“The Federal Public Prosecutor’s Office in São Paulo denounced on Monday, January 7, 2018, 17 members of a criminal organization that worked on several fronts for the practice of financial-administrative illicit crimes at Banco Cruzeiro do Sul SA…between January 2007 and March 2012.”

Subsequently, the bank was liquidated and audits showed “impairment of the institution’s economic and financial situation and serious violation of rules issued by the National Monetary Council and the Central Bank.”

Firm was retained by Counsel on behalf of a Brazilian client who sought confirmation of a tracing exercise to recover property valued over $20 million in the State of New York. This action was necessary given the practice of ‘illicit crimes’ by management of a financial institution in Brazil that resulted in material over-statement of its economic condition. The practice included the fraudulent removal of funds from the bank to acquire the property.

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The Washington Post reported on July 16, 1998 the headlines “World Bank Hires Auditors to Probe Its Own Spending” “Possible Kickbacks, Embezzlement Cited”.  It states: “World Bank President James D. Wolfensohn acknowledged yesterday that within the past two months he has setup a special internal fraud team and hired the global accounting firm PricewaterhouseCoopers.” The Post reported on October 24, 1998 an article entitled ‘World Bank Probes Pakistan Project’ where it referred to PWC and its work on tracing ‘Elwan’s international holdings and vast financial records of the Pakistan projects.’

As the engagement partner, I led our team in conducting global investigations into allegations of corruption, conflicts of interest and fraud, regarding the Bank’s loan program and to advise on the Bank’s anti-corruption initiative.  This effort was the result of President Wolfensohn’s belief that “corruption effects development.”

After 18 months, our work led to the disbarment or removal of various companies and individuals in several foreign countries from any future involvement with any World Bank project.  Thereafter the Bank created its own permanent investigation group.

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Tracing Loans Across Borders

The Washington Post reported on July 16, 1998 the headlines “World Bank Hires Auditors to Probe Its Own Spending” “Possible Kickbacks, Embezzlement Cited”. It states: “World Bank President James D. Wolfensohn acknowledged yesterday that within the past two months he has setup a special internal fraud team and hired the global accounting firm PricewaterhouseCoopers”.

As the engagement partner, I had the opportunity to work with counsel in conducting global investigations into allegations of corruption, conflicts of interest and fraud, regarding the Bank’s loan program and to advise on the Bank’s anti-corruption initiative. This effort was the result of President Wolfensohn’s belief that “corruption effects development.”

After 18 months, our work led to the disbarment or removal of various companies and individuals in several foreign countries from any future involvement with any World Bank project. Thereafter the Bank created its own permanent investigation group.

Read July 16, 1998 Press Article

Read April 8, 1999 World Bank News Release on the first debarment

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Tracing the proceeds in the ‘Bank Caper of the Century’

“BANK CAPER OF THE CENTURY” is how Virginia Business magazine described the way former Signet Bank in Richmond, Va., was victimized by John Reiners, a former Philip Morris executive who obtained more than $300 million in bogus loans through Nelco, a local computer leasing company and a New York computer firm owned by Ruffo.

Briefly, the two men invented a fictitious secret project for which the tobacco company supposedly needed millions of dollars worth of computers. Two Richmond banks and six other international lending institutions relied on the appearance of the Philip Morris name on phony documents prepared by Reiners, their former executive. The “con” was that the $300 million would be lent to Nelco in order to buy computers from Ruffo’s company for leasing to the tobacco company’s secret project.

In reality, Ruffo and Reiners invested the money into the stock market but guessed the wrong way. If profitable, they had an exit strategy, a feature significantly absent in most corporate fraud schemes. Later when one of the lenders became suspicious and started to ask questions, the scheme, despite further deceit, collapsed. Counsel for one of the banks had a requirement to trace the loan proceeds through the various bank accounts for the purpose of recovery. This “caper” was well planned and although convicted, I still give them high marks for their creative efforts to succeed.

Read “Bank Official Saw Apparent Loan Fraud”

Read decision of “United States Court of Appeals, Fourth Circuit”

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