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AREB’s solution: a vulture fund penalized by FinCEN for managing a bank that laundered money in Santo Domingo

04/05/2018/in Useful Publications /by BankAdmin

Original Article Source “Exposing the Real JC Flowers & Co The American vulture fund chosen by the AREB, J.C. Flowers, to manage the assets of Banca Privada D’Andorra (BPA), is an old acquaintance of FinCEN. J.C. Flowers bought a small bank in the US, which was penalized by the agency within the Department of […]

The “vulture fund” JC Flowers is the one getting the most benefit out of millions in interest payments

02/05/2018/in Andorra, BPA & VALLBANC, Frontpage News, In English /by BankAdmin

The “vulture fund” JC Flowers is the one getting the most benefit out of millions in interest payments produced by nearly 250 million euros that have been blocked since March 2015 – later on deposited in Vall Banc –, affecting hundreds of investors as a result of the intervention to the no longer existing Banca […]

AREB’s solution: a vulture fund penalized by FinCEN for managing a bank that laundered money in Santo Domingo

04/05/2018/in Useful Publications /by BankAdmin

The “vulture fund” JC Flowers is the one getting the most benefit out of millions in interest payments

02/05/2018/in Andorra, BPA & VALLBANC, Frontpage News, In English /by BankAdmin

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AREB’s solution: a vulture fund penalized by FinCEN for managing a bank that laundered money in Santo Domingo

04/05/2018/in Useful Publications /by BankAdmin

Original Article Source “Exposing the Real JC Flowers & Co

The American vulture fund chosen by the AREB, J.C. Flowers, to manage the assets of Banca Privada D’Andorra (BPA), is an old acquaintance of FinCEN. J.C. Flowers bought a small bank in the US, which was penalized by the agency within the Department of the Treasury for having carried out large monetary transactions with murky clients in Mexico and the Dominican Republic.

The Saddle River Valley Bank was a small entity with two branches in New Jersey that was struggling to overcome the recent financial crisis. J.C. Flowers looked for a bank to invest in as a strategy to gain access to other bankrupt entities through the SRVB Federal Deposit Insurance Corp., which would also allow them to have access to an electronic banking network in Latin American countries. Under the management of J.C. Flowers, between 2009 and 2011 the aforementioned entity from New Jersey moved $1.5 billion in financial transactions with clients from Mexico and the Dominican Republic – a country that is well known to the President of the Andorran Government, Toni Martí – while at the local level it was only able to move around $120 million.

Unlike BPA – in which the same Andorran authorities have not had another option than to recognize that the immense majority of the clients and financial transactions do not raise a single doubt in regard to their legality – in Saddle Ricer Valley Bank’s case its legitimate domestic banking transactions were nonexistent compared to its participation in money laundering operations in Latin America. For this reason, the Latin American line of business of Saddle River attracted the attention of FinCEN, which opened an investigation into them in 2011.

Shortly after it became known that the FinCEN was investigating Saddle River Valley Bank, J.C. Flowers sold the bank’s assets in a hasty manner, accepting an undervalued offer from Union Center National Bank, which was a significant loss of money for the minority shareholders of the then troubled New Jersey bank. In 2013, the New Jersey bank accepted a fine from FinCEN of $8.2 million given the various charges against it including the inability to use a program to effectively combat money laundering. J.C. Flowers claimed that it new nothing about the activities at Saddle River Valley Bank (SRVB) despite having spent nine months reviewing the bank’s documents before deciding to buy it. It seemed unthinkable not to realize it given the fact the bank managed relatively few deposits, and instead had transactions with Latin American clients that increased the bank’s assets by fifteen times.

In 2012, the minority shareholders, who had lose a lot of money, decided to sue SVRB and J.C. Flowers for not fulfilling their pledges to renew and revive the New Jersey bank. The legal proceedings came to an end at the request of the parties and also by the man who had been in charge of the bank and one of its founding partners, Conrad Caruso, who was the initiator of the suit, and the rest of the plaintiffs and defendants who remain anonymous. The case was finally resolved with a financial settlement: $1.2 million.

All of this brings to mind the fact that the claims by AREB, that choosing J.C. Flowers ensures that they have “achieved all the objectives laid out in the BPA resolution plan,” seem rather hypocritical. Which objectives would those be? Finding a buyer that had a bank that was laundering massive amounts of money and that was penalized by FinCEN? To give a constantly growing bank to a vulture fund that claimed it did not recognize it acquired a bank that was making transactions valued at a minimum of $1.5 billion in a bank that only had $120 million in assets? Does the AREB expect from J.C. Flowers the same treatment and ethics that this US company showed the United States? Or perhaps all this is just an attempt to sell the bridge bank at any price with the sole objective being to brush under the rug the incompetence of the Andorran government in managing the crisis caused largely by itself, and its lack of transparency.

