US embassy cable - 04SANTODOMINGO2821

UNCLAS SECTION 01 OF 03 SANTO DOMINGO 002821 
 
SIPDIS 
 
SENSITIVE 
 
DEPARTMENT FOR WHA/CAR (MCISAAC), WHA/PPSC, EB/OMA; 
TREASURY FOR LAMONICA, RTOLOUI; DHS PASS MIAMI FOR 
RFUENTES; DHS ALSO FOR CIS - CARLOS ITURREGUI 
 
E.O. 12958: N/A 
TAGS: EFIN, ECON, PGOV, PREL, DR 
SUBJECT: DOMINICAN BANKING SERIES # 06: "RAMONCITO" GOES TO 
TRIAL 
 
REF: SANTO DOMINGO 2223 
 
1.  (U)  This is cable # 6 in a periodic series on the 
banking sector in the Dominican Republic.  Sensitive but 
unclassified, entire text. 
 
SIPDIS 
 
 "RAMONCITO" SENT TO TRIAL IN THE BANINTER CASE 
 
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What's new: a summary of the bank cases in the Dominican 
Republic 
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In a mixed decision issued on April 26, Judge of Instruction 
Eduardo Sanchez Ortiz ruled that enough evidence of 
wrongdoing exists against Ramon Baez Figueroa and Marcos Baez 
Cocco to send them to trial on charges of criminal fraud and 
mismanagement of Baninter.  Sanchez Ortiz dismissed all 
criminal charges against Luis Alvarez Renta, Vivian Lubrano 
de Castillo and Jesus Troncoso Ferrua.  Attorneys for the 
GODR and the Ramon Baez and Marcos Baez defense team have 
filed appeals.  Luis Alvarez Renta's legal team has placed 
full page ads in the local press saying, in essence, "I told 
you so - I didn't do it." 
 
The Bancredito case continues, with the assigned judge of 
instruction compelling witnesses to appear and compiling 
evidence in the case.  Banco Mercantil became the third bank 
to have its executives implicated in fraudulent activities. 
On April 16, attorneys for the GODR Central Bank filed 
charges against six former executives. The new case is also 
with a judge of instruction. 
 
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Baninter: decisions, appeals and new charges 
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Judge Sanchez Ortiz's decision that sufficient evidence 
exists to indict Ramon Baez and Marcos Baez comes after 9 
months of work.  He was slowed by the complexity of the case, 
but also hampered by legal maneuvering by the Baez defense 
team, the Alvarez Renta defense team, and the Central Bank 
(CB) attorneys.  The technically complicated case required 
numerous requests for extension by Sanchez Ortiz in order to 
review voluminous documentation and learn the basics of how 
to treat complex fraud cases.  The legal wrangling by all 
parties was par for the course, for these are high powered 
defendants, with high powered and high priced attorneys. 
 
The judge's decision to drop all criminal charges against 
Luis Alvarez Renta is disappointing but not unexpected. 
Alvarez Renta was the only defendant who did not hold an 
executive position within Baninter.  More surprising and 
disappointing is the decision to drop all criminal charges 
against Lubrano and Troncoso, respectively vice president and 
legal counsel for the bank.  CB attorneys have appealed the 
decision of Sanchez Ortiz to drop all charges against Alvarez 
Renta, Lubrano and Troncoso, so the case against them remains 
active. 
 
The CB attorneys have also appealed the jurisdiction of the 
appeals court.  They  took this portion of their appeal 
directly to the Dominican Supreme Court, asking that any 
appeals to the Baninter case be removed from the First Penal 
Court of Appeals to another Dominican Court of Appeals. 
Meanwhile, the Baez defense team filed a second petition to 
recuse Sanchez Ortiz from the case (an earlier petition was 
denied).  Sanchez Ortiz made his substantive decision in the 
case before the second recusal petition was heard.  The 
recusal petition went to the First Penal Court of Appeals for 
argument on April 30, and the Court announced on May 3 that 
it would stay its decision on the recusal issue, until the 
Supreme Court ruled on the CB's appeal to remove all appeals 
from its purview. The Baez defense team covered all bases, 
also appealing the indictment of Ramon Baez and Marcos Baez. 
 
The CB attorneys have filed another criminal complaint 
against a Baninter actor.  On May 3, the team filed, with the 
court administrator for criminal cases, a complaint alleging 
embezzlement by Americo Bogaert Marra, former Baninter vice 
president in charge of credit card operations.  The complaint 
alleges Bogaert embezzled, stole, or otherwise committed 
fraud in the amounts on RD $1,209,784 pesos (about USD 
26,000) and USD 10,380. 
 
