Opinion ID: 78049
Heading Depth: 2
Heading Rank: 5

Heading: Characterizing the Transfers

Text: As noted, Renta did not dispute that he endorsed the funds transfers and the notes. Rather, he contends the transfers to him represent repayment of money he personally advanced to help turn around the duty free stores. Thus, the central factual dispute in the case is whether these transfers were bona fide loan payments or mere looting. Importantly in this regard, Bankinvest changed ownership during the time periods at issue, as Bankinvest was sold by Renta to BanInter. The sale and merger documents are significant evidence concerning the nature of the transactions at issue. Further background is necessary to understand why. Before the events at issue, BanInter had made loans to the duty free stores controlled by Baez-Figueroa. The stores were financially distressed, however, and were having difficulty repaying the loans. In 1997, Baez-Figueroa sought Renta's help in restoring their profitability. At that time, each of the duty free stores was owned by a separate corporation controlled by Baez-Figueroa; at some later point they were later consolidated into one company, Interduty. When Renta was brought in to turn around the stores in 1997, he needed to improve their creditworthiness. He testified that he used Bankinvest, which had good credit, to borrow money on behalf of Interduty in order to secure more favorable financing for the stores. Bankinvest also obtained an equity stake in Interduty. Thus, Bankinvest was carrying debt arising from loans to Bankinvest for the benefit of Interduty when Renta sold Bankinvest (including its ownership stake in Interduty) to Baez-Figueroa in August 2001. Critically, Renta also alleges that some of that debt was to him; that is, he contributed substantial amounts of personal capital to the duty free stores venture. Thus, the transfers of funds from BanInter to Bankinvest and Interduty, [9] which typically found their way into Renta's hands, represented a repayment of loans he made. Renta further maintained that he and Baez-Figueroa contemplated this arrangement whereby Renta could inject or remove personal funds as needed in his discretion. Further, Renta maintained that this arrangement was essentially a gentlemen's agreement between himself and Baez-Figueroa, consummated on a handshake and not reduced to writing. Of course, if the jury believed his testimony, it should have found for Renta, because the funds transfers would be payments of bona fide liabilities. If Renta injected personal funds into the duty free store venture, Bankinvest would indeed have substantial liabilities to him. Thus, one would expect the documents consummating the sale of Bankinvest to Baez-Figueroa to recognize these obligations. They do not, or at least, there was sufficient evidence for the jury to reject this characterization. The sale documents do not specifically list the existence or amount of any debts owed by Bankinvest to Renta. Rather, the agreement provided that Renta represented that Bankinvest's only liabilities were (i) those to BanInter or related entities, [10] including Interduty, and (ii) credit obligations with other banks directly or indirectly guaranteed by BanInter. The agreement did not specifically state that Bankinvest owed Renta or Wadeville $30 million. Renta tries to argue that the agreement indirectly referenced this alleged liability, because it noted that the sale was subject to liabilities related to Interduty, which included the alleged liability to him. But the sale documents hardly compel this conclusion, and the jury was free to disbelieve Renta's characterization of these transactions. The Bankinvest sale documents state that the company had liabilities related to Interduty, but they do not state that any of those liabilities are to Renta. At best, the sale documents are ambiguous, and did not compel the court or the jury to accept Renta's story. Renta also made numerous inconsistent or implausible statements which may have undermined his credibility in stating that Bankinvest owed him money. For example, he admitted telling inconsistent stories about the purposes of the funds transferstelling BanInter and TIBOM that they were to pay on letters of credit for which Bankinvest was liable, but frequently transferring funds to Wadeville, his personal expense account, or to Interduty, which then transferred them to Wadeville. And it appears Renta never represented to BanInter that the funds he requested were repayment of loans by him. Renta also stated that he did not need documentation concerning his injection of funds into the duty free stores because he had adequate collateral for the loans, namely, shares of the duty free stores. But the evidence showed that Renta was required to relinquish those shares as collateral for another loan. In short, although the jury would have been free to accept Renta's testimony that the transfers to him were payments of loans he made to the duty free stores, there were also ample grounds for it to reject this characterization of the transactions. Thus, because there was a sufficient basis for the jury to conclude that the funds transfers did not represent repayment of loans by Renta to the duty free stores, the jury could permissibly find that Renta had no right to the funds. As explained in part II, this affects the analysis of the sufficiency of the evidence on the RICO claims.