In June 2014, MasTec (NYSE: MTZ) purchased Pacer Construction and its related entities from Richard Pelletier, who was the founder and CEO of Pacer, his company Richard Pelletier Holdings Inc. and two others.  MasTec Inc. paid RP/RPHI a cash sum of approximately Can$59 million for his proportionate equity interest in Pacer.  At the time of the purchase, Pelletier was a resident of Calgary, Alberta, Canada. However, in the year 2015, Pelletier and his family moved to the Cayman Islands.

Following the acquisition, it became apparent that Pelletier had falsely represented the financial condition of the companies.  In March 2016, MasTec’s and Pacer’s claims caused them to commence an arbitration against RP/RPHI and the two other sellers.

In March 2019, an International Arbitration Panel determined that RP/RPHI were jointly and severally liable to pay to Pacer the sum of Can$55,775,277.50. After the two other sellers had repaid their proportionate share to MasTec, RP/RPHI remained liable to Pacer for the amount of some Can$34 million.

MasTec’s counsel includes Sequor Law partner Edward Davis in Miami who retained Lindquist in order to determine the current whereabouts of the purchase funds that were paid to RP in 2014.

After a study of several personal and corporate bank accounts of Pelletier at various financial institutions in four countries (including tax havens) during the years 2014 to 2019 along with other related financial documentation, Lindquist was able to disclose the movement of funds through the various countries and their use, particularly their lifestyle and the identification of assets.  Subsequently Counsel has obtained freezing injunctions as the asset recovery process continues.

MasTec Expands Canadian Oil Sands Presence with Acquisition of Pacer Construction

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On April 12, 2016, a Chilean businessman wanted for an investigation into one of the biggest financial frauds in Chile, was identified by a Chilean camera crew in Malta in the reception of a hotel in Valletta. Alberto Chang Rajii (“Chang”), founder of the Arcano Group had left Chile on March 12, 2016 on a flight to the United States. In mid-April 2016, Chang’s bank accounts in Chile were frozen and the Chilean prosecutors delivered the search warrant that would later become an international arrest warrant.

Previously, an anonymous complaint against the Arcano Group had been sent to the Chilean Office of the Prosecutor in Las Condes in December 2015 and he has since been under investigation. He has been living in Malta, having successfully avoided extradition to Chile, where he is wanted to face charges of investment fraud running into millions through a Ponzi scheme run by his company.

Malta Independent

“Alberto Chang-Rajii is the tech guru who allegedly wowed Miami with an elaborate backstory that turned out to be totally made up. Maltese authorities previously said that Mr. Chang-Raji tried to buy citizenship on the island through a program that encourages investors to pour money into the island, but reports read that the authorities denied his efforts.

Chang-Rajii allegedly raised millions from Miami investors with a tale of leaving Chile for Stanford University in the mid-1990s, where he said he met Larry Page and Sergey Brin and became an early Google investor. He became a board member at Endeavor Miami and regularly spoke at tech conferences and universities.

But later, the Miami New Times reported that his Stanford tale was bogus, as journalists back in Chile raised questions about whether his business was legit. As Chilean investigators closed in, Chang-Rajii abruptly fled to Malta and essentially disappeared.”

Chang’s company Onix went into compulsory liquidation in May 2016 after it defaulted on its liabilities to a Chilean creditor, with the Santiago court appointing Carlos Parada Abate as its liquidator. The company had over US$120 million in liabilities to over 1,000 creditors at the time of its liquidation.

Parada’s US counsel is Sequor Law partner Edward Davis from Miami. After an Australian court had become the latest to recognize Chilean liquidation proceedings in January 2018 Davis stated, “We are very happy to have obtained…additional recognition for Mr. Parada in Australia which will allow him to secure real estate, bank accounts and artwork that are believed to be worth more than AU$5 million [US$4 million] in value.”

Chang’s alleged personal spending on properties in Australia, the British Virgin Islands, Miami and London had instigated the global round of recognition proceedings for his Chilean liquidation.

Mr. Parada’s counsel then retained Lindquist in order to establish the flow of funds, the quantum of their source and use and to identify assets.