- - - - - - - - - - - - 
Justice Begins to Work 
- - - - - - - - - - - - 
These events represent an initial and tentative success for 
the Dominican judicial system.  Many individuals (government 
officials, private businesspeople, attorneys, and others) 
told us that they did not expect any of the players to be 
indicted.  Two out of five isn't a great ratio of indictments 
to dismissals, but it beats zero out of five on any day.  A 
second positive is the persistence of the CB attorneys.  The 
immediate appeal of the dismissal of the case against Alvarez 
Renta, Lubrano and Troncoso, along with the filing of a 
second complaint against a former Baninter executive within a 
week of Sanchez Ortiz's decision, indicates to all that the 
CB lawyers intend to keep the fire stoked and the pressure 
on.  The most important audience may be the general public - 
who now see through press reports that the GODR is not 
letting bank fraud cases slip quietly out to sea without at 
least making an attempt to keep on shore and active. 
 
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Bancredito and Banco Mercantil: Two cases in the early stages 
--------------------------------------------- --------------- 
 
The Bancredito case continues in the preliminary stages with 
Judge Annikssa Serra de la Mota serving as the judge of 
instruction charged with gathering evidence in the case.  In 
April Judge Serra de la Mota ordered the arrest of former 
Bancredito President Manuel Arturo Pellerano and former vice 
president Juan Felipe Mendoza. The arrest warrants were 
issued to compel the former executives to appear and testify 
in front of her.  Mendoza complied, subjected himself to 
interrogation by the judge and was released.  After a full 
day of questioning, he told the press, "I'm free and I hope 
to remain free because no innocent person should be 
detained." 
 
The warrant against Pellerano could not be served because he 
was not in the Dominican Republic.  Mendoza told the press 
that Pellerano was out of the country with his ailing father, 
who is receiving unspecified medical treatment.  Pellerano 
has yet to appear in front of Judge Serra de la Mota. 
 
The criminal charges against former Banco Mercantil 
executives mark the third bank targeted by the CB attorneys 
within the past year.  On April 16, CB attorneys filed 
criminal fraud charges against six former Mercantil 
executives, alleging fraud in the amount of RD $6.5 billion 
pesos.  Charges were brought against former Mercantil 
President, Andres Alejando Aybar Baez; vice president of 
administration and finance, Evelyn Perez Montandon; vice 
president of operations and technology, Ramon Aref Henriquez 
Risk; vice president in charge of auditing and security, Jose 
Manuel Mateo Contreras; and vice president of financial 
control, Rafael Maximiliano Moya Hernandez. 
 
The alleged fraud took place during 2002 and 2003, prior to 
the October 2003 sale of the majority of Mercantil's shares 
to the Republic Bank Limited of Trinidad and Tobago.  The CB 
complaint avers that financial assistance given to Banco 
Mercantil by the Central Bank at a time when Mercantil was 
suffering liquidity problems, went, in large part, to line 
the pockets of the bank executives. 
 
Continued movement in the Bancredito and Banco Mercantil 
cases is a further sign of the GODR's attempts to prosecute 
complex banking and fraud cases.  These types of cases are 
still new to the Dominican judicial system, and there will be 
hurdles to obtaining convictions.  Nevertheless, exposing 
more judges to complex bank fraud cases, attempting to hold 
criminal bankers accountable for their actions, and working 
towards the return of some of the misappropriated funds to 
the CB coffers, can all be seen as signs of progress. 
-------------------------- 
Where do we go from here? 
-------------------------- 
 
The Dominican government's civil case in the Southern 
District of Florida against Alvarez Renta remains active.  So 
does the criminal investigation into possible money 
laundering by the Baninter principals.  Embassy officers 
continue to stress the importance of convictions in the 
Dominican Republic and remind contacts that any money 
laundering case in the U.S. will be easier to prove if there 
are convictions in the Dominican Republic.  We also continue 
to emphasize the devastating effect on the economy of the 
bank frauds. 
 
Even so, we are all too aware that many Dominicans have very 
little faith in their judicial system (particularly when it 
comes to corruption cases) and that even as the cases move 
forward through the courts, convictions and appropriate 
punishment and restitution are not assured. 
 
2.  (U) Drafted by Angela Kerwin. 
 
3.  (U) This report and others in the series are available on 
the classified SIPRNET at 
http://www.state.sgov.gov/p/wha/santodomingo< /a> along with 
extensive other material. 
HERTELL