How Stupid Is The FBI? You Must Read This!

Commentary 

Richard Lawless

Unfortunately, my company along with tens of thousands of other individuals and corporations was caught off-guard by Puerto Rico’s financial collapse. To make sure that it doesn’t happen to us again, my company launched an investigation into the causes of this tragedy so we wouldn’t become a victim a second time, somewhere else.

Part of the findings uncovered information indicating the Puerto Rico Government theft of hundreds of millions of dollars in public funds each year.  I reported this to the San Juan FBI office and after many months and little cooperation, they determined the activities did not meet criminal standards and would better be handled as a personal civil case.

Shortly after that I received a call from a CIA Agent that said they have been tracking the massive wire transfers out of Puerto Rico for almost a decade. The Agent then went on to say that they have notified the FBI repeatedly and the FBI failed to act on it.  The agent also said that in tape recorded phone conversations it was clear that the San Juan FBI and U.S. District Attorney Offices were participating in this massive theft and their family members were receiving payoffs; Further explaining the lack of prosecution for so many years.  A short time after that, British Intelligence suggested they were aware of much of same.

Two newspaper editors were able to confirm the tip from the CIA and British Intelligence.

On April 6, 2016, the Caribbean News Now Agency printed the article “Personal conflicts obstruct FBI investigation into Puerto Rico fraud” and the New York Observer printed a similar article on 6 27-16. As of today, it is my understanding that the money continues to flow out of Puerto Rico and find its way back to critical DOJ employees.

Reporting this to the San Juan FBI and U.S. Attorney would be silly, since they were the DOJ employees allegedly accepting the payoffs. I forwarded this information to the Washington Headquarters of the FBI hoping they would do something.

After not hearing anything for almost a year, I filed a Freedom of Information Request.  I received the results today. The Washington FBI referred my complaint back to the San Juan FBI so they could investigate themselves!

As of today, it is my understanding that the money continues to flow out of Puerto Rico and find its way back to critical DOJ employees.

Puerto Rico Bond Fraud that set a new standard for Congressional Corruption? 60 Sec Commercial Summarizing some of the crimes

Press Conference recapping testimony to the SEC/FBI and Congressional Oversight Committee – It is mind bending

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 several Corporate Boards and actively writes for several finance publications. The opinions expressed in the preceding commetary are solely his and do not represent those of The Puerto Rico Monitor.

Former Psychiatrist Sentenced For Social Security Fraud

Department of Justice

U.S. Attorney’s Office

District of Puerto Rico

---

FOR IMMEDIATE RELEASE

Monday, July 3, 2017

SAN JUAN, P.R. – Psychiatrist Luis Escabi-Pérez was sentenced to five years of probation, 500 hours of community service and ordered to pay a restitution of $230,244, for fraud in the application process for Social Security Administration (SSA) disability insurance benefits in Puerto Rico, announced United States Attorney for the District of Puerto Rico, Rosa Emilia Rodríguez Vélez.

Escabi-Pérez had plead guilty on July 29, 2015 to committing fraud to the Social Security Administration. Escabi-Pérez’ DEA and medical license were revoked without contest.

Defendant Luis Escabi-Pérez submitted Psychiatric Medical Reports to the SSA in support of applications for disability insurance benefits submitted by his patients. Escabi-Pérez charged a fee for the medical visits, typically in the amount of $100.00. In addition, the defendant typically charged a fee in the amount of $500.00, for the preparation and submittal of a Psychiatric Medical Report to the SSA. He would at times also charge additional fees of up to $5,000 to backdate medical records in order to create the appearance of a longer history of medical treatment.

The case was investigated by the Social Security-OIG with the collaboration of the FBI and the Puerto Rico Police Department. Special Assistant United States Attorney Vanessa D. Bonano-Rodríguez prosecuted the case.

Thirteen Individuals Indicted For Social Security Fraud

Department of Justice

U.S. Attorney’s Office

District of Puerto Rico

FOR IMMEDIATE RELEASE

Tuesday, June 27, 2017

The total loss for SS is $1,510,921.90

SAN JUAN, P.R. - On June 23, 2017, a Federal Grand Jury in the District of Puerto Rico returned nine separate indictments charging 13 individuals with fraud against the Social Security Administration (SSA) disability insurance benefits in Puerto Rico, announced United States Attorney for the District of Puerto Rico, Rosa Emilia Rodríguez Vélez. These cases were investigated by the Social Security-Office of Inspector General (SS-OIG) with the collaboration of Health and Human Services-Office of Inspector General, and the Puerto Rico Police Department.

The SSA is responsible for the implementation of the Disability Insurance Benefits Program. The SSA provides monetary benefits to workers with severe, long-term disabilities, who have worked in SSA covered employment for a required length of time. Spouses and dependent children of disabled workers may also be eligible to receive benefits.

Pursuant to SSA regulations, a claimant must prove to SSA that he or she is disabled by furnishing medical and other evidence with the application. The application and supporting evidence would then be evaluated by SSA to determine the individual’s medical impairments and determine the effect of the impairment on the claimant’s ability to work on a sustained basis.

