified potential witnesses, subjects, and 

targets, and causes of action, and is working to preserve relevant evidence. 

24. The Independent Investigator has invoked Sections 104(c)(l) & (2) of PROMESA 

to request relevant documents and records from AAF AF. To date, AAF AF has committed to 

cooperating with the investigation, and has begun production of relevant documents on a rolling 

basis. 

25. The Independent Investigator has issued approximately 84 document preservation 

notices to individuals and entities involved in the issuance of debt securities in Puerto Rico over 

the last twenty years, including to issuers, underwriters, advisors, and rating agencies, and other 

stakeholders. 

26. As of this writing, approximately 79 witnesses have responded to confirm that they 

have implemented preservation measures. With the vast majority of these respondents, the 

Independent Investigator has had substantive discussions about prioritizing materials for 

production. In many cases, those discussions have already yielded production of easily-identifiable 

materials relevant to the Independent Investigator's work. Wherever possible, in light of the 

ongoing effects of Hurricanes Irma and Maria, the Independent Investigator has prioritized 

obtaining copies of materials from off-island sources while taking all measures available to 

preserve records likely to exist in Puerto Rico. In sum, a large majority of the witnesses have 

expressed a willingness to cooperate in the investigation, and produce documents and information 

on a voluntary basis. 

27. To the extent any of the aforementioned parties decline or fail to produce the 

requested documents and compulsory process becomes necessary, the Independent Investigator 

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may issue Investigative Subpoenas pursuant to the Investigative Subpoenas Resolution. 

28. In addition to the Informal Investigative measures described above, pursuant to the 

Investigative Subpoenas Resolution, the Independent Investigator issued subpoenas on October 

27, 2017 to Popular, Inc., Popular Securities, LLC, and Banco Popular de Puerto Rico. The 

Independent Investigator will update the public in its next interim report regarding these and any 

other subpoenas. 

29. As the Independent Investigator continues to identify potential witnesses, subjects, 

and targets, the Independent Investigator will issue additional document preservation notices and 

voluntary requests for information and documents. 

iii. Witness Interviews and Depositions 

30. The Independent Investigator anticipates that it will conduct interviews with and 

take sworn testimony from numerous witnesses and subjects, including underwriters, 

professionals, and government officials. 

31. The Independent Investigator will generally seek to conduct voluntary interviews 

of witnesses with respect to the issues subject to the investigation. To the extent, however, the 

Independent Investigator requires compulsory process, as with the document requests, the 

Independent Investigator will issue Investigative Subpoenas pursuant to the Investigative 

Subpoenas Resolution. 

32. The Independent Investigator expects to commence witness interviews in the near 

term, but is mindful that many witnesses continue to have limited connectivity due to Hurricanes 

Irma and Maria. 

RESERVATION OF RIGHTS 

33. The Independent Investigator's work is ongoing. This interim report is based upon 

currently available information, and reflects that, to date, the Independent Investigator has received 

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clear direction from the Special Investigation Committee and substantial cooperation from 

numerous parties in interest. Given the early stage of the investigation, the ongoing effects of 

Hurricanes Irma and Maria, the volume of potentially relevant data, and the number of potential 

witnesses, subjects, and targets, it will take significant time to assemble, review, and analyze the 

documents and related information. As the investigation unfolds, the Independent Investigator will 

supplement and amend its investigative work plan to fulfill the Special Investigation Committee's 

directives regarding the scope and goals of the investigation, and, as appropriate, will continue to 

report to the public on its progress. 

Dated: October 30, 2017 

10 

Respectfully submitted, 

John D. Courie! 

+1305967 6115 

D. Farrington Yates 

+ 1 212 488 1211 

Stephanie L. Hauser 

+1 305 967 6124 

Daniel J. Saval 

+12124881259 

Adam Lavine 

+1212488 1279 

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