VZCZCXYZ0000
PP RUEHWEB

DE RUEHDG #0825/01 1021723
ZNR UUUUU ZZH
P 121723Z APR 07
FM AMEMBASSY SANTO DOMINGO
TO RUEHC/SECSTATE WASHDC PRIORITY 7921
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE PRIORITY
RUCOWCV/CUSTOMS CARIBBEAN ATTACHE MIAMI FL PRIORITY
RUEAWJA/DEPT OF JUSTICE WASHDC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RUEAHLC/HOMELAND SECURITY CENTER WASHINGTON DC PRIORITY
RUEPINS/HQ BICE INTEL WASHINGTON DC PRIORITY
RUEFHLC/HQS DHS WASHDC PRIORITY
RUCPDOC/USDOC WASHDC PRIORITY 1642
RUEAIIA/CIA WASHDC PRIORITY
RHEFDIA/DIA WASHDC PRIORITY
RUMISTA/CDR USSOUTHCOM MIAMI FL PRIORITY

UNCLAS SANTO DOMINGO 000825 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR WHA, WHA/CAR, WHA/EPSC (LKUBISKE), EEB/IFD/OMA, 
INL; DEPT PASS TO SEC, FEDERAL RESERVE; TREASURY FOR 
KUSHLIS, TOLOUI, JLEVINE, WAFER, KLINGENSMITH; DOJ FOR OIA 
ORJALES; SOUTHCOM ALSO FOR POLAD AMSELEM 
 
E.O. 12958: N/A 
TAGS: EFIN KJUS PGOV PREL DR
SUBJECT: DOMINICAN BANKING SERIES, 14: BANINTER PROSECUTORS 
"GUARANTEE" CONVICTIONS, FEAR SENTENCING PHASE 
 
REF: 2005 SANTO DOMINGO 4610 
 
¶1. (U) This is the 14th in a series of cables following the 
Dominican banking frauds and prosecutions.  Extensive 
additional material on prosecutions is available on our 
SIPRNET site. 
 
Baninter Prosecutors "Guarantee" Convictions, but Fear 
Sentencing Phase 
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 
- - - - - 
 
(U) Despite being months away from the completion of the 
State's case, on March 21 prosecutors told Embassy officers 
and Miami-based Immigration and Customs Enforcement (DHS-ICE) 
investigators they predicted victory in the 2.3 billion 
dollar Banco Intercontinental bank fraud trial. Considering 
the track record of previous bank fraud prosecutions in the 
Dominican Republic, State officials have cause for concern 
that any punishment following conviction will not fit the 
gravity of the crime. 
 
-- Background 
 
(U) The 2003 collapse of Banco Intercontinental (Baninter) 
revealed fourteen years of double-bookkeeping designed to 
hide sweetheart loans, embezzlement, and money laundering. 
The demise of Baninter, formerly one of the largest Dominican 
banks, and a subsequent State reimbursement of depositors 
cost approximately 2.3 billion dollars.  With the fraud-based 
collapse that same year of Banco Mercantil and BanCredito, 
total fraud-based losses to the Dominican government 
approached 3 billion dollars for 2003.  These frauds gutted 
the Dominican economy, almost tripled national indebtedness, 
and caused a massive devaluation of the Dominican peso. 
Aftereffects are still felt today. 
 
(U) The State's work is essentially over in the BanCredito 
case, where convictions are on appeal. It is just beginning 
in the case of Banco Mercantil, with the trial phase delayed 
by a jurisdictional dispute.   But Baninter case prosecutors 
are locked deep in the trial process -- a process that began 
only on April 3, 2006, after many months of procedural delay 
by the defense.  On trial for abuse of confidence, money 
laundering, and violation of the monetary law are bank 
president Ramon ("Ramoncito") Baez Figueroa, bank 
vice-presidents Marcos Baez Coco and Vivian Lubrano, and 
in-house legal counsel Jesus Maria Troncoso Ferrua.  Noted 
Dominican economist and  entrepreneur Luis Alvarez Renta, a 
U.S. citizen, faces charges of criminal money laundering in 
connection with the collapse.  He has already been convicted 
under civil racketeering (RICO) statutes in the Southern 
District of Florida for Baninter-associated offenses. 
 
-- Prosecutors have "guaranteed" victory - Is this likely? 
 
(U) German Daniel Miranda Villalona, Chief of the Attorney 
General's three-member Bank Fraud Unit, tells U.S. officials, 
"Given the overwhelming evidence, there is not the slightest 
doubt that the defendants will be convicted." 
 
(U) The evidence supporting his confidence is extensive. 
Prosecutors are in physical possession of the duplicate books 
used to hide the fraudulent activities and have a series of 
nearly 30 experts and other witnesses linking the defendants 
to the fraudulent practices.  The books form only a part of 
the of the 700-odd pieces of documentary evidence that the 
prosecutors can use to support their case.  Two of the most 
recent revelations suggestive of guilt and sure to inflame 
public opinion:  the award of 16 billion pesos of 
"sweetheart" interest-free loans (roughly 890 million dollars 
at the pre-crash exchange rate) and payment of up to 33 
percent interest on deposits by "special" customers.  The 
books also clearly demonstrate that the fraudulent 
bookkeeping began in 1989. 
 
 
(SBU) As suggested by Villalona, outside pressure for justice 
by the United States (Embassy), as well as other diplomatic 
missions and international financial institutions, will play 
a crucial role in obtaining convictions in this case.  But 
for the pressure of the international community the case 
might have derailed itself in the face of the country's 
tradition of pervasive judicial corruption. 
 