The nine indictments charge thirteen individuals of theft of government property, concealment or failure to disclose work activity to SSA and false statements or representations to the SSA. These defendants knowingly and willfully embezzled, stole, and converted to their own use the Social Security Disability Insurance Benefit payments to which the defendants knew that they were not entitled.

The defendants and the Social Security Disability Insurance Benefit payments to which they knew they were not entitled to are: Damaris Marrero-Santiago and Isaias Diaz-Torres $254,100.90; Mariluz Rodríguez-Rodríguez and Juan C. Rodríguez-Miranda $82,700.90; Roberto Padilla and Ednali Ramirez-Maldonado $317,083.40; Nancy Serrano-Picón $130,493.20; Edwin Maldonado-Burgos and Consuelo Nuñez-Serrano $72,235.30; Elson Fernández $77,647.50; Arnaldo Ramos-Martir $142,096.40; Minerva Carro-Rivera $311,976.10; and Luis Álvarez-Ramos, a.k.a. “Wichy” $56,207.20. They reported during a Continuing Disability Review (CDR) that the disability beneficiary had not been able to work due to different health conditions, when in truth they were working.

Defendant Nancy Serrano-Picón was also charged with healthcare fraud. As part of her SSA disability benefits, Serrano-Picón became eligible, applied for and received benefits under the Medicare Program. Once a person is receiving SSA disability benefits for 24 months he/she automatically starts receiving Part A of the Medicare Program (hospitalizations) and they become eligible to apply for Part B and C of the Medicare Program. If they decide to apply for Part B and/or C of the Medicare Program, the monthly premium is deducted from their monthly disability benefits.

“This is a great example of ongoing efforts by the Government to deter fraud against the social security programs,” said United States Attorney Rosa Emilia Rodríguez-Vélez. The Department of Justice is committed to investigate and prosecute those who engage in fraudulent schemes. Hopefully this round of arrests will discourage more people from getting involved in these types of schemes, because we will continue investigating these crimes.”

SSA-OIG Special Agent-in-Charge John Grasso said: “Today’s arrests are the latest in our continued and ongoing effort to bring to justice all individuals who commit Social Security Disability Fraud. I am very grateful for the efforts of our law enforcement partners involved in this investigation, and for the continued commitment from the United States Attorney’s Office for the Commonwealth of Puerto Rico to aggressively pursue these important cases. I strongly encourage the public to report suspected instances of Social Security fraud to the OIG’s Fraud Hotline at 1-800-269-0271 or https://oig.ssa.gov/report.”

Special Assistant United States Attorney Vanessa D. Bonano-Rodríguez is in charge of the prosecution of these cases. If convicted, the defendants could face a maximum penalty of 10 years of imprisonment and/or fines of up to $250,000.00. Indictments contain only charges and are not evidence of guilt. Defendants are presumed to be innocent unless and until proven guilty.

Five Individuals Arrested for Bank Fraud

U.S. Attorney's Office

San Juan

Press Release

SAN JUAN, P.R. – On October 5, 2016, a Federal grand jury returned a nine-
teen count indictment against five individuals for conspiracy to commit bank 
fraud, bank fraud, unlawful transfer, possession, and use of means of identifi-
cation during and in relation to an enumerated felony, and access device fraud,
announced Rosa Emilia Rodríguez-Vélez, United States Attorney for the Dis-
trict of Puerto Rico. The investigation was led by the United States Secret Ser-
vice.

The indictment alleges that from on or about May, 2012, through on or about 
March, 2015, Frankie Ortiz-Jaime, Wilfredo Reyes-Hiche, Cesar Quiles-Perez,
 Linda Rivera-Ortiz and Javier Torres-Garay knowingly and willfully combin-
ed, conspired and agreed with each other, to execute a scheme and artifice to 
defraud and to obtain money from Banco Popular de Puerto Rico, First Bank,
and Oriental Bank which are federally insured financial institutions and to ob-
tain monies and funds owned by and under the custody and control of the fin-
ancial institutions.

As part of the conspiracy the defendants conspired to engage in deceptive con-
duct designed to fraudulently obtain monies and credit from federally insured 
financial institutions for the purchase of goods and the distribution of monies 
to the members of the conspiracy. The indictment alleges that the defendants 
would contact Telebanco Popular to request loans using the name and perso-
nal identification information of a recruit and proceed to provide false employ-
ment and income information. The recruits, aided and abetted by the other me-
mbers of the conspiracy, would submit false documentation regarding employ-
ment and income in order to obtain loans, lines of credit, and credit cards from
the financial institutions.

According to the indictment, the defendants would receive electronic transfers 
or official checks for the loan proceeds and divide the proceeds with other me-
mbers of the conspiracy. In some instances, loan proceeds and credit cards we-
re used to purchase vehicles, such as a BMW, a Raptor and Polaris. They wo-
uld also utilize the credit cards to obtain cash and make other retail purchases.

