Puerto Rico News Digest For May 3, 2017

BANKRUPTCY!

GOVERNOR SAYS PR TO SEEK TITLE III PROTECTION

Governor Ricardo Rosselló announced at a press conference this morning that he has notified the Fiscal  Control Board of the intention of the Puerto Rican government to trigger Title III of the PROMESA federal law, a move similar to bankruptcy, in order to safeguard essential government services and payroll. The announcement comes in the wake of the expiration on May 1 of the island government's immunity to lawsuits related to its staggering debt load. Bondholder groups have already sued the government since the deadline passed. Governor Rosselló expressed his willingness to continue a dialogue with bondholders, and stated that the Title III decision was made because it would be "the way to defend the main interests of the people of Puerto Rico." He also declared that the Board had received the government's petition and would act on it "immediately".

PROTESTER ARRESTED FOR POPULAR CENTER VANDALISM

From US Attorney's Office:

"Today, United States Magistrate Judge Silvia Carreño-Coll authorized a criminal complaint against Nina Droz Franco, charging her for damaging or attempting to damage by means of fire a building engaged in  activity affecting interstate commerce[...]During the course of the protest [on Monday] on Ponce de Leon  Street, numerous individuals vandalized the Popular Center building...after several individuals broke windows of the building, two individuals approached one of the broken windows and attempted to light a  fire. Specifically, a female and a male approached one of the broken windows and lit a flame. All of these  events were captured on video[...]Assistant United States Attorney Alexander Alum is in charge of the prosecution of the case. If convicted, the penalties Droz Franco is facing are a minimum term of imprisonment of five years, and a maximum term of 20 years, a supervised release term of not more than 3 years, and a fine not to exceed $250,000..."

GUAYNABO MAYOR CASE TO SPECIAL PROSECUTOR

From The San Juan Daily Star:

"The island Justice Department recommended on Monday the assignment of a special prosecutor to investigate  possible corruption related to a sexual harassment complaint involving Guaynabo Mayor Héctor O’Neill. After completing a preliminary investigation, Justice concluded that the longtime mayor could have committed  a total of 20 violations of the law..."

GOV'T PUBLISHES NEW OFFER FOR GO CREDITORS

From Caribbean Business:

"The government of Puerto Rico presented Monday a new debt restructuring offer, individually, to general obligations (GOs) creditors. The counteroffer reduces to 30% the suggested cut to principal, known as  haircut, to the debt guaranteed by the commonwealth’s constitution. The government offered about 50 cents on the dollar in its first proposal. However, the government has yet to reach an agreement with its creditors..."

Puerto Rico News Digest For April 24, 2017

PONCE COP DIES AFTER SHOOTING

From Officer.com:

"A Puerto Rico police officer succumbed Wednesday of injuries he sustained in a shooting Sunday. Agent Benjamín De los Santos-Barbosa and three other officers attempted to stop a vehicle with an illegal window tint when the driver led them on a pursuit, according to The Officer Down Memorial Page. The driver -- who was on parole for narcotics charges -- led the officers on a pursuit until he encountered a broken down vehicle. The suspect then backed into the patrol car and opened fire as he exited his vehicle, hitting De los Santos-Barbosa in the head. Other officers returned fire, striking the suspect. The man was taken into custody and charged with 15 counts including murder, narcotics violations and weapons violations..."

GROUP TO FORGE AHEAD WITH DEBT AUDIT

From Caribbean Business:

"The Frente Ciudadano por la Auditoría de la Deuda, a group that is pushing for Puerto Rico’s debt to be audited, announced Friday that it will join a University of Puerto Rico (UPR) student protest to demand that the public debt be investigated and to defend public education. The “family-oriented, artistic” and educational event will take place Sunday, April 23..."

PR GROUPS VISIT CUBA FOR BAY OF PIGS CELEBRATION

From Telesur:

"A delegation of 40 members from the Juan Rius Rivera Brigade representing several social organizations in Puerto Rico celebrated the 56th anniversary of the Bay of Pigs victory last week in Cuba, showing their commitment to the elimination of foreign military bases in the world including the illegally occupied U.S. base at Cuba's Guantanamo Bay.At the site of the failed military invasion of Cuba by the CIA-sponsored paramilitary forces, Puerto Rican activists showed solidarity with Cuba and the ideals of the Cuban revolutionary leader Fidel Castro. The brigade seeks to highlight the solidarity between to the two island nations by organizing delegations to Cuba every year..."

Puerto Rico News Digest For July 13, 2016

200K ZIKA CASES POSSIBLE BY YEAR END

From The San Juan Daily Star:

"The committee created by the Puerto Rico government to confront the Zika
virus reported Monday that more than 200,000 cases of people infected with
the virus could be registered by the end of the year. According to island State
Department Epidemiologist Brenda Rivera, a drastic increase in the pattern of
infection of the virus has been noted in recent weeks. According to the most re-
cent report, an increase of 30 percent in cases have been reported..."

S&P CUTS PRASA DEBT RATING

From Caribbean Business:

"S&P Global Ratings lowered its ratings on Puerto Rico Aqueduct & Sewer
Authority’s (Prasa) series 2008 and 2012 senior-lien revenue bonds two not-
ches to ‘CC’ from ‘CCC-‘. The outlook is negative. At the same time, it low-
ered to ‘D’ from ‘CCC-‘ the rating on Prasa’s obligations that also carry a Co-
mmonwealth of Puerto Rico guarantee, as well as those obligations that are co-
mmonwealth-supported. It removed the ratings from CreditWatch, where they
were placed with  negative implications on Aug. 18, 2015..."

