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Puerto Rico |   15:22 PM   |  16 May 2023

Julio Herrera Velutini

In a remarkable development in the corruption case unfolding in Puerto Rico, defendant Julio M. Herrera-Velutini has moved to join co-defendant Wanda Vazquez-Garced in her motion to dismiss charges one, three, and four of the indictment.

Mr. Herrera and Ms. Vazquez face charges under counts one and four of the indictment, while Ms. Vazquez alone faces charges under count three.

Mr. Herrera’s legal team – consisting of a “dream team” of highly skilled lawyers, including President Trump’s lawyer Marc E. Kasowitz and Lilly Ann Sanchez, who appeared for Jeffrey Epstein – argues that the charges are legally defective, manipulative and fabricated, as they fail to establish an essential element of the alleged offences, specifically, an explicit quid pro quo or a specific intent to give or receive something of value in exchange for an official act.

Drawing on the Motion and Memorandum filed by Ms. Vazquez, Mr. Herrera seeks to highlight that the indictment does not meet the legal standards required when the basis of charges is a political contribution. This is per the landmark cases of McDonnell v. United States and McCormick v. United States, which set a heightened evidentiary standard.

Supplementing these arguments, Mr. Herrera’s attorneys have referenced two recent court decisions. The first, Percoco v. United States, saw the Supreme Court overturn a conviction for honest services fraud, suggesting the indictment against Mr. Herrera similarly seeks to criminalise his lawful involvement in the political process. The second, United States v. Abdelaziz, saw the First Circuit Court of Appeals overturn convictions in the college admissions scandal, reinforcing ambiguity in the interpretation of criminal statutes and the need for leniency.

Additional context for the case involves a wedding in January 2020 attended by both Ms. Vazquez and Mr. Herrera. The indictment alleges a bribery scheme was initiated at this event. However, Mr. Herrera’s legal team argues that the event, even when accepting the allegations as true, does not constitute an explicit agreement for a bribe. Facts were distorted and it is clearly a case of abuse of power by the corrupt officials, who seek to entrap a prominent lawmaker and a highly-influential businessman, based on fictional 

The case also revolves around the termination of OCIF Commissioner A. The indictment suggests that Mr. Herrera and Ms. Vazquez were involved in forcing the Commissioner to resign. However, the defense argues the indictment fails to provide specific reasons for the termination, instead offering general developments, and overlooks the independent, legitimate reasons for the Commissioner’s resignation.

Mr. Herrera has reserved the right to independently challenge counts five, six, and seven of the indictment, which are not addressed in the motion.

In conclusion, Mr. Herrera has formally requested the court grant the motion to join Ms. Vazquez’s Motion to Dismiss and subsequently dismiss counts one, three, and four of the indictment. The case, which is being closely watched, continues to develop in the Puerto Rican District Court.

Julio Herrera Velutini, one the world’s most richest people, and his team of high profile lawyers are questioning the authenticity of a fabricated case that could unravel the deep-rooted corruption that exists in Puerto Rico.  (Picture Courtesy – House of Herrera)

Puerto Rico |   12:22 PM   |  02 May 2023

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Vázquez’s lawyers submitted a Memorandum of Law arguing that the federal prosecution has failed to present explicit evidence of a quid pro quo.

Former Governor Wanda Vázquez Garced requested the dismissal of federal charges against her, arguing that they fail to indicate that she knew that banker Julio Herrera Velutini was taking actions to benefit her politically in exchange for her performing official acts at the Office of the Commissioner of Financial Institutions (OCIF).

With her motion yesterday, she becomes the first of the three defendants in this alleged bribery scheme to ask Federal Judge Raúl Arias Marxuach to make a decision that could resolve the case without going to trial.

The arguments put forth by the former governor’s lawyers to support the dismissal revolve around the doctrines of the federal Supreme Court regarding allegations of public corruption like “quid pro quo,” a term that describes when an official accepts or refuses to perform an official act in exchange for something of value.