The indictment includes a forfeiture allegation of any property, constituting, 
or derived from, proceeds obtained, directly or indirectly, as a result of the 
violations such as U.S. Currency totaling $285, 270, and three vehicles.

“Sophisticated financial crimes such as this one cause painful long lasting 
loss to law abiding businesses thereby affecting our fragile economy. Prev-
ention and prosecution of crimes of this nature will remain a top priority for 
the U.S. Attorney’s Office.” said United States Attorney, Rosa Emilia Rodr-
íguez-Vélez.

The case is being prosecuted by Assistant U.S. Attorney Seth A. Erbe. The 
case was investigated by the United States Secret Service.


 If convicted on charges of bank fraud, the defendants face a sentence of up 
to thirty (30) years of imprisonment. Criminal indictments are only charges 
and are not evidence of guilt. A defendant is presumed innocent unless and
until proven guilty.

The Real Cause of Puerto Rico’s Financial Collapse Wasn’t The Economy!

Commentary

Richard Lawless











On September 27, at the Waldorf Astoria Hotel in New York, Commercial Solar
Power, one of the many victims of the Puerto Rico financial collapse, will host
a press conference detailing its findings.

Sources close to the investigations suggest that there was rampant and repeated
massive government theft of public funds going on for over a decade. The theft
of public money, along with widespread Wall Street fraud associated with the is-
land’s bond issues, resulted in $39 billion in bondholder losses.

Although all the specifics may not be known until September 27, the following
has been shared with us.

The Puerto Rico Power Authority (PREPA), one of the world’s largest govern-
ment owned utilities, has been burning lowest grade No. 6 fuel oil for over a de-
cade.  The authority has been billing its citizens for the higher grade No. 2 oil.
The payments for this oil have been wired offshore and then kicked back to gov-
ernment officials’ family members. The difference in cost between No. 2 and No.
6 oil is approximately 58 percent.  In some years the overpayments exceeded $1.6
billion.

Our source also states that the ongoing EPA testing results could only occur with
the utility burning low grade sludge oil and that the equipment needed to burn No.
6 fuel oil is different than the equipment needed for the burning of higher grade No.
2 fuel.  A quick walk through of PREPA’s plants showed that PREPA was indeed
using equipment for fuel No. 6, which requires preheating.

[Note: Number 6 fuel oil is a high-viscosity residual oil requiring preheating to
220–260 °F (104–127 °C). Residual means the material remaining after the more
valuable cuts of crude oil have boiled off. The residue may contain various unde-
sirable impurities including two percent water and one-half percent mineral soil…
literally the bottom of the barrel.]

Additionally, a review of the agencies financial statements shows hundreds of mi-
llions of dollars in public funds missing from the equipment purchase and mainte-
nance accounts each year.

PREPA alone is responsible for almost $2 billion a year in missing or stolen public
funds.

An inter-agency review of Puerto Rico’s other agencies reflected similar activity.
It is estimated that as much as $3 billion a year in public funds are unaccounted
for in Puerto Rico.

Reviews of the various agencies’ financial statements indicate those agencies were
all technically bankrupt as early as 2007.  Normally, bankrupt entities would not be
able to secure any credit rating, let along investment grade ratings.  Without invest-
ment grade ratings the agencies could not issue bonds to raise more capital.

The typical fee for a credit rating is 1-2 percent but, by paying the rating agencies
as much as 9 percent, the Puerto Rico municipal agencies were able to secure good
credit ratings.

These fraudulent credit ratings allowed Puerto Rico to issue new debt ultimately
resulting in the financial collapse and a loss to the original bondholders of $39 bi-
llion.

I have been told that all members of both the Congress and the Senate knew this
when they voted to revoke all legal rights for the victims, the bondholders.

It is reasonable to expect, when a full disclosure is finally made, that Wall Street
and Washington will have some explaining to do.


Mr. Lawless is a career Banker and CEO of Commercial Solar Power, Inc.  Mr. Lawless has been 
working with the SEC, the FBI, The U.S. Attorney’s Office and the Treasury Department to un-
cover the reasons for Puerto Rico’s $70-billion-dollar bond default.  Mr. Lawless has held Senior 
and Executive positions with Wells Fargo Bank, Home Savings and Washington Mutual Bank 
specializing in the issuance of debt instruments.  Mr. Lawless holds a BA from Pepperdine Uni-
versity and a Master’s Degree from the University of San Diego.


The opinions expressed in the preceding commentary are exclusively those of the author and
do not necessarily reflect those of The Puerto Rico Monitor, its contributors or advertisers.

Three Defendants Plead Guilty In Identity Theft Tax Fraud Schemes

U.S. Attorney's Office

San Juan

Press Release










Defendants Gabriel Aquino-Camilo and Pedro J. Esteves-Rosa and
defendant Samer Suboh-Kased plead guilty before United States Dis-
trict Judge Juan M. Pérez-Giménez to twenty counts, ten counts, and
five counts, respectively, of theft of government property, announced
Rosa Emilia Rodríguez-Vélez, United States Attorney for the District
of Puerto Rico.