TOURISM BOOKINGS UP 6% THIS SUMMER

From News Is My Business:

"The Puerto Rico Tourism Co.’s fourth annual “Summer is Easy” promotion
is outpacing last summer’s bookings, generating a 6 percent rise in participa-
ting partner room night sales in May and a 7 percent rise in June, versus the
same months in 2015, the agency said Monday. Comparatively, bookings thr-
ough “Summer is Easy” partner Expedia are currently 9.7 percent above 2015
bookings. The promotion highlights how travel to Puerto Rico has never been
easier — no passport is required for U.S. citizens, more than 70 direct flights
from the U.S. to Puerto Rico daily — and how many things there are to do on
the island..."

SAMSUNG PAY NOW AVAILABLE IN PR 

From Banking Technology:

"Samsung Pay will support eligible credit cards from Banco Popular, Puerto
Rico’s largest bank, and will be available on AT&T, T-Mobile, Sprint and Cla-
ro networks in Puerto Rico. The firm says Samsung Pay is the “only” mobile
wallet that allows users to pay with their compatible Samsung smartphones at
terminals, due to both MST (magnetic secure transmission) and NFC (near fie-
ld communications) technologies.Thomas Ko, vice-president and global co-ge-
neral manager of Samsung Pay at Samsung Electronics, says users can shop in
Puerto Rico right from their phones at retail chains and independent businesses..."

Puerto Rico News Digest For July 5, 2016

GOVT MAKES PARTIAL INTEREST PAYMENT

From The San Juan Daily Star:

"The government of Puerto Rico said it would pay at least part of the interest
on bonds that came due at midnight on Friday, but in any case foresaw the grea-
test default on the debt to date. The different bonds that came due July 1 totaled
nearly $2 billion, of which some $700 million were general obligation (GO) bo-
nds, according to a CyberNews report. This type of bond is guaranteed by the
Puerto Rico Constitution, which assures that their payment has priority over any
other public expenditure that the commonwealth administration has incurred..."

PR UNVEILS FIRST LGBT MONUMENT

From The Advocate:

"Puerto Rico has unveiled its first LGBT monument, which also serves as a me-
morial to the 49 victims of the June 12 massacre at Orlando’s Pulse nightclub.
Most of the people killed were LGBT and Latino, and a majority of the victims
were of Puerto Rican descent. The monument, located in San Juan’s Third Mill-
ennium Park, is comprised of seven rectangular columns in rainbow colors, and
sits at the entrance to the Escobar the Sixth Stadium...At the base of the monum-
ent is a plaque highlighting the names of the 23 Puerto Rican victims killed in the
massacre, with the additional 26 victims listed below..."

BANKRUPTCIES REMAIN FLAT IN JUNE

From News Is My Business:

"Puerto Rico’s bankruptcy levels remained flat last month, when the total number
of companies and individuals who turned to the U.S. Bankruptcy Court for help
was up by two cases when compared to the same month in 2015. So far this year,
there are 5,291 bankruptcy cases on file, representing a 5.06 percent increase from
the same six-month period last year..."

NPP HOISTS 51-STAR US FLAG

From Caribbean Business:

"The secretary-general of the New Progressive Party (NPP), William Villafañe,
on Monday, July 4, removed the U.S. flag from on its pole at party headquarters
and hoisted a new flag, with 51 stars. The event comes about as part of an initia-
tive calling for the U.S. government to “respect the will of the people and give
way to a decolonization process in which statehood is attained,” Villafañe said
...Villafañe added that during the NPP’s monthly directors’ meeting, to be held
Tuesday, a resolution will be presented so all of the party’s municipal committe-
es hoist the 51-star flag “to deliver the message of equality and statehood,” he
said...'

Puerto Rico News Digest For June 30, 2016

PROMESA PASSES SENATE, GOES TO OBAMA

From Caribbean Business:

"Congress delivered relief to debt-stricken Puerto Rico on Wednesday,
sending President Barack Obama a last-minute financial rescue package
to help the U.S. territory of 3.5 million Americans. The Senate passed the
bill on a bipartisan 68-30 vote..."

35 PEOPLE CHARGED WITH DRUG TRAFFICKING

From US Attorney's Office:

"On June 23, 2016, a federal grand jury in the District of Puerto Rico retur-
ned an indictment against 35 defendants charged with conspiracy to distrib-
ute controlled substances, announced Rosa Emilia Rodríguez-Vélez, United
States Attorney for the District of Puerto Rico. The Drug Enforcement Ad-
ministration and the Puerto Rico Police Department (PRPD), Ponce Strike
Force Unit, are in charge of the investigation. The indictment alleges that be-
ginning in 2012, the organization distributed heroin, crack, cocaine, and ma-
rihuana, at the Rafael López Nussa, Ernesto Ramos Antonini and the Dr. Ma-
nuel De La Pila Iglesias Public Housing Projects in Ponce; and the El Pino
Ward in Villalba, Puerto Rico, all for significant financial gain and profit. The
thirty-five defendants acted in different roles in order to further the goals of
their organization, to wit: leaders, drug point owners, enforcers, runners, se-
llers, and facilitators. Ten defendants are facing one charge of possession of
firearms in furtherance of a drug trafficking crime..."

