by the El Reportero’s wire service
Payoffs to the FBI & U.S. Attorney offices
As the CEO of Commercial Solar Power (CSP), Mr. Lawless ordered a forensic investigation into the $13,200,000 losses the company incurred while doing business in Puerto Rico. In an effort to better understand the causes for such losses, Mr. Lawless and his team uncovered questionable practices by the Puerto Rico Government and outright fraud by the Credit Rating Agencies, Fitch, Moody’s and S&P.
The very first step in considering an investment of company resources in any company is to check the credit ratings of the company and make sure they are financially sound. In this case, the rating agencies were giving the Puerto Rico Electric Power Authority an “A” rating. A pretty sound rating for a utility company.
Given that the credit rating was the companies first step in their due diligence process, CSP did an audit of the bond offering memorandums that these good ratings were based on. The audit uncovered hundreds of millions in missing funds and a utility that has been technically bankrupt since 2007. It seemed inconceivable to the CSP team that all three rating agencies gave a bankrupt company an investment grade credit rating. We delivered the results of our audit to the Puerto Rico FBI, U.S. Attorney and the Puerto Rico Legislature.
After receiving no response for many months, I wrote an editorial that appeared in many Puerto Rico Newspapers and Blogs. Shortly after I wrote the article I started receiving phone calls. One of the calls was from someone who implied he was from the CIA and stated that the CIA has been listening into phone activity between the utility and Hugo Chávez (Venezuela). The calls detailed a criminal enterprise that was stealing literally billions in public funds through bogus oil purchases and fraudulent municipal bond issues. While listening in to the conversations over a number of years it became clear that the Puerto Rico FBI Office and the Puerto Rico U.S. Attorney Office were (and are) accepting payoffs to insure no interference from those agencies. This story was confirmed to me by British Intelligence and confirmed a third time by the editors of Caribbean News Now.
Shortly after this disclosure the FBI got back to me. I was left a voicemail that suggested the agency was very concerned about my criminal complaint but could not find criminal grounds to pursue charges. I was surprised by that response so I contacted all persons of interest and discovered no one was ever interviewed by the FBI. In addition, during this time frame, two private parties filed RICO charges against the utility that were challenged and upheld by the courts. Amazing that private parties can file charges claiming that the utility is an organized criminal enterprise but the DOJ can’t.
To make matters worse for the FBI and the U.S. Attorney, the Puerto Rico Senate issued a 23-page report outlining the theft of billions and the purchase of knowingly fraudulent credit ratings from Moody’s, Fitch and S&P. These phony credit ratings have already resulted in billions of losses for those bond holders. Once again the FBI and U.S. Attorney did nothing.
We have a 23-page confession and financial audits supporting all of the illegal activity. No charges, no investigation.
It was brought to my attention that Treasury Secretary Lew while COO for Citibank, and Treasury Counsels, Weiss and Campbell while working for Lazard, participated in this fraudulent activity by selling these knowingly fraudulent bonds before joining the Treasury Department. This may help explain the reluctance of the FBI and DOJ to do anything about any of this.
Now it is up to the Press to bring pressure on our legislators to get involved.
(Richard Lawless is a former senior banker who has specialized in evaluating and granting debt for over 25 years. He has a Master’s Degree in Finance from the University of San Diego and Bachelor’s Degree from Pepperdine University. He sits on a number of Corporate Boards and actively writes for a number of finance publications).