Lindquist’s ‘Approach’ was driven by the finding of bank transfers as the primary way that Chang moved funds on a daily basis from their initial source to their ultimate use to fulfil a particular need in order to maintain the Ponzi fraud.  There were a few thousand of these bank transfers. From Lindquist’s perspective, all related-party bank transfers were meaningless until such funds were either paid to a third party, retained by Chang for personal benefit or were in the ‘unknown’ category.

After a study of several personal and corporate bank accounts of Chang at various financial institutions in eight countries during the years 2009 to 2016, Lindquist determined that the total amount obtained was some $201 million that was traced to Chang’s personal benefit, assets and the unknown category.  Counsel has recovered the assets on behalf of the victims.

The Chang Difference from Madoff

Lindquist had also been retained on the Bernie Madoff case and offers the ‘Chang Difference’. Chang promised payments of interest in cash to his investors and these payments required cash with regularity, usually every month.  Banco Santander provided “giros” for each bank account and the “giros” present a list of investors with the same names, same sequence of names, amounts and pay dates that was repeated on a monthly basis.  Consequently, there was constant pressure on Chang to enhance his ‘image of success’ in order to secure new cash in a timely fashion to repay the promised obligations to the past investors.  Madoff took a different approach.  Madoff fabricated false trading documents and account statements that reported profits and sufficient returns on investment that caused the investors to keep their funds with Madoff.  Hence Madoff did not have this type of ‘cash’ pressure.  Madoff was still exposed to his investors but only when a bear market appeared that would encourage investor redemptions.

Mystery Surrounds Missing Chilean Venture Capitalist

Who Is Alberto Chang Rajii, The Chilean ‘Madoff’ Who Wanted Maltese Citizenship?

Criminal Appeal Court Declares Alberto Chang Rajii a Free Man

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Firm was retained by Counsel, namely Boies, Schiller & Flaxner, LLP on behalf of the plaintiffs in a matter known as ‘Anwar, et al., Plaintiffs vs. Fairfield Greenwich Ltd, et al., Defendants’ where the subject matter is Bernie Madoff and his Ponzi scheme. The engagement was as a testifying expert on forensic accounting matters in the Anwar class action. Lindquist issued a “Rebuttal Expert Report” to opine on issues raised in three “Expert Reports” that essentially expressed the opinion that the defendants could not have “uncovered the Madoff Ponzi scheme because it was so sophisticated and impenetrable that even an investigation focused on fraud could not have discovered it”.

In November 2015 a $125 million settlement was reported with the hedge fund administrator Citco Group and in May 2016 a $55 million settlement was reported with PricewaterhouseCoopers, the auditor of the feeder fund Fairfield Greenwich who had previously settled for an amount of $80.3 million.

View PwC in $55 million settlement with Madoff…

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Many Fools’ Gold

May 5, 1997 Headlines:
Bre-X Minerals Limited was a “Canadian mining exploration company that falsified the gold strike (in Indonesia) and then hyped its stock price to the heavens” from Wall Street Journal. The Washington Post headlines read “A Lode of Lies: How Bre-X Fooled Everyone No Deposit, No Return”. The Calgary Sun, home city of Bre-X in Canada headlines read “Bre-x: There’s No Gold – MASSIVE FRAUD”.

Two days earlier, before the story had broke, I had arrived in Calgary to attend a meeting in the boardroom of Bre-X the next day with David Walsh, the company’s CEO and members of the Board, Management and Counsel. We were sitting and waiting. On the phone from Grand Cayman was another management member, also waiting, John Felderhof.

The door opened and Graham Farquharson, a mining engineer entered the room, sat down with his report entitled “Busang Technical Audit-Interim Report” and read slowly, “The magnitude of the tampering with core samples that we believe has occurred and the resulting falsification of assay values at Busang, is of a scale and …to our knowledge, is without precedent in the history of mining anywhere in the world”.

We then set about preparing a press release and starting our investigation.

To be present when such a ‘fraud realization’ event occurs is an ever-lasting memory in the study of human behavior. It was also my largest ever retainer: $1,000,000.

Read the May 3, 1997 Interim Report of Farquharson

Read the May 4 Press Release.

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