PREPA TO ENACT PROVISIONAL RATE HIKE

From The San Juan Daily Star:

"The Puerto Rico Electric Power Authority government power company will
impose a provisional rate increase of 1.299 cents per kilowatt-hour on clients
in the coming weeks after winning approval from the Puerto Rico Energy Co-
mmission. The rate hike is among several requirements the utility must fulfill
as part of a proposed deal with creditors to restructure nearly $9 billion debt..."

AC HOTEL BREAKS GROUND IN CONDADO

From News Is My Business:

"The groundbreaking ceremony for the first AC Hotel by Marriott in San Juan
took place Wednesday for what will be a $45 million investment by Ashford
1369 Hospitality, LLC, an affiliate of Interlink, which acquired the former Am-
bassador Plaza & Casino property in Condado. The investment includes a com-
prehensive renovation of the property to convert it into the Marriott brand..."

Puerto Rico News Digest For June 1, 2016

HURRICANE SEASON STARTS TODAY

From The San Juan Daily Star:

"U.S. government forecasters expect a near-normal Atlantic hurricane season,
after three relatively slow years. But they also say climate conditions that influ-
ence storm development are making it difficult to predict how many hurricanes
and tropical storms will arise over the next six months. The National Oceanic
and Atmospheric Administration’s outlook released late last week called for a
near-normal season with 10 to 16 named storms, with four to eight hurricanes
and one to four “major” ones with winds reaching 111 mph and up..."

SENATE HONORS VETS ON MEMORIAL DAY

From Caribbean Business:

"The Senate received Monday a group of veterans and their families, as well as
officers, to commemorate Memorial Day in a ceremony at a Capitol monument
honoring the fallen in various wars. Sen. Miguel Pereira, chairman of the Judici-
ary, Security and Veterans Committee, hosted the activity and received Col. Mar-
ta Carcana, adjutant general of the National Guard of Puerto Rico, who delivered
a message to attendees. Also attending the ceremony were Jorge Cases, spokes-
man for the Veterans Advocate Office; former Puerto Rico National Guard Adjt.
Gen. Luis González Vale and former San Juan Mayor Héctor Luis Acevedo, who
retired as a lieutenant colonel from the U.S. Army Reserve in 1998..."

OMB: PAYING DEBT COULD MEAN LAYOFFS

From News Is My Business:

"If the government of Puerto Rico were to pay the full amount due next year in
GO debt would require laying off more than 3,400 public workers, among other
adjustments, Luis Cruz, executive director of the Office of Management and Bud-
get, told members of the House Finance Committee during budget hearings Mon-
day. In his testimony, Cruz said the $209 million set aside from the General Fund
will go to cover GO interest payment, but no principal amount, which would total
$1.4 billion next fiscal year..."

SAN JUAN TAXI DRIVERS PROTEST UBER

From Fox News Latino:

"Traffic chaos prevailed in San Juan on Tuesday as taxi drivers and  truckers
protested the arrival in Puerto Rico of Uber, the private ride-hailing service,
which links passengers and drivers via a mobile application. On Tuesday mor-
ning it was difficult to find taxis on the capital streets, while some tourist excur-
sions had to be cancelled when drivers with certain tourist operators refused to
work..."

Puerto Rico News Digest For May 24, 2016

VOTE ON CONTROL BOARD TOMORROW

From The San Juan Daily Star:

"The U.S. House of Representatives Natural Resources Committee confir-
med that it will hold a hearing Wednesday to vote on legislation that impo-
ses a fiscal control board on Puerto Rico. In an official statement issued late
last week by the committee chaired by Rep. Rob Bishop (R-Utah), the comm-
ittee established that it would begin the mark-up of the bill on Tuesday at 5
p.m. and the process would extend until Wednesday between 10 a.m. and
12:30 p.m., according to a report by CyberNews..."

'LOS LOBOS' GANGSTERS CAUGHT NEAR MEX BORDER

From Breitbart:

"Two members of a dangerous Puerto Rican gang that operates in a manner
similar to a drug cartel  have been arrested near the Texas border. Federal au-
thorities recently arrested Carlos E.  “El Negro” Carrion Nieves and Orlando
“Elvin” Martinez Nunez near this border city. The two men are named in a six-
count federal indictment out of Puerto Rico, accusing 17 members of the group
with multiple crimes in furtherance of the criminal organization. While federal
authorities do not refer to the Puerto Rican criminal organization as a cartel, a
close look at the indictment reveals that their method of operation is very simi-
lar to those used by drug cartels in Mexico..."

SAN JUAN MAYOR GETS 'F' ON FINANCES

From Caribbean Business:

"Puerto Rico Comptroller Yesmín Valdivieso blasted San Juan Mayor Car-
men Yulín Cruz on Monday, giving a grade of “F” to the mayor’s handling
of the capital city’s finances and refuting the mayor’s claims of having a sur-
plus in the municipal coffers. During an AM news radio interview in Notiuno
630, Valdivieso said that Cruz had earned a failing grade because “she is car-
rying a debt of [around] $888 million as of June 2014.” The comptroller added
that the mayor’s claims of a surplus were “not real because the so-called surplus
is the result of a loan...”

GOVERNOR PITCHES $9.1 BILLION BUDGET

From News Is My Business:

"Puerto Rico Gov. Alejandro García-Padilla on Monday unveiled a proposed
budget for Fiscal 2017 of $9.1 billion, down $700 million from the original
budget that was approved last year and $192 million less than the adjusted cu-
rrent budget. The proposed budget — which must be approved by the Legisla-
ture by June 30, the end of the current fiscal year — is based on an actual pro-
jection of revenues and includes a reduction in the government’s operating ex-
penses of nearly $3 billion, compared with the last spending budget filed by
the previous administration..."