TIMELINE

2006: Conrad Caruso founded Saddle River Valley Bank (SRVB) with the goal of creating a business that offers investment and loan services to local businessmen.

2007-2008: SRVB gets rather mediocre returns and the financial crisis hits them hard. They intend to survive.

2009: During the first nine months of the year, J.C. Flowers begins a courtship with the bank and starts to scrutinize its balance sheets before coming to an agreement to take over majority control of the bank. During this time, the bank begins to offer international transfers. In October of that year, J.C. Flowers reaches an agreement to acquire the subsidiary of the bank, SRV Holdings LLC for about seven million dollars.

2010: SRV Holdings officially acquires the necessary assets to take over majority control of the bank.

2011: SRVB’s operations attract the attention of the regulator, which orders them to stop violating established anti-money laundering laws, and instead they establish programs to avoid them. The company ignores the warnings and FinCEN opens an investigation.

2012: The bank fights back to save itself and, in this context, agrees to sell the majority of its assets and deposits to Union Center National Bank for $9 million, an incredibly undervalued price. At the same time, six minority shareholders, including the founder of the bank, Conrad Caruso, sues the bank, its board and J.C. Flowers for bringing the bank to the ground.

2013: Saddle River Valley Bank accepts a fine of $8.2 million from FinCEN. Flowers had sold the bank’s assets in 2012, but the events under investigation were carried out from 2009 to 2011, during the time in which J.C. Flowers was in charge of the bank’s management. J.C. Flowers denied having knowledge of the facts and never filed official charges.

The “vulture fund” JC Flowers is the one getting the most benefit out of millions in interest payments

02/05/2018/in Andorra, BPA & VALLBANC, Frontpage News, In English /by BankAdmin

The man behind the venture capital firm “JC Flowers” is J. Christopher Flowers, 60 years of age, known as “business pirate”, with a fortune that amounts to 1.170 million euros according to Forbes magazine. The firm has control over the greatest group of firms in the world which invests in financial institutions, most of them ailing banks, from Spain to Japan.

This entity has been focusing on the European periphery for years. Used to looking for profits where only bankruptcy and destruction exist, it saw in Andorra a great opportunity for business and acquired the assets of BPA for the bargain price of 29 million euros, when the actual value was more than 500 million euros.

JC Flowers was suspiciously chosen by the State Agency for Resolution of Banking Institutions of Andorra (AREB) to manage the assets of the extinct BPA. However, when it acquired the “good” funds from Vall Banc, it was penalized by the FinCEN for managing a bank involved in money laundering, in contrast to the BPA, where the Andorran authorities had no choice but to recognize the lawfulness of the great majority of the clients and financial transactions.

After acquiring the Saddle River Valley Bank, a small bank located in New Jersey in the United States, the “vulture fund” was penalized by the FinCEN for carrying out major monetary transactions with shady clients in Mexico and the Dominican Republic. In spite of this bad precedent, the AREB approved the buyer, not caring at all about the lack of ethics of this American company who owned a bank implicated in money laundering.

Although some analysts affirm that selling the bridge bank was a desperate measure in response to the Andorran government incompetence at handling the crisis to a large extent caused by itself and its lack of transparency.

Moreover, AREB’s affirmations turned out to be a complete farce, since none of the objectives established in the BPA’s resolution plan were met. Over three years from the illegal intervention and not the slightest attempt has been made to give back the funds to the rightful owners, who are legally supported and will not give up the fight to get their savings back. More than 110 penal and administrative complaints have been presented before the Andorran court.

Despite the actions taken by major shareholders, the brothers Ramon and Higini Cierco, against JC Flowers and the Andorran government to hold up the illegal bank expropriation process, it was biased from the start due to mishandling, kept in secret and devoid of accountability and rule of law.

From the very beginning, the Cierco brothers rejected this American fund and were sure that this was not the ideal solution to the problem. It had a doubtful investment history and the Spanish government had already rejected it in previous attempts to acquire a Spanish bank in weak financial position.

In other words, JC Flowers was never a serious or responsible alternative to solve this disaster, which until today, has been poorly handled by the Andorran government. In previous years, it had also faced its own financial restructuring problems, legal claims and reputational damages to its investors due to their funds being “exposed to unsuccessful deals”.

The regulating Andorran authority never revealed why they supported the expropriation of a successful and highly creditworthy financial institution over a more reasonable restructuring alternative to assess and eventually correct any weaknesses in the anti-money laundering control process.