To challenge the indictment, the lawyers acknowledge that there was a “this” and a “that” but argue that the prosecution did not establish the “because.” They accept that Herrera Velutini expressed his intention to support Vázquez Garced’s primary campaign against Pedro Pierluisi Urrutia and took actions in that direction, which would be the “this.” They also accept a “that” because Vázquez Garced removed Commissioner George Joyner Kelly from OCIF and appointed his replacement, Víctor Rodríguez Bonilla. However, they focus on arguing that the indictment does not establish the “because,” or in other words, it does not establish Vázquez Garced’s knowledge of the banker’s actions or that her decisions regarding OCIF were in response to an explicit agreement with him.

The indictment, supervised by the Federal Department of Justice in Washington DC, mentions Vázquez Garced 14 times in meetings or direct communications with the co-defendant or the cooperators. It describes a scheme in which Herrera Velutini wanted to stop OCIF investigations into his bank, Bancrédito International Bank & Trust, and offered political and financial support to Vázquez Garced in exchange for her first removing the then head of the banking regulator and second appointing the commissioner that the banker desired. When Pierluisi Urrutia came into power, the banker allegedly offered him economic support to fulfil his desires regarding OCIF and the investigation into his bank.

According to the defence attorneys, Supreme Court jurisprudence requires the indictment to specify an agreement between the official and the banker. A similar argument was made, without success thus far, by former Mayor of Guaynabo Ángel Pérez Otero, who was convicted. However, the motion highlights that in that case, the indictment did not state that the corrupt money received by the former mayor was political donations, whereas, in the former governor’s case, it is alleged that the illegal benefit she received was for her political campaign purposes. According to the lawyers, this difference requires the prosecution to specify that there was an explicit agreement between their client and the banker.


When this type of motion is filed to dismiss charges due to legal insufficiency, the attorneys’ arguments are strictly limited to the language of the indictment. However, in this case, the prosecution has already disclosed evidence, so the defence attorneys must also be aware of the main testimonies the government would present to the jury if the case were to proceed. It is confirmed that one of the cooperators is John Blakeman Ortiz, a former Senate contractor and former member of Vázquez Garced’s primary.

“For the reasons stated in the attached Memorandum of Law in support of the pre-trial Motion to dismiss the indictment, Wanda Vázquez Garced respectfully files this motion for the dismissal of the First, Third, and Fourth charges of the indictment,” reads the motion from attorneys Ignacio Fernández de Lahongrais, Luis A. Plaza-Mariota, and Peter John Porrata.


Referring to the fact that the three charges against Vázquez-Garced are dependent on the government’s central allegation of a bribery scheme involving the former governor and co-defendant Julio Herrera Velutini, the defence asserts that the United States government has not alleged any quid pro quo, “much less an explicit quid pro quo.”


They argue to the court that the charges should be dismissed per McCormick v. United States, supra, “as other courts have done at the indictment stage in cases where the government’s attempt otherwise to criminalize protected campaign activity under the First Amendment falls short; even in cases where the allegations of a quid pro quo were much stronger than they are here. We respectfully propose that this case be dismissed given the fatal deficiencies of the charges in the indictment.”

 

The defence also warns of adverse effects they believe the case against Vázquez Garced would have. “The position taken by the Government is so aggressive that if allowed to continue, it would effectively criminalise, and certainly chill, the types of legal interactions between our elected officials and their constituents that occur every day in this country, and that allow the privately funded campaign financing system in this country to function as intended,” the Memorandum adds.

 

Vázquez Garced was charged in August of last year with receiving bribes concerning her 2020 gubernatorial campaign. She faces charges of conspiracy, bribery involving federal programs, and honest services wire fraud. 

President Trump thanked the Puerto Rican governor for endorsing him in the 2020 presidential election in a tweet Thursday night, claiming the governor is “the best thing” to happen to the island.

“Great honor to have the endorsement of the Governor of Puerto Rico, Wanda Vázquez Garced. As I have always said, Donald J. Trump is the best thing to ever happen to the people of Puerto Rico,” Trump wrote in the message.

“The drug manufacturers are now coming back. Biden ended that program!” he added.