Puerto Rico News Digest For May 19, 2016

AGP DECLARES ROAD AGENCY EMERGENCY

From ABC News:

"Puerto Rico's governor on Wednesday again used a state of emergency 

decree to protect one of the island's struggling public agencies from law

-suits and preserve dwindling liquidity as the U.S. Congress works on a 

bill to restructure the island's $70 billion public debt. The order allows Pu-

erto Rico's Highways and Transportation Authority to suspend the transfer 

of toll revenues to bondholders and imposes a stay on legal claims, Gov. 

Alejandro Garcia Padilla said. That will allow the government to pay con-

tractors and avoid paralyzing safety and improvement projects, he said..."

TOWNS WASTE $35M ON VANITY PROJECTS

From The San Juan Daily Star:

"The Office of the Comptroller said Tuesday that in a period of six years
more than $35 million has been squandered in municipal works and proj-
ects that are not used by the public. The data comes from 35 different si-
tuations in 17 municipalities between 2011 and 2016, according to Inter
News Service. In the municipalities of Culebra, Luquillo, Naranjito and
Vieques, $27.3 million was spent for activity centers, and in Aibonito,
Culebra, Peñuelas, Rincón and Río Grande, $2.3 million was spent for
recreation areas, and in Gurabo, Santa Isabel and Vega Baja, $1.2 million
was spent for the installation of monuments, structures and bronze plaques..."

BILL CLINTON STUMPS FOR WIFE IN PR

From Caribbean Business:

Former U.S. President Bill Clinton promised Puerto Ricans on Tuesday
that his wife, Hillary Clinton, will fight for equal treatment of the econo-
mically struggling island if she’s elected president. He also said she backs
immediate action to restructure the island’s $70 billion public debt as the
local government warns it is running out of money for essential services...
Clinton visited the island ahead of the June 5 primary, and officials say the
Democratic presidential candidate herself will come before the vote. Verm-
ont Sen. Bernie Sanders visited on Monday..."

PR LOSES MAJOR CONVENTION TO ZIKA

From News Is My Business:

"The Internet Corporation for Assigned Names and Numbers (ICANN) conf-
irmed Tuesday the cancellation of its upcoming convention slated to take pla-
ce in San Juan, due to concerns related to the Zika virus, Akram Atallah, first
president of ICANN’s global domains division, said. It is the second consecu-
tive event the organization in charge of coordinating the maintenance and pro-
cedures of several databases related to the namespaces of the internet has relo-
cated this year over the mosquito-borne ailment. Earlier this year, ICANN ann-
ounced it was moving the ICANN56 convention from Panama City, Panama,
to Helsinki, Finland..."

Puerto Rico News Digest For May 12, 2016

AGP MEETS WITH CREDITORS IN NYC

From News Is My Business:

"Puerto Rico Gov. Alejandro García-Padilla met with a group of unidenti-
fied advisors to the Commonwealth’s creditors to communicate, first hand,
the need for Puerto Rico reach a broad restructuring of its $70 billion public
debt to sustainable levels, his office said Tuesday. At the meetings, the go-
vernor emphasized that Puerto Rico is only willing to accept agreements lea-
ding to “sustainable long-term restructuring that will result in economic gr-
owth for the island...”

US HOUSE BILL ON PR FACES DELAYS

From Reuters:

"Republicans on a U.S. House of Representatives panel said they were ma-
king progress on a Puerto Rico debt relief bill that will take the same basic
approach as an earlier failed version, despite cancelling plans to unveil new
legislation on Wednesday...House Democratic leadership now expects legis-
lation from the committee before the end of the week. Competing forces have
fought over the bill and raised concerns that creditor rights and long-establi-
shed municipal bond market hierarchy would be set aside in a broader plan to
fix Puerto Rico's festering debt problems that have resulted in a breakdown in
the island's social services..."

NPP REP WANTS PROBE OF JETBLUE DELAYS

From Caribbean Business:

"New Progressive Party (NPP) Rep. Uroyoán Hernández announced Wednes-
day that he filed a resolution seeking to investigate the complaints of several
JetBlue passengers about the allegedly constant delays of the airliner’s flights
departing from the Puerto Rico capital. “During the past few weeks, we’ve
heard dozens of Puerto Ricans who’ve made their voices heard,” Hernández
said. “Whole families have had to wait for hours in the airport terminal ascri-
bed to JetBlue...because there are no pilots available and they must be flown
in from Orlando, Florida, or due to a mechanical failure in the plane. There’s
always an excuse...”

GOVERNOR SAYS BUDGET READY 'SOON'

From The San Juan Daily Star:

"Gov. Alejandro García Padilla said Tuesday that the budget for the next fis-
cal year “is being worked on in a responsible way” and that it will be delive-
red to the Legislature “soon.” In a written statement distributed by La Forta-
leza, the governor said he is “close” to presenting the budget to the Legisla-
ture. The statement came after Senate President Eduardo Bhatia criticized La
Fortaleza for the tardiness in delivering the budget..."

Puerto Rico News Digest For May 10, 2016

RECESSION TO LAST INTO 2017

From The San Juan Daily Star:

"More red ink is in store for Puerto Rico, according to an island Planning
Board statement issued late last week that projected negative growth in the
gross domestic product (GDP) of minus 1.2 percent for fiscal year (FY) 2016
and a minus 2.0 percent contraction for FY 2017. In FY 2015, at current pri-
ces the local economy measured by the GDP generated $68.52 billion, repre-
senting a growth of 0.1 percent with relation to FY 2014..."