From December 2011 through May 2012, Aquino-Camilo gave Este-
ves-Rosa twenty (20) U.S. treasury checks totaling $138,912.43 that
were fraudulently obtained by filing false tax returns with the Internal
Revenue Service (IRS) using stolen identities of residents of Puerto Ri-
co. Esteves-Rosa successfully deposited the checks into two business
bank accounts that he controlled. The treasury checks were endorsed
with the victims’ signatures, but each victim denied filing the tax return
and endorsing the check.

From September through October 2012, defendant Suboh-Kased also
received treasury checks that were fraudulently obtained by filing frau-
dulent tax returns with the IRS. He deposited these checks into his busi-
ness bank accounts, without the authorization of the individuals whose
names were on the checks, and then Suboh-Kased withdrew the money
in cash. Suboh-Kased received a percentage for each check he deposited
and another individual kept the remaining amount.

The cases were investigated by the Internal Revenue Service, Criminal
Investigation (IRS-CI) and prosecuted by Assistant United States Attor-
ney Nicholas W. Cannon. Esteves-Rosa and Suboh-Kased are scheduled
to be sentenced on November 29, 2016. Aquino-Camilo is scheduled to
be sentenced on December 15, 2016.

Four Individuals Arrested For Social Security Fraud

Press Release

U.S. Attorney's Office - San Juan

SAN JUAN, P.R. - On August 2nd, 2016 a Federal Grand Jury in the District of
Puerto Rico returned a 16-count indictment charging one doctor, Americo Oms-
Rivera, his secretary Mayte González Muñoz, and Francisco Cabrera Alvarado,
a former Social Security Administration (SSA) employee, for fraud in the appli-
cation process for SSA disability insurance benefits in Puerto Rico, announced
United States Attorney for the District of Puerto Rico, Rosa Emilia Rodríguez
Vélez.

Defendants are also facing charges for wire fraud, false statement or representa-
tion to SSA, dispensing controlled substances by a practitioner (diversion), hea-
lth care fraud, and aggravated identity theft.

The SSA is responsible for the implementation of the Disability Insurance Bene-
fits Program. The SSA provides monetary benefits to workers with severe, long-
term disabilities, who have worked in SSA covered employment for a required
length of time. Spouses and dependent children of disabled workers may also be
eligible to receive benefits.

Pursuant to SSA regulations, a claimant must prove to SSA that he or she is dis-
abled by furnishing medical and other evidence with the application. The applica-
tion and supporting evidence is then evaluated by SSA to determine the individu-
al’s medical impairments and determine the effect of the impairment on the clai-
mant’s ability to work on a sustained basis.

The indictment alleges that on or about September 24, 2013, Person A was intro-
duced to Oms-Rivera to discuss his intentions of applying for disability insurance
benefits. During said meeting, Oms-Rivera informed Person A that he/she needed
to seek treatment for a period of five (5) to six (6) months before the paperwork
was submitted to the SSA. Oms-Rivera told Person A that once Person A’s disabi-
lity benefits were approved he would take a percentage of the check as payment.
The scheme involved, among others, the following acts alleged in the indictment:


* On or about January 14, 2014, Person A had the first medical appointment with
Oms-Rivera. During this visit, Person A informed the doctor that he/she was inter-
ested in obtaining SSA disability insurance benefits. Person A reported that his/her
medical conditions were high blood pressure and migraines from time to time. In
response, Oms-Rivera prescribed Prozac, a non-controlled narcotic, used for depre-
ssion and panic disorders and Restoril, a Scheduled IV narcotic used to treat insom-
nia symptoms.

* Person A made additional visits to Oms-Rivera for purported medical treatment.
During these visits Oms-Rivera and Person A discussed the disability application
process and Oms-Rivera prescribed Prozac, a non-controlled narcotic, used for de-
pression and panic disorders; Restoril, a Scheduled IV narcotic, used to treat ins-
omnia symptoms; Ambien, a Scheduled IV narcotic, used to treat insomnia; and
Xanax, a Scheduled IV narcotic, used to treat anxiety and panic disorders.

* Oms-Rivera and defendant González-Muñoz referred Person A to Cabrera, a
former SSA employee who worked as a non-attorney representative. Cabrera as-
sisted Person A in his application for SSA disability insurance benefits.

* On May 21, 2014, Cabrera met with Person A in order to assist him/her to fill
out the Adult Function Report, SSA Form 3373. During said meeting Cabrera
coached Person A as to what to write in the form in order to get Person A’s dis-
ability benefits approved.

* On June 10, 2014, González charged Person A $600.00 for the Psychiatric
Medical Report and $1,440.00 for backdating his/her medical file and creating
24 fictitious medical appointments.

* On or about October 22, 2015, the Psychiatric Medical Report signed by Oms-
Rivera was submitted to the SSA indicating that Person A was totally disabled to
return to work as of that date or in the near future. In the Psychiatric Medical Re-
port Oms-Rivera falsely represented to the SSA that Person A’s first medical visit
was on October 15, 2013. Oms-Rivera further reported a total of approximately
eleven (11) fictitious appointments that never took place. This was done to create
the appearance of a longer history of medical treatment.