-- Proceedings have been ongoing since 2003.  Why hasn't the 
Baninter case "aged out?" 
 
(U) Despite the "speedy trial" requirement of the 2004 
Criminal Procedures Code (CPP), mandating the conclusion of 
legal proceedings within three years, this case has not yet 
aged out.  The Baninter case properly began on May 16, 2003, 
when it was first placed before a "Judge of Instruction" 
(these judges make probable cause determinations, much as 
grand juries do in the United States).  That date in itself 
is unimportant -- the speedy trial requirement introduced in 
revised CPP Article 148 did not come into effect until 
September 27, 2004.  As Article 148 is not retroactive, 
Baninter's "trial clock" did not start until then. 
 
(U) One might then assume that Article 148 would mandate 
termination of this case by September 2007. Prosecutors 
assure us that certification of Baninter as a "complex case" 
by the competent Dominican authority has granted an automatic 
one-year extension of the time available to the parties. 
Accordingly, sentence need not be pronounced until September 
27, 2008. 
 
(SBU) Prosecutors predict that they will complete their case 
within the next 3 months and that the defense case will run 
no longer than 6 months.   A decision should be rendered 
sometime in December 2007. 
 
(SBU) In order to keep things on track, Villalona notes, the 
State is likely to avoid calling all of its scheduled 
witnesses.  It will certainly introduce no more than 500 of 
the 703 pieces of documentary evidence in its possession.  In 
this case documents are thought to be the more critical and 
persuasive form of evidence and prosecutors are using 
witnesses to introduce them into evidence.  As of the 
meeting, the prosecution had presented 12 witnesses and 227 
pieces of documentary evidence.   This has continued at a 
rhythm of two to three full hearing days per week. 
 
-- Will criminal convictions in the United States follow? 
Will a criminal conviction in the Dominican Republic prop up 
a criminal case in the United States? 
 
(U) The short answers appear to be "not necessarily" and 
"no."  Generally speaking, U.S. criminal jurisdiction extends 
only to those crimes that occur within U.S. territory, as 
well as to crimes committed by U.S. citizens or Legal 
Permanent Residents regardless of their location (though the 
country where the crime is committed exercises primary 
jurisdiction). 
 
(SBU) Given the facts revealed to date, it appears that only 
Alvarez Renta is subject to U.S. jurisdiction; he is the only 
U.S. citizen defendant.  The Central Bank's successful civil 
suit against him in U.S. Federal court under racketeering 
statutes (RICO) is a strong indication he committed 
Baninter-related money laundering in the United States. 
There is no indication that any other defendant has conducted 
criminal activities within U.S. territory. 
 
(SBU) For all practical purposes, U.S. prosecution of Renta 
for money-laundering cannot be undertaken without proof of an 
underlying statutory offense such as bank fraud or narcotics 
trafficking.  It appears that DHS-ICE investigators have not 
yet uncovered evidence of any such crime in the United 
States.  Prosecutors recently attempted to amend the 
 
Dominican charges against Renta to include conspiracy, abuse 
of confidence, document falsification, and use of falsified 
documents - charges that would have facilitated prosecution 
in the United States.   The trial court judges rejected their 
petition.  Nevertheless, prosecutors claim that the danger of 
"functional impunity" for Renta is somewhat lessened by the 
Dominican government's ability to certify any local judgment 
to U.S. courts, at least in regard to asset forfeiture. 
 
-- What's the Embassy's assessment of the local prosecutorial 
effort? 
 
(SBU) The prosecutors appear sufficiently competent, thanks 
in part to technical training on complex fraud cases provided 
by USAID in 2004-2005 to the School for Judges and 
Prosecutors. The attempt to amend charges well into the trial 
process speaks of poor initial preparation and of their 
relative inexperience.  Tellingly, Department for the 
Prevention of Corruption Director Octavio Lister notes that 
these prosecutors are "not specialized by training," though 
they are doing the best that they can. 
 
(SBU) Recent indications of a potential disconnect between 
bank fraud prosecutors and others within the Justice Ministry 
cast further doubt on the functioning of the banking fraud 
unit.  Prosecutors assigned to the Unit asserted to us on 
March 21 that no prosecution is planned in the 2005-06 Banco 
Progresso case, in which shareholders have brought charges 
against former executive Pedro Castillo for mismanagement and 
misappropriation. Prosecutors said that this is an "internal 
bank matter."  Shortly afterward, Public Prosecutor for the 
National District Juan Hernandez Peguero publicly called for 
the opening of a criminal case against Castillo. Hernandez 
Peguero is something of a political animal, though, and these 
may have been spontaneous comments to the press rather than 
an announcement of firm plans. 
 
-- What are the possible sanctions facing the defendants? 
 
(U) For the defendants charged with violation of the monetary 
law the potential sanction is quite serious:  a statutory 
minimum of 5 years upwards to 20 years, the maximum permitted 
in the Dominican justice system. Other charges have statutory 
minimums of 3 years and maximums of 10 years.  That said, 
prosecutors and the populace may well be disappointed by the 
sentences that are ultimately handed down.  The prosecutors 
asked for 8 years for BanCredito executive Arturo Pellerano 
but the judge gave him and other defendants the statutory 
minimum of 3 years.  That sentence is currently under appeal. 
 
¶18. (U) In a case where the influence and economic power of 
the defendants is unquestionable, can one hope for better? 
 
¶19. (U) This report, others in the series, and extensive 
additional material are available on the classified SIPRNET 
at http://www.state.sgov.gov/p/wha/santodomingo/  .  (Search 
"Baninter" or "Ramon Baez.") 
HERTELL