EIGHT-YEAR-OLD GIRL SHOT DEAD IN CIALES

From Fox News Latino:

"A little 8-year-old girl died of a gunshot to her head while another 14 peo-
ple suffered multiple bullet wounds in two unrelated incidents during a vio-
lent weekend in Puerto Rico...The death of the 8-year-old, local authorities
said Monday in different reports, occurred Sunday night, though the circums-
tances of the shooting are as yet unknown...One or more unknown persons
shot at a vehicle carrying the little girl and her parents as they arrived home
in the town of Ciales on the north side of the island...They took their daugh-
ter to a  hospital where she was pronounced dead..."

NO URGENCY FROM CONGRESS ON ZIKA FUNDS

From Caribbean Business:

"Republicans from states at greatest risk, such as Florida, Texas, Louisiana
and Georgia, have been slow to endorse Obama’s more than 2-month-old re-
quest for $1.9 billion to battle the virus, which causes grave birth defects. The
Centers for Disease Control and Prevention currently reports more than 470
cases in the continental U.S., all so far associated with travel to Zika-affected
areas. Polls show that the public isn’t anywhere nearly as scared of Zika as it
was about the Ebola outbreak in...2014. Aides to GOP lawmakers, even those
representing Southern areas most vulnerable to Zika, say they’ve yet to hear
from many anxious constituents..."

PR SENATE HANDS PREPA PROBE TO FBI

From ABC News:

"A special commission looking into fuel purchases by the financially troubled 

electric utility in Puerto Rico has turned over its findings to U.S. federal autho-

rities for further investigation, the majority leader of the island's Senate said 

Monday...The special Senate investigative commission has been looking into 

allegations that the utility overcharged customers by hundreds of millions of 

dollars while amassing about $9 billion in debt in recent years. Utility officials 

appearing before the commission denied wrongdoing..."

Governor Declares Emergency At Government Development Bank

From Caribbean Business:


"Gov. Alejandro García Padilla has declared an emergency period at the
Government Development Bank (GDB), issuing an executive order that
restricts cash outflow at the bank in an effort to preserve its dwindling li-
quidity and ensure essential government services, according to a statement
released by La Fortaleza on Saturday...The measure doesn’t impose a mo-
ratorium on the bank’s debt obligations yet. The GDB faces a $422 milli-
on payment May 2 and the administration has repeatedly stated there is not
enough cash to make the full payment. Waiting to pull the trigger on decla-
ring a moratorium on the bank’s debt service is intended at fostering nego-
tiations between the GDB and its creditors...[CONTINUE READING]

GDB Rejects Shutdown & Privatization Rumors

Press Release

Government Development Bank

April 1st, 2016


Today, Melba Acosta Febo, President of the Government Development Bank
for Puerto Rico ("GDB" or the “Bank”), issued the following statement in res-
ponse to several rumors recently reported in the media:

“The Government Development Bank became aware of rumors claiming that
a bill will be introduced today to shut down the Bank. This rumor is false – the
GDB will neither shut down nor be privatized.

This irresponsible rumor is damaging to the Bank as an institution, as well as
needlessly harmful to our employees and their families. Bank management has
met with employees and informed them that, due to the fragility of the Bank’s
liquidity, all available options are currently being reviewed. These options will
responsibly address the issues facing the Bank and will not involve the dismi-
ssal of public employees. As we have for weeks, GDB representatives continue
to engage with a considerable group of our creditors about the restructuring of
the GDB’s debt. As we have stated publicly, the Government is also considering
additional measures to address this situation, such as declaring a temporary mo-
ratorium on payments, and amending the GDB charter.

I, and representatives of the Puerto Rico Electric Power Authority (“PREPA”),
were recently in London attending meetings regarding the GDB’s and PREPA’s
soon-to-expire insurance policies. This was a long scheduled trip – though these
policies are active, we are in the process of negotiating their renewal. During the-
se meetings, I provided an overview on the Commonwealth’s finances, covering
the Krueger report, the Fiscal Adjustment Plan, the public offer made to bondhol-
ders and the status of the Commonwealth’s and PREPA’s debtrestructuring nego-
tiation processes.

As I have stated publicly on multiple occasions, including this week, it is impor-
tant that everyone in Puerto Rico understand that the GDB’s fiscal standing, as
well as the Commonwealth’s fiscal standing, is delicate due to the fiscal crisis we
are confronting. For this reason, the GDB’s Board of Directors and management
continue to urgently evaluate all available options to safeguard public finances.
We will continue to move forward on several initiatives simultaneously as no
final decisions have been made at this time.”

Even An Immediate Bailout of Puerto Rico Is Unlikely To Save It!

Commentary

Richard Lawless


For almost a decade it appears that the island of Puerto Rico has been 
issuing municipal bond debt that it knew it could never repay. Municipal 
entities in Puerto Rico like the government owned electric utility have 
been technically bankrupt for many years. This utility and almost every 
other municipal entity on the island have been paying the credit ratings 
agencies and banks tens of millions of dollars a year to secure unjusti-
fied credit ratings The utility by itself spends $40-$60 million dollars 
a year with the ratings agencies and banks to keep the money flowing.

A simple review of the bond offering memorandums, easily available to 
anyone, shows almost all these entities to be in dire financial condition, 
many, if not most, technically bankrupt. Unbelievably, the credit agencies 
were lining up to offer A & BBB ratings for the right fees.  Wall Street’s 
biggest banks did the same thing and then sold these very troubled bonds 
to their unsuspecting investors.

