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[UPDATED] Is Victor Vargas' Banco Occidental de Descuento a Ponzi?

UPDATED* - Legal news from Curaçao provide another exhibit of Venezuela being the undisputed king in the major leagues of corruption. Andrade Gutierrez, not necessarily the cleanest of operators as exposed in Lava Jato scandal, took Victor Vargas' Banco del Orinoco NV (BdO) to court. The reason being, if our interpretation is correct, that Andrade paid into BdO $2,150,000 as security for a parallel loan provided to Constructora Andrade in Venezuela, through Vargas' Banco Occidental de Descuento (BOD). Constructora Andrade repaid the loan to BOD in Venezuela, alas it got crickets when it went to BdO in Curaçao to get collateral back.

Andrade filed a case against BdO and the court granted a default judgement in Andrade's favour. Vargas' BdO was a no show. A communication to relevant authorities (see below) was leaked to this site. It suggests that Vargas' $1 billion plus investment portfolio, which would back his banks operations across the Caribbean, is simply non existent.

We got in touch with Curaçao court folks for corroboration, and they kindly sent the ruling on Andrade's case (pdf), adding that a verdict is to be announced on 26th October.

UPDATE 11 NOV 2018: read here judgement against Victor Vargas' BdO, dated 26 Oct 2018, ruling $5,292,296 million payment in favour of Andrade.


Communication from representatives of aggravated parties.

We are a group of lawyers and accountants representing customers from Banco del Orinoco, N.V. (BdO). We deliberately omitted the names of our customers and also our identification, to avoid BdO retaliation against our customers. It is important to point out that in the past, when customers presented claims or legal actions against BdO, the UBO of this financial institution, Mr. Victor Vargas, ordered the closure of all the bank accounts of the concerning customers in the whole BOD FINANCIAL GROUP, the annulment of their credit cards, and other similar and illegal measures toward claimants, like baseless criminal procedures against them. You should know that BdO is governed by an international “Criminal Gang” integrated by Mr. Victor Vargas, Mr. Raul Baltar, Mr. Ivan Hernandez, Mr. Domingo Infante, Mrs. Careli Valentine, Mr. Jose Escudero, Mrs. Jasmir Pineda, Mr. Hector Caraballo, and Mr. Santos Alonso.
 
a) Relevant Facts
 
During the past three years, many customers of BdO, an international bank operating in Curacao and under your supervision, presented claims and legal actions before Curaçao’s Courts and before the Centrale Bank. In all those cases, customers suffered important damages because of the expenses and legal fees they had to pay in order to recover their money. In addition, they lost business opportunities, contracts, options in real estate and other deals, and in some cases customers have been forced to lose medical treatments because their money is illegally retained by BdO, compromising their health and even their lives. We know that some months ago the Centrale Bank has acted, putting BdO under close supervision. However, the problem is getting worse, and the measures adopted by the Centrale Bank are neither enough nor appropriated to deal with the very hazardous situation we are facing in this case.
 
As the financial supervision authority of Curaçao and Sint Maarten, the Centrale Bank has the power to investigate and discover the real problem behind BdO’s client claims. As a consequence of such number of claims and legal actions, you have had to perform a special audit procedure to determine what is really going on with BdO. However, you have missed the point over and over again, concentrating your efforts on the wrong issue: the delay and/or no execution of wire transfers.
 
We know for trustworthy inside information, that the problem is much bigger. Some of our sources say that BdO has reported an investment portfolio for more than one billion dollars. However, Bank’s lack of liquidity is evident and the Centrale Bank knows it. The investment porfolio does not exist, and the confirmations provided by the alleged custodians are, all of them, fake.
 
Our sources also indicate that the lack of liquidity would be a consequence of two different causes: either BdO has simply lost its investment portfolio, or such portfolio has been pledged and then lost. In both scenarios the situation is quite alarming, because it means that the Centrale Bank and the independent auditors, are unaware of something that they should have known a long time ago, acting accordingly to protect the funds entrusted to BdO by the depositors.
 
Hence, it seems that BdO is bankrupt and is paying withdrawals and wire transfers with deposits of new customers, like in the famous Ponzi’s and Madoff’s criminal schemes, or has used its partner Bank BOD to obtain funds from illegal exchange transactions in Venezuela.  
 
If this is the real situation, we would like to ask you what kind of supervision have performed the Centrale Bank and the auditors of BdO?
 
Have you ever asked to the custodians of the bonds for a confirmation about the existence, composition and realized or unrealized losses of the BdO’s investment portfolio? Is the Centrale Bank absolutely sure that BdO has a diversified investment portfolio? Have you ever talked with the bank's auditors? Have you ever asked your peers from Antigua & Barbuda, the Financial Service Regulatory Commission, what is the situation of Victor Vargas’ bank there (BOI BANK CORPORATION)?
 
We know from trustworthy inside information that the situation is similar or worse, so we would like to ask you what conclusion could you get from this? From our point of view, based solely on facts, both Banks are in a critical situation because they don’t have assets to return depositors’ money.
 
A very reliable source indicates that a team of high executives and financial and legal advisers form BdO (the aforementioned Criminal Gang), intentionally manipulated the books and the financial statements, which is a criminal conduct.
 
We understand that to go public with this information, would be a disaster for BdO and also for the Curaçao financial system; but acting in the name, and following instructions of, our customers, we cannot tolerate anymore that the BdO current authorities (the Criminal Gang), continue deceiving customers and using their money inappropriately. We are ready to act in the short term to put an end to this dangerous and illegal situation.
 
b) Petition
 
In light of the above, we ask the Centrale Bank:
 
1.     To take this opportunity to immediately put BdO under the full control of the Centrale Bank, replacing the whole Board of Directors with professional, accountable and honest people.
 
2.     To discuss openly the situation of BdO with the independent auditors (KPMG) in order to protect the interest and rights of depositors.
 
3.     To establish urgent communication with regulatory authorities from Antigua & Barbuda (BOI BANK), Panama (ALLBANK) and Dominican Republic (Banco Multiple de las Americas BANCAMERICA) in order to have a broader vision of the whole Financial Group situation and the actions of the aforementioned Criminal Gang in those jurisdictions.
 
4.     To order the immediate sell of at least 10% of the “investment portfolio” of the Bank in order to execute all the pending obligations of the institution, especially with the depositors (wire transfers, withdrawals, credit card payments, etc.). If the Bank cannot do that is because the investment portfolio does not exist anymore.
 
Now that you know the truth, please don’t act in criminal complicity with the BdO’s authorities (the Criminal Gang); and don’t neglect the rights of depositors, not only because is your duty, but also because is the best decision for the financial sector of Curaçao.
 
Please don’t take the following as a threat, but if within two weeks as of today we don’t see any action by the Centrale Bank, we are going to act publicly. We have had several meetings with journalist from Curazao, Venezuela and USA, and now we are ready to give them more information and evidence about this issue.
 
Don’t trust anymore either inaccurate arguments of the members of the Board, nor on the UBO’s lies and tampering; just act according to the legal duties and obligations of the Centrale Bank in Curaçao and Sint Maarten.


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