The government is seeking the forfeiture of the medical license of Oms-Rivera since
he used it to facilitate the commission of controlled substances offenses when he pre-
scribed or dispensed controlled substances outside the scope of his medical practice.
The defendants are facing a maximum penalty of 5 years in prison for the conspiracy
to defraud the United States; up to 20 years in prison for wire fraud; up to 5 years in
prison for providing false statements to the SSA; up to 20 years for dispensing cont-
rolled substances by a practitioner (diversion); 10 years for health care fraud; and a
statutory term of two years in prison, consecutive to any other sentence, for the agg-
ravated identity theft charges.

Beneficiary Julio Rodríguez Ríos was charged in a separate indictment with theft
of government property and false statement or representation to SSA. That second
indictment alleges that Rodríguez-Ríos provided false statements to the SSA, during
a “Continuing Disability Review,” indicating that he had not worked since July 5,
2009, when in fact he had worked after said date. Rodríguez Ríos is facing a forfei-
ture allegation of $25,316.00 in United States currency.

“This is another Social Security Disability Benefits Fraud case where shameless in-
dividuals illegally facilitated and obtained the benefits provided by the Federal Go-
vernment. This is not a victimless crime, but rather an unacceptable act that depri-
ves those who truly need assistance from receiving it,” said United States Attorney
Rosa Emilia Rodríguez-Vélez. “The Department of Justice is committed to investi-
gate and prosecute those who engage in fraudulent schemes.”SSA-OIG Special Ag-
ent-in-Charge John Grasso said: “The Social Security Disability Insurance program
is intended to support individuals truly in need of this important and earned  benefit.
The program relies on the truthfulness of disability applicants, as well as other pro-
fessionals involved in the application process, to include physicians, attorneys, and
non-attorney representatives. It is particularly disturbing when people in positions
of trust engage in criminal activity that undermines Social Security’s programs and
their own professional responsibility. I am very grateful for the efforts of all of our
law enforcement partners involved in this investigation, and for the continued com-
mitment from the United States Attorney’s Office for the Commonwealth of Puerto
Rico to aggressively pursue these important cases. I strongly encourage the public
to report suspected instances of Social Security fraud to the OIG’s Fraud Hotline
at 1-800-269-0271 or https://oig.ssa.gov/report.”


The case was investigated by the Social Security-OIG with the collaboration of the
FBI, DEA, Health and Human Services, and the Puerto Rico Police Department.
The case was indicted by Special Assistant United States Attorney Vanessa D. Bo-
nano-Rodríguez.

Dodd-Frank Is About To Be Thoroughly Hillaried

Commentary

Richard Lawless

I can no longer sit quietly and watch this country implode from all of the Wa-
shington corruption.

Today I watched Hillary Clinton's speech, and I was appalled. I watched her 
tell the audience how she would bring Wall Street to heel and hold them acc-
ountable. I listen to her say how she would use Dodd Frank legislation to ma-
nage that process. It is all complete BS.

Hillary is fully aware of the large scale bond fraud uncovered in Puerto Rico.   
A criminal conspiracy so large that it calls into question all $70 billion dollars
of Puerto Rico debt.  Hillary is calling for a complete bailout and supports cu-
rrent legislation to do just that. She does not support prosecution.

The Puerto Rico Senate held investigative hearings in early 2015 to explore the 
financial failure of one of its largest municipal agencies. One government exe-
cutive after another testified under oath that they knew they were technically ba-
nkrupt when they issued these bonds and could not pay they back.  The witness-
es then went on to say that although the credit agencies (Moody’s, Fitch and S&
P) knew they were insolvent, they could secure good credit ratings for the bonds 
for the “right fee”. According to the same testimony, Wall Street’s biggest banks 
knew all this but for the “right sales fees” they would sell these junk bonds as sa-
fe retirement income to their retired investors.

The SEC has already performed four full audits on four bond issues and found 
the audits to be consistent with the Senate testimony.  These agencies were insol-
vent and it could not have been accidently overlooked by the Rating Agencies and 
the Banks.

We have seen this before with the 2007-2008 CMBS (mortgage bonds) crisis. The 
Rating Agencies and the Banks almost prefer to support these failing agencies be-
cause it forces them to refinance debt they can’t pay off as agreed before they have 
to admit it to their bond holders.  This “Ponzi Scheme” forces frequent and costly 
refinancing on a regular basis, generating huge fees for the Rating Agencies and 
Banks. All good, if you can continue to refinance fast enough and bring in new in-
vestors quick enough to pay off the old investors.  As in the case with Puerto Rico 
and other States and Cities, even a small hiccup causes the hold house of cards to 
collapse.

It is pretty clear that the Agencies issuing the bonds, the Rating Agencies issuing 
fraudulent ratings and the Banks selling junk bonds all broke the law and violated 
almost all of the provisions of Dodd-Frank.