There has been over $5 billion dollars in losses so far to the bond holders 
who bought the utilities bonds, mostly retired Americans of modest means.
No one has been questioned, no one has gone to jail.  

When you look closely at these bond offering memorandums you will not 
only see that the entities never had the money to make the payments on the 
bonds but bond offering after bond offering, the entities claim to be raising 
money for improvements.  The improvements never get done, the money 
disappears and the following year another request for money for the same 
project appears in a new memorandum and once again the money disappears
and on and on.

The bonds rating agencies never mention the improvements never get done 
but the money disappeared. The Agencies claim that the bond payments will
be made in whole or in part from accounts receivable that have not been co-
llected in a decade and in small print say they are unlikely to be collected in 
the future. Again not important I guess.

The Puerto Rico Legislature held committee meetings where executives from 
the utility and the lead auditor from Ernst and Young claim the ratings agencies 
and banks were fully aware the utility was bankrupt when they issued the A & 
BBB ratings.  Umm, everyone wants to seem to ignore this fact.

Everywhere I looked in Puerto Rico I saw the same thing. Junk bonds with a 
very high likelihood of default sold to everyday Americans as low risk retire-
ment income.  While this concerns me greatly, it is not why I am so concerned.  
You see, after I looked at Puerto Rico, I looked at Chicago, Compton, Oakland, 
California and New York.  You guessed it, much of the same. Until these issues 
are addressed, throwing more dollars at Puerto Rico will only postpone the 
inevitable.

When Bernie Madoff started out many people saw the same thing.  Reports 
were made to the SEC and ignored, the FBI and ignored the DOJ and ignored. 
He could have been stopped at $100,000,000 dollars, instead he stole $40 bi-
llion dollars before it all collapsed.  There were whispers and they were igno-
red. I am screaming from the mountain top and I hope you are listening.

Everyone acknowledges that Madoff ran a Ponzi scheme.  The early investors 
were promised things he could not deliver and new investors were sought out 
to pay off the early investors and so on.  Over time its gets bigger and bigger 
and finally the last investors lose everything.

Today there are approximately 60,000 entities that issue municipal bonds. Four 
trillion dollars in bonds are in the market today, owned entirely by Americans, 
mostly retired Americans.  These retired Americans might get $900 a month 
from Social Security, $500 a month from savings and another $600 a month 
from their bonds.  They are barely making it on the $2,000 a month. Take away
the $500 in bonds and they lose their home, can’t pay for medicine or simply 
give up. 

If the municipal market activity was to slow down or temporarily stop, it is 
possible that the American people would see $2-$2.2 trillion dollars in losses. 
 The house of cards built on fraud and deceit would collapse.

How could this happen?  It is easy, in the 2007-2008 CMBS/CDO crash that 
brought America to its knees, 6 million jobs were lost, millions more lost their 
home and trillions in wealth was wiped out.  That too was a Ponzi scheme built 
on false credit ratings. 

One person was charged with a crime, a crime that almost ruined our country.  
If no one is held accountable, why not do it again. So they did!

Our congressmen and Senators go to plush lunches with these folks, they go 
on wonderful fact findings trips to exotic locations, paid for by these folks, 
they get political contributions and for special favors, they get outlandish sp-
eaking fees.  It’s a great deal and they will protect it regardless of how many 
Americans they have to throw under the bus.

Other politicians want to buy votes. It is an election cycle. Have you listened 
to the speeches?  Free community college, no four years of free college, free 
this, free that. Why not?  Just because we have 19 trillion dollars in debt do-
esn’t mean we can’t have 25 trillion in debt. What debt, you guessed it, bond 
debt.  You see when you can’t raise taxes anymore and still keep you job, you 
have to take the money from someone.  Why not issue bonds and default on 
them later!  No one is paying attention, who reads those pesky bond offering
memorandums anyway. If  they are rated AAA or A or BBB, they must be 
good!

Most Americans don’t know that Municipal Bonds are not reviewed or moni-
tored by any agency.  Our tough talking politicians responded to the American 
people by passing a law that requires the agencies issuing these bonds, self-re-
port. I am not kidding, they wrote into law that the issuing agencies, credit a-
gencies and banks will not be monitored unless they write to the SEC and admit 
to doing something wrong themselves.  No really, this is true.  $4 trillion dollars 
and accountable to no one.  Our leaders even passed laws that make it very di-
fficult to sue if  someone like me uncovers it all.  I am sure it had nothing to do 
with those lunches, free vacations, political contributions and paid speeches. 
That would be cynical.

How about the press.  Well you see how they uncovered the CMBS/CDO cri-
sis. No wait a minute, it was American’s like me.  They did report on it when
it could no longer be ignored.  The financial papers get their business from the-
se very same firms, they wine and dine them, vacation with them and count on 
them to advertise in their papers.  When is the last time you can remember that 
the Wall Street Journal, The Financial Times or Bloomberg broke a meaningful 
story? Investigative journalism is dead unless it fits the political bias of a specific 
paper.

This house of cards is starting to collapse.  First Puerto Rico with Chicago next.  
At first the papers will print what their told to, it’s the economy, lack of jobs, the 
weather.  Anything but the truth.  When it becomes more than one or two cities, 
when the numbers are too big to ignore, someone will tell the truth and everyone
will ask how this could have happened?  How could it have gone on for so many 
years?   