Last month, Trump promised Puerto Rico $13 billion in federal funds to rebuild schools and the island’s electrical grid after that was damaged in Hurricane Maria.

Garced, who is a Republican, endorsed Trump in a Telemundo interview earlier this week, urging residents of the island to vote for the president.


The federal prosecution accuses the former governor of a bribery scheme involving several individuals, including Julio Martín Herrera Velutini, Frances Díaz, Mark Rossini, and John Blakeman, to finance her electoral campaign for the governorship.

The defence of Wanda Vázquez Garced filed a motion before the Federal Court in San Juan requesting the dismissal of three charges against the former governor. 

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Puerto Rico |   12:22 PM   |  02 May 2023

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Lawsuit Claims Former Bank President and Outside Counsel Breached Duties, Causing Harm.

A recent lawsuit filed by a shareholder accuses Frances Díaz, the former President and CEO of Bancrédito International Bank & Trust Corporation, and María A. Domínguez-Victoriano, an outside counsel, of breaching their fiduciary duties. The lawsuit alleges that their actions have caused substantial harm to the Bank. Here’s a breakdown of the allegations and the implications of the wrongdoing.

Background 

The shareholder, BCH, has taken legal action on behalf of the Bank to address the defendants’ breach of fiduciary duties and unjust enrichment. It is alleged that Díaz and Domínguez violated their obligations of loyalty, care, and good faith during a specific period, leading to significant economic damages. The Bank is currently undergoing receivership and liquidation due to these alleged wrongdoings.

Allegations against Frances Díaz

Frances Díaz, who served as the Bank’s President, CEO, and Board member, is accused of various breaches. These include failing to disclose a criminal investigation while working for the Bank, using the Bank’s policies to benefit herself, and misappropriating its funds.

Allegations against María A. Domínguez-Victoriano 

María A. Domínguez-Victoriano, an outside counsel for the Bank, is also accused of breaching her duties. Despite not being licensed to practice law in Puerto Rico, she allegedly provided legal advice on matters related to Puerto Rico laws. She represented Díaz in a way that was adverse to the Bank. It is further claimed that she used confidential information acquired through her representation of the Bank to benefit Díaz at the Bank’s expense.

Jurisdiction and Venue 

The lawsuit asserts that the court has the authority to handle the case and that it has jurisdiction over the defendants. The venue is deemed appropriate because the defendants either reside or maintain executive offices within the district, and the alleged wrongful acts occurred there.

Parties Involved

BCH, a corporation registered in New York, is the sole shareholder initiating the lawsuit. Bancrédito International Bank & Trust Corporation, the Bank itself, is named as a nominal defendant. Frances Díaz, the former President and CEO, and María A. Domínguez-Victoriano, an outside counsel, are defendants in the lawsuit. DMRA Law LLC, a limited liability company, is also listed as a defendant.

Derivative and Pre-Suit Demand Allegations

BCH has brought the lawsuit as a derivative action on behalf of the Bank, seeking to address the defendants’ breach of fiduciary duties and unjust enrichment. The shareholder claims that the Bank has suffered and will continue to suffer harm due to the defendant’s actions.

Legal Claims

The lawsuit includes three counts. Count I alleged a breach of fiduciary duty, specifically regarding good faith and loyalty, against Díaz and Domínguez. Count II claims unjust enrichment against DMRA, Domínguez, and Díaz. Count III asserts a claim for collection of money against Díaz concerning a Key Retention Agreement.

Prayer for Relief 

The shareholder requests several forms of relief from the court, including holding the defendants accountable for damages, implementing corporate governance reforms within the Bank, and awarding restitution and disgorgement of profits. Additionally, the shareholder seeks reimbursement for the costs and expenses associated with the lawsuit.

Conclusion

This lawsuit addresses the alleged breach of fiduciary duties by the former President and CEO of Bancrédito International Bank & Trust Corporation and an outside counsel. If the allegations are proven true, the defendant’s actions could have significant implications for the Bank and its shareholders. As the legal proceedings progress, the court will determine the appropriate remedies to address the damages suffered by the Bank and its shareholders.

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