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

Heading: The Bank Transfers

Text: The centerpiece of this case is a series of bank transactions, occurring between January 2000 and February 2003, which proceeded in similar patterns. The parties do not dispute that these transactions occurred nor that Renta ordered them, but they sharply dispute their nature and significance. The Commission argued, and the jury believed, that the funds transfers were simply looting of BanInter. Renta argued that the funds transfers were returns of his capital investments in, or payments on loans that he made to, the duty-free stores. In each transaction, Renta would take some step to cause BanInter funds, typically held in BanInter's dollar-denominated accounts at American banks, to be transferred to an account of Bankinvest (at TIBOM) or Interduty (at BankAtlantic or Hamilton Bank). Although they all had the same effect, namely transferring money from BanInter to a Renta-controlled entity, the transactions took several different forms. Sometimes Renta signed a letter to BanInter requesting a simple transfer of BanInter's funds to Bankinvest. Typically, the letter request would state that the requested funds were needed to pay on a letter of credit for which Bankinvest was a guarantor. On other occasions, Renta would direct BanInter to debit Bankinvest's account at BanInter in a particular amount, and then direct BanInter to transfer those funds to some other entity. But because Bankinvest's account at BanInter was perpetually overdrawn, each of the initial debits was, in substance, a loan or transfer of funds from BanInter to Bankinvest. [3] On other occasions, BanInter would, at Renta's request, issue a standby letter of credit for Bankinvest in favor of another Bankinvest creditor, such as TIBOM. In those cases, BanInter ultimately paid on each letter of credit. Although most of the transfers were initially made from BanInter to Interduty or to Bankinvest, the transferred funds did not remain there long. Rather, the evidence showed that on most occasions, money transferred from BanInter to Bankinvest was subsequently transferred elsewhere. Sometimes the second transferee was Interduty, but frequently the funds found their way into the hands of entities controlled by Renta [4] or Baez-Figueroa. [5] Typically, the second transfer was for the exact same amount as the request for funds from BanInter. These subsequent transfers were often carried out the same day, or within a few days, of the request for funds from BanInter. On some occasions funds were transferred to Interduty, and ultimately used to pay its debts, even when Renta (or his subordinates acting at his direction) represented to BanInter that the requested funds were to be used to pay on a different letter of credit for which BankInvest was a guarantor. Altogether, Renta endorsed forty six such transactions which resulted in the transfer of $48,455,625 in BanInter funds to the bank accounts of Interduty, entities controlled by Renta or Baez-Figueroa, or, in a few cases, their personal creditors. Of that $48 million, about $33 million ended up in Wadeville, Renta's personal bank account. Meanwhile, these funds transfers were not acknowledged on BanInter's public records. Indeed, BanInter's auditors at Price Waterhouse Coopers were unaware of them until after BanInter's collapse in the spring of 2003. The transfers were booked as loans on a secret, parallel set of accounting records. This parallel set of books had its own computer accounting system and operated as a bank within a bank. Only transactions between entities controlled by Baez-Figueroa were kept on the parallel books, known within the bank as the VP Portfolio. Of course, the loans in the VP Portfolio were treated differently from other loans by BanInter. Normally, a credit committee would assess the viability of a loan before approving it, and it would appear on the public books. But the VP Portfolio loans to Bankinvest were approved solely by Marcos Baez-Cocco, BanInter's Executive Vice President, and booked on the secret parallel accounting system at his direction. In addition to the surreptitious booking, there were also irregularities about the interest rates attached to these loans. The promissory notes (described below) which ostensibly corresponded to the loans to Bankinvest were sometimes recorded in the parallel bank at different interest rates than the notes stated on their face. In fact, some were recorded as zero percent loans. But once the Dominican government attempted to arrange a merger between BanInter and Banco del Progreso, the VP Portfolio loans were hurriedly moved to the public books and, at Baez Cocco's direction, were all given a twelve percent interest rate. Public acknowledgment of the VP Portfolio loans significantly altered BanInter's balance sheet. Renta maintained that he did not know about the parallel books.