Richard Lawless is CEO of Commercial Solar Power in Temecula, CA. The opinions expressed in the 
preceding commentary are solely his own and do not necessarily reflect the views of The Puerto Rico 
Monitor or its advertisers.

Puerto Rico News Digest For March 21, 2016

BERNIER CALLS FOR DEBT MORATORIUM

From Yahoo! News:

"The gubernatorial candidate for Puerto Rico's ruling Popular Democratic
Party is calling for a five-year debt payment moratorium, saying it's needed
to stabilize government operations and guarantee the delivery of essential
services. Former Secretary of State David Bernier made the call Friday weeks
after urging the administration to hasten the pace of debt restructuring talks
with creditors, which have been dragging on since Gov. Alejandro Garcia Pa-
dilla announced last June the U.S. Commonwealth's nearly $70 billion debt
is not payable..."

PR GOP CAUTIOUS ON PRESIDENTIAL RACE

From The San Juan Daily Star:

"Puerto Rico Republican Party Chairwoman Jenniffer González -- who
supported Florida Sen. Marco Rubio’s run for the GOP presidential
nomination -- said she will continue promoting the participation of
Republican voters in the remaining primary elections. Although she
didn’t say who she supports now that Rubio has withdrawn from the
race after losing the primary in his home state of Florida on Tuesday,
she said “...Since Marco Rubio has withdrawn from the presidential
campaign, we have to be attentive to all the developments of the primary
race,” González said in a written a statement. “On our part, we will
continue supporting participation in the process up to the Republican
Convention...”

SOVEREIGN UNION REJECTS FISCAL BOARD

From Caribbean Business:

"Sovereign Union Movement (MUS by its Spanish acronym) President 

María de Lourdes Guzmán urged Puerto Rico’s political sectors to 

unite to “defend our dignity as a people” and adamantly reject the 

imposition of a fiscal control board by the U.S. Congress. She also 

asked the island’s political leadership to carry out concerted actions

to request that the U.S. government “put forth a serious process of 

decolonization, to seek a solution to the centenarian issue that is 

Puerto Rico’s status, which keeps our people divided and hinders the 

design of a national plan that would lead to social justice, to our 

economic development and the well-being of all Puerto Ricans..."

GOV'T TO BE SOLE MEDICAL POT PROVIDER

From News Is My Business:

"Now that medical marijuana is legal in Puerto Rico, don’t count on local
farmers joining the green rush. At least not yet. Instead, growing high-
grade medical cannabis will initially be in hands of the government and
“maybe in the future, we can enter the market,” the man in charge of the
Puerto Rico Farm Bureau told News is my Business. “Right now, there are no
opportunities for farmers,” said Héctor Iván Cordero, who leads the group
founded in 1924..."

Puerto Rico Is Asking Congress To Run Out The Statute of Limitations

Commentary

Richard Lawless


Puerto Rico is asking Congress to run out the statute of limitations on
fraud claims against them, and Congress is listening!

In a story about government corruption and fiscal misstatement our Con-
gress may insert themselves on the side of the defendant to prevent any
legal recourse by the victims.

It’s hard to believe but it is true.  Between 2008 and 2013, Puerto Rico’s
public utility, PREPA issued billions of dollars in municipal bonds know-
ing they could not be repaid.  In a June 2015 series of committee meetings
Puerto Rico Legislators heard testimony from many government represen-
tatives of PREPA and Ernst and Young their accounting firm.  In the testi-
mony the auditors and executives of PREPA admitted that the company was
technically bankrupt when these bonds were issued and repayment was un-
likely. The Legislative Report HR 1049 concluded that what PREPA did may
have constituted a criminal act and the report recommended a copy of these
findings be sent to the SEC and FBI.

These billions in in bonds are primarily owned by retired Americans who de-
pended on their income to support themselves.

For the first time in history, the United States Government is considering rea-
ching out to protect a government owned utility from any civil litigation by
passing a law that temporarily prohibits anyone from suing Puerto Rico to re-
over their damages.  This new law would postpone litigation just long enough
to run out the clock on the statute of limitations for fraud.

Not surprisingly, Treasury Secretary Jack Lew is promoting that Congress pass
this temporary moratorium.  You see Jack Lew was the COO of Citibank from
2006-2008 when many of these bonds were marketed by Citibank.

It appears the fox is in charge of the hen house in Washington.  Please contact
your Congressman and Senators to let them know how you feel about this.



Richard Lawless is CEO of Commercial Solar Power in Temecula, CA. The opinions expressed in the 
preceding commentary are solely his own and do not necessarily reflect the views of The Puerto Rico 
Monitor or its advertisers.

The Democrats' Plan For Nationwide Municipal Bond Bankruptcy

Commentary 

Richard Lawless


Rahm Emmanuel once said never let a crisis go to waste. The Democratic
Party has fully embraced that concept. They now see a possible solution
for gross fiscal mismanagement and political corruption.

Cities like Chicago or Compton, and states like California, have been buying
votes for decades by promising health benefits, pay raises and pension increa-
ses that could not be supported by the current tax structures. The thinking was
simple: give our supporters what they want and let the next guy figure out how
to deliver on our promises.

Well, the future is now. Chicago is ready to collapse as are over a dozen other
Democratic strongholds.  The voters will not tolerate higher taxes, the states ca-
nnot or will not bail them out. This house of cards is about to fall down.  A so-
lution is needed if the Democrats are to retain power.

Just when all seems lost, a few smart but shifty Democratic power brokers
found their possible salvation, Puerto Rico!