All Congressman and Senators were issued this information.  Most did nothing 
but those that did, quickly stepped up to protect their Wall Street contributors. You
see, if this got out, the Rating Agencies and Banks would be held accountable for 
the tens of billions in bond losses.  Politian’s and government employees may be 
charged criminally. 

To date, there has been over $30 billion dollars in bond losses from this scam. The 
average bond holder owns less than $10,000 in bonds and that represents over 20% 
of their total savings. Not hedge funds as the Press and our Political leaders would 
have you believe.  When these bonds collapsed, after the senior citizens lost half 
their money, then the hedge funds came in to buy these bonds at 33-50 cents on the 
dollar with the hope of making money in the future.  The hedge funds are being us-
ed as a distraction to take the discussion away from the original crimes. Most Pu-
erto Rico Bonds are still held by individuals like you and I.

New York residences owned the single biggest piece of this debt at about $4 billion 
dollars, followed closely by Florida, New Jersey, Pennsylvania and Illinois. I don’t 
think any State has loss less than a few hundred million dollars. It is not a Puerto 
Rico Fraud. it is a National Fraud.

This entire thing sickens me and makes me glad that I am no longer part of the Wa-
shington two step.  The two step is a Political Dance that requires most politicians 
to add a political calculation to every vote they make.  There are three simple ques-
tions, how will this vote increase my power base, will it add to my reelection war 
chest and will it improve my personal financial statement.  There is no considerati-
on given to the masses they represent.  It is all about trading American Treasure 
and Tax Payer money for personal gain.

In this case it gets even better.  The Politicians were not happy stealing tens of bi-
llions from America’s middle class senior citizens when there is more to be taken. 
Enter the PROMESA legislation. Legislation that removes all existing legal rights 
from the innocent bond holders.  The legislation actually prevents the bond holders 
from suing. All supported by politicians that know all about this. 

Being around Washington for so long I know what most of these government offi-
cials did before securing their government jobs.

Treasury Secretary Lew and his legal counsels Weiss and Campbell worked for 
Citibank and Lazard, respectfully.  In the period that this fraud started Citibank 
and Lazard were among the first firms to sell these fraudulent bonds.  Now, using 
their position in government, all three of these gentlemen marketed congress for 
a full  bailout of Puerto Rico with Tax Payer Dollars and the innocent bond hold-
er’s money. Not once in all the committee meetings they participated in did they
site this conflict of interest while purposing solutions that benefit all their former 
employers.

Paul Ryan a professed conservative, was not supportive of any bailout or the PRO
MESA legislation.  That is until he met with Secretary Lew.  After the meeting, 
Ryan supported the legislation that violates every core principal that the Republi-
can party stands for.  What happened?  I suspect two things.  Lew reminded him
that he had a bright career and Wall Street would not forget this (contributions for 
his continued career advancement) and immediate funds for his current reelection 
campaign.  I as guessing about the former, but if you look at the contributions that 
flowed into him from Wall Street firms after the meeting, well it was impressive.  
Not surprisingly, most of the contributions came from firms directly involved with 
Puerto Rico.

It is clear that the Democrats has a strategy in place to redirect what’s left of the 
bond holders money to fund the unfunded government (union pensions).  How 
will they do this?  It is simple and the Press is going along with it.  Claim that the 
bonds were issued fraudulently and claim they shouldn’t be paid back to the bond 
holders. Float stories that the bond holders are just greedy hedge funds and not peo-
ple like you and I.  Who likes hedge funds?  Float stories that Puerto Rico is cance-
lling services from lack of money.  Kids are dying in the streets.  You have heard 
all this before.

As a debt expert, I should point out that when a family does not make its mortgage 
payment (bond payment example) that family has more cash at the end of the mon-
th, not less.  Puerto Rico has withheld hundreds of millions in payments and has mo-
re cash than you would imagine. Any cancelling of services is just another strategy 
being employed by less than honorable people.

I should mention in closing that Elizabeth Warren (claims to be anti-Wall Street) 
knew all about this but was the first to propose an amendment to an energy bill 
preventing innocent bond holders from suing.  Just follow the money for Elizabeth.

This is not just a $70 billion-dollar scam (Puerto Rico). It includes Chicago, Conn-
ecticut and many other States.  This is a Political Strategy to make up for years of 
over spending.  When legal taxes are no longer enough, steal the bond holder’s mo-
ney.  Individually the bond holders are not very powerful and they will not underst-
and what their leaders are doing to them.



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. The opinions expressed in the preceding article are solely those of
Mr. Lawless and do not necessarily reflect those of The Puerto Rico Monitor, its editors, contributors
or advertisers.

American and British Intelligence Uncover Payoffs to the FBI & U.S. Attorney's Office

Commentary 

Richard Lawless





As the CEO of Commercial Solar Power (CSP), Mr. Lawless ordered a for-
ensic 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 Ag-
encies, 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 Ri-
co 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 diligen-
ce process, CSP did an audit of the bond offering memorandums that these
good ratings were based on.  The audit uncovered hundreds of millions in mi-
ssing funds and a utility that has been technically bankrupt since 2007. It see-
med inconceivable to the CSP team that all three rating agencies gave a bank-
rupt 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 Legisla-
ture.