Puerto Rico is in the midst of a financial crisis.  he same old story, mis-
management and corruption.  This time however, Puerto Rico might solve
all the Democrats' problems.  The Democratic Power Elite came up with a
plan. Let’s use Puerto Rico to win the legal right to default on the City and
States municipal bonds.  It’s a great idea.  By declaring bankruptcy, we
can shed 40%-50% of the current debt.  It is like raising money without
raising taxes! Brilliant...

Let’s call it the Puerto Rico Debt Restructure Plan.  It will not only incor-
porate Chapter 9 bankruptcy for the municipal corporations, it will also
include special bankruptcy provisions for the general obligation debt. Once
it is granted to Puerto Rico, we can use it for Chicago and California. The
stupid Republicans will not see it coming.  Even if the Press figure it out,
they will be supportive in their silence.

If anyone contests our demands, we will call them racists!  We can also play
off the fact that Puerto Rico may not have been treated fairly.  Yes, Puerto
Rico is the answer.  Let’s get the press to demonize the bond holders and hed-
ge funds as vultures and run stories about how hospitals and schools will close
and the children will starve.  We own the Press, that will be easy.

We understand that over 50% of these bonds are owned by retired Americans
but someone has to pay for our promises. Let’s make sure the Press ignores
the real impact of this strategy.

Puerto Rico today and a dozen other cities tomorrow.  This doesn’t have to
stop! We could go one for decades with our fiscal mismanagement utilizing
this new bankruptcy strategy. Keep the money flowing, baby...


Richard Lawless is CEO of Commercial Solar Power, Inc. in Temecula, CA. The opinions  expressed  in the 

preceding commentary are exclusively his own and do not represent the  opinions of The Puerto Rico Monitor, 

its editors or advertisers.

Governor Signs Prepa Revitalization Bill Into Law

Caribbean Business

Eva Lloréns Vélez 


SAN JUAN – Gov. Alejandro Garcia Padilla signed late Tuesday night the
Puerto Rico Electric Power Revitalization Act, paving the way for a major
$9 billion debt restructuring of the public utility’s debt.

The Senate concurred Tuesday with amendments the House made to the bill,
which was rushed to La Fortaleza because under the terms of the restructuring
agreement, creditors could walk away from the deal had it not been enacted by
midnight Tuesday.

The legislation creates a separate corporation, the Prepa Revitalization Corp.,
which will issue new bonds to be exchanged for the Prepa bonds that are curr-
ently on the market...[CONTINUE READING]

DOJ Says a Confession is Not Good Enough For a Prosecution

Commentary 

Richard Lawless


In June 24, 2015 the government of Puerto Rico issued a 23-page legisla-
tive report that is no less than a detailed confession. The report details how
government officials in Puerto Rico conspired with Wall Street firms to co-
mmit $11 billion dollars in financial fraud.  After reviewing this document
and other evidence for many months, the FBI is claiming that the best prose-
cutors in the DOJ have not yet found criminal grounds to move forward.

Let’s look at the confession:

· “Investors allowed PREPA to issue bonds, then, PREPA borrowed from
private banks to pay the bond’s interests; then, borrowed from the Govern-
mentDevelopment Bank (from herein “GDB”) to pay back the private bank
loans, and the GDB, in turn, issued more bonds to refinance all.”

“This practice could constitute a fraud scheme for which the federal agen-
cies that regulate financial instruments and the Security Exchange Commi-
ssion could take action against and/or pursue civil suits against these
institutions.”

The legislature is describing a Ponzi Scheme.

· “Therefore, the institutional bondholders bought this debt with the know-
ledge and with consent of what was going on financially in the corporation,
which was ailed with technical insolvency or bankruptcy.”

This means the Wall Street firms bought these bonds knowing they were no
good and they in turn resold them to retail investors. Puerto Rico is clearly
saying these firms conspired with them.

· “This goes to show that the financial intermediaries and the institutio-
nal holders, despite being fully aware of PREPA’s fiscal situation, had no
qualms with Unjustly Enriching themselves and with having the conse-
quences of their negligent acts be paid for by the people of Puerto Rico”.

Why did the Wall Street firms participate? According to Puerto Rico “to
unjustly enrich themselves (fee income).

· “in the face of the credit houses, whom, knowing this, and therefore
PREPA’s technical insolvency, allowed this public corporation, and thus
the people of Puerto Rico, to continue running into debt”.

(Credit Houses is a reference to Moody’s, S&P & Fitch Credit Rating 
Services.)

To clarify, the credit houses issued unjustified credit ratings to earn
fee’s according to the report.

· “Said debt was sold at discount, a large quantity of it between .60 to
less than .50 cents to the dollar”

Once the scheme was uncovered, the investors that owned the bonds lost 40
to 50 cents on the dollar.  With $11 billion outstanding that is around
$5 billion in losses.

· “That this Report be forwarded to the Justice Department of the Common-
wealth of Puerto Rico and the United States of America for their correspon-
ding actions;”

“That this Report be forwarded to the United States Securities Exchange
Commission for its corresponding action;”

Legislature is clearly suggesting a criminal act occurred and should be 
investigated.

The report gives many, many more specifics.  Given all this information, the
DOJ believes there may not have been any actual crimes. Umm?



Richard Lawless is CEO of Commercial Solar Power, Inc. in Temecula, CA. The opinions  expressed  in the 

preceding commentary are exclusively his own and do not represent the  opinions of The Puerto Rico Monitor, 

its editors or advertisers.