After receiving no response for many months, I wrote an editorial that appe-
ared 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 Chavez (Venezuela).  The calls
detailed a criminal enterprise that was stealing literally billions in public fun-
ds 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 res-
ponse so I contacted all persons of interest and discovered no one was ever in-
terviewed 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 Se-
nate 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 pho-
ny credit ratings have already resulted in billions of losses for those bond hol-
ders. 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 Citi-
bank, 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 rel-
uctance 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. The opinions expressed in the prece-
ding commentary are those of the author alone and do not necessarily reflect those of The Puerto
Rico Monitor, its editors, contributors or advertisers. 

Government Reaches $2.5 Million Settlement in Healthcare Fraud Matter

Press Release

US Attorney's Office - San Juan

SAN JUAN, Puerto Rico – On May 18, 2016, the U.S. Government entered
into an out of court settlement agreement with Hospicio La Paz, Inc., in co-
nnection with a False Claims Act investigation carried out by the U.S. Dep-
artment of Health and Human Services, Office of Inspector General (HHS-
OIG) and the U.S. Attorney’s Office, District of Puerto Rico. The investiga-
tion uncovered approximately $1,504,509.00 in questionable billings submi-
tted for payment by Hospicio La Paz, Inc. to Medicare Program, Part A, from
October 2011, through September 2012.

Under the False Claims Act, Title 31, United States Code, Sections 3729, et
seq., the United States can recover up to three times the amount of loss and
civil monetary penalties ranging from $5,500.00 to $11,000.00 per false cl-
aim. As part of the settlement negotiations, Hospicio La Paz, Inc. paid the
United States Government the sum of $2,500,000.00, including excess da-
mages and penalties. Furthermore, Hospicio La Paz will enter into a comp-
liance agreement with HHS-OIG.

The United States Attorney’s Office will continue to investigate healthcare
fraud matters, and will aggressively pursue civil and criminal actions against
those who attempt to defraud the United States.  The matter was prosecuted
by Assistant U.S. Attorney Rafael J. López Rivera, Civil Health Care Fraud
Coordinator, at the U.S. Attorney’s Office.

Credit Rating Agencies Throw Our Senior Citizens Under the Bus And Congress Pulls Out All Stops to Protect Their Wall Street Friends!

Commentary

Richard Lawless










Once again we are faced with one inevitable truth.  Our legislators protect Wall
Street, not us.

The municipal bond market is approximately $4.2 trillion dollars. Municipal
bonds are a favorite of retired Americans and Senior Citizens for their double
tax free income.  80% of the bonds issued are either directly held by these folks
or held through a mutual fund.

Senior Citizens rely on this income to supplement their social security and pen-
sions.  The average bond holder has a household income of $30,000 or less.

There is clear and compelling evidence of massive municipal bond fraud on the
part of S&P, Moody’s and Fitch.  The Puerto Rico financial collapse spurred a
number of Senatorial Hearings in Puerto Rico.  In these hearings there was di-
rect sworn testimony from municipal agency executives that the rating agencies
knew they were bankrupt but for the right fee would issue a good credit rating
for their bonds.  Subsequent accounting audits of the bond issues verified that
the entities were technically bankrupt when S&P, Fitch and Moody’s issued good
credit ratings to them.  $56 billion of the $70 billion in bond debt issued, is held
by Americans in the fifty states.

In addition to first hand testimony and audits there is abundant evidence of coll-
usion between the rating agencies.  Much like the results of a DNA test; 10,000,
000 to 1 probabilities, the odds that the three rating agencies got the same things
wrong across so many bond issues, leaves no doubt, there was collusion. Make no
mistake, the evidence is overwhelming and this is a massive criminal enterprise in-
volving hundreds of billions of dollars.

All of our Congressman and Senators have been given the testimony and the audits.
The legislatures are aware of the SEC and FBI investigations and are doing every-
thing they can do to obstruct any progress on that front.  There are even CIA recor-
dings that implicate the Puerto Rico FBI and US Attorney offices in this criminal
enterprise.

While most of our Representatives do nothing, a small but powerful group of Con-
gressman and Senators are aggressively throwing us under the bus to protect their
contributors.

A complete and full report was also sent to the House and Senate Oversight Co-
mmittees. I recommend that all Americans call the numbers below and let them
know, “WE ARE MAD AS HELL AND WILL NOT TAKE IT ANY MORE”.


House Committee on Oversight                           Senate Committee on Oversight
2157 Rayburn House Office Building                   340 Dirksen Street (Senate Offices)
Washington, DC 20515                                        Washington, DC 20510

Phone: (202) 225-5074  Fax: (202) 225-3974        (202) 224-4751



Mr. Lawless has twenty-five years of experience in performing forensic accounting reviews.  Mr. 
Lawless received his Bachelor of Science Degree from Pepperdine University and a Master’s in 
Business Administration with a focus on finance from the University of San Diego.  Richard has
had a long banking career as a commercial lender and has served as a senior and executive ma-
nager for major banking institutions. In these roles Mr. Lawless was responsible for billions of 
dollars in assets.  Mr. Lawless has also served as Chairman and CEO for a number of non-ban-
king companies some of which have been in the energy sector. Mr. Lawless' opinions are exclu-
sively his own and do not necessarily represent those of Th Puerto Rico Monitor, its contributors 
or advertisers.

Court Upholds RICO Claims In PREPA Conspiracy Lawsuit

Press Release


SAN JUAN, Puerto Rico – A U.S. District Judge overseeing a class-
action lawsuit against Puerto Rico Electric Power Authority (PREPA)
and the world’s largest fuel oil suppliers for perpetuating an extensive
fuel oil fraud upheld claims that defendants violated the Racketeer In-
fluenced and Corrupt Organizations Act (RICO) and denied motions
to dismiss the suit, according to Hagens Berman.

The order from Judge Jay A. Garcia-Gregory on Apr. 5, 2016 denied
motions to dismiss from the majority of the suit’s 20 defendants, allow-
ing RICO claims to continue against PREPA, Shell Oil, Petrobras, Al-
chem and various other laboratories and fuel oil suppliers.

“This order is a major victory for the nearly 1.5 million PREPA custo-
mers who were defrauded through this complex and deeply entrenched
scheme,” said Steve Berman, managing partner of Hagens Berman. “Re-
sidents and businesses were overcharged to the tune of $1 billion by the-
se corrupt, greedy organizations, and we are pleased that the court agrees
that they should be held to answer for their actions.”

In the original suit, filed Feb. 24, 2015 in the U.S. District Court for the
District of Puerto Rico, Puerto Rico residents and businesses accused PR-
EPA and 20 total defendants of perpetuating an extensive fuel oil fraud,
resulting in users of electricity in Puerto Rico being overcharged by more
than $1 billion dollars for electricity since 2002. The suit states the defen-
dants received kickbacks and payments for colluding to raise fuel oil pri-
ces that were directly passed to users of electricity, by agreeing to use non-
compliant fuel oil and falsifying lab tests.

The order from Judge Garcia-Gregory stated, “Plaintiffs’ allegations aga-
inst PREPA are extensive,” denying PREPA’s motion to dismiss on gro-
unds that it is a co-conspirator with responsibility for inflating the fuel’s
price. “Plaintiffs have successfully shown this by alleging that the three
groups of participants—the Fuel Oil Supplier Participants, the PREPA
Participants, and the Laboratory Participants—all coordinated together
for the common purpose of falsifying laboratory results to pass off Non-
compliant Fuel Oil as Compliant Fuel Oil.”

Attorneys allege that PREPA – one of the largest public power agencies
in the United States – fraudulently agreed to accept millions of barrels of
fuel oil that did not meet specifications of contracts between PREPA and
its oil suppliers, or specifications set by the EPA. PREPA accepted this non-
compliant fuel oil and the laboratories certified the fuel oil as compliant in
exchange for kickbacks and commissions from the fuel oil suppliers, accor-
ding to the complaint. PREPA served approximately 1.5 million customers
in 2012.

In recent developments in the case, plaintiffs alleged that Alchem, a labo-
ratory named in the suit’s laundry list of defendants, switched its testing
methodology to satisfy PREPA on Dec. 31, 2010 and that it used the new
testing methodology to falsify test results for every PREPA sample tested
after this date. Plaintiffs point to contrasting sample pages of Alchem’s log
book dated before the change in testing methodology and after the change,
showing the log book page before the change in testing methodology refle-
cts that every sample tested was rendered non-compliant, whereas the two
log book pages after the change show that every sample tested was deemed
compliant.

“Based on Plaintiffs’ new allegations, the Court finds that Plaintiffs have
adequately pled that Alchem committed two or more RICO predicates and
thus have alleged Alchem’s participation in a ‘pattern of racketeering acti-
vity.’”

Former employees from PREPA and the oil cartel participants have shared
information about the conspiracy to help end this fraud. If you have additio-
nal information about the Cartel de Petróleo, you may contact a Hagens Ber-
man attorney by calling 708-628-4949 or by emailing prepa@hbsslaw.com.
More information about the lawsuit is available at www.hbsslaw.com/prepa.

The suit seeks to recover out-of-pocket losses, compensatory damages and
punitive damages for plaintiffs under the RICO Act and for the disgorge-
ment of profits under the common law of unjust enrichment.

__________________________________________________________________


About Hagens Berman

Hagens Berman Sobol Shapiro LLP is a consumer-rights class-action law firm with offices
in 10 cities. The firm has been named to the National Law Journal’s Plaintiffs’ Hot List 
eight times. More about the law firm and its successes can be found at www.hbsslaw.com. 
Follow the firm for updates and news at @ClassActionLaw.