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.

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.

I Threw A Pebble In A Pond And Started A Ripple

Commentary

Richard Lawless


You might not believe what I am about to tell you but I hope you read
this article through to the end.

My company invested in developing a large solar power plant for the
Puerto Rico Electric Power Authority (PREPA).  PREPA is one of the
largest government owned utilities in the world. At the time the utility
had BBB+ ratings from the credit agencies.

As time went on we felt the utility was not acting in good faith.  Their
behavior was really bizarre.  We had experience with other large utilities
and this was nothing like them.  The long and short of it was, we lost eve-
rything, our company went bankrupt and all of the executives that guaran-
teed our loans are now being sued.

Normally, not an uncommon occurrence.  Unfortunate but it can happen.
I felt terrible that we could not pay back our creditors and investors so ra-
ther than throw my hands up, I started to take a better look at this govern-
ment agency.

What I found will shock you.  It appears that this government entity has
been defunct for many years.  They have been issuing billions of dollars
in municipal bonds they couldn’t pay for and Wall Street’s largest com-
panies knew it, but went along.  The credit rating agencies knew it and
issued false and misleading credit ratings.  This weekend, The Puerto Ri-
co Government admitted they issued $11 billion dollars in fraudulent bo-
nds.  But that is only part of the story.

I uncovered strong data that would suggest that this very same govern-
ment entity was also missing up to $1 billion dollars a year in public fun-
ds.  It now appears that there may be missing funds in their huge construc-
tion and capital improvement budgets as well as creating a scheme to buy
low quality oil for their power plants while paying for high quality oil.
The difference in price on the oil, up to $700,000,000 a year was alleged-
ly kicked back to politicians and government bureaucrats.  Again, I want
to stress, Puerto Rico has not admitted to this yet.

Big news right? Well I took this data and gave it to the SEC, EPA, FBI,
U.S. Attorney and the Attorney General.  Bottom line, no one but the SEC
took any interest.  You see the SEC is run by a four-person panel and is
not subject to the political pressures the DOJ and the EPA are.  The infor-
mation I provided was supported by financial reports and was unquestiona-
ble. I also took this information to the press, The Wall Street Journal, New
York Times, The Bond Buyer, The Financial Times, Bloomberg, Cavoto,
John Stossel, Reuters, AP and others.  The few that paid attention and con-
tacted me, laughingly suggested I couldn’t prove any of this or they may
look into it, but no promises.  Again, I gave them proof! Maybe they coul-
dn’t read, didn’t understand financials, were lazy or just incompetent?  Or
could it be that it reflected negatively on the administration, a Democratic
administration and that outweighed informing their readers and preventing
them from losing more money on this scheme?

It is clear that the administration wants bankruptcy for Puerto Rico and
this story breaking would not be helpful.  The Treasury Secretary deman-
ded Congress get moving and consider a bankruptcy option for Puerto Rico.
I should mention two things here.  The Treasury Secretary used to run Citi-
bank a firm that issued billions in these fraudulent bonds.  Our President is
from Chicago and Chicago definitely needs a bankruptcy option.  An option
that would likely be available if Puerto Rico gets it.  Lastly politicians like
Chuck Schumer need to win the Puerto Rico vote and even though he had this
information, Mr. Schumer continues to push for bankruptcy.

Bankruptcy would help hide all this malfeasance and mismanagement.  It
would also make it more difficult to sue.

These bonds failed and were sold for 50-60 cents on the dollar.  $11 billion
in fraudulent bonds, that means the owners of these bonds, Americans, lost
about 5 billion dollars.  Let me write that out: $5,000,000,000.00.

Our politicians knew about this and did nothing.  The press knew about this
and did nothing.

How broken is our system of government?

DOJ is subject to political pressure. The Treasury Secretary like the politi-
cians wanted to run over millions of Americans to get what Obama wanted
and protect his wall street friends.  Our career government employees, our
Attorney General, the head of the FBI, the head of the EPA all kicked up
their skirts and bent over their desks to achieve a political result.  If it does-
n’t enrich them personally or enhance their career, they are not interested.

It may be over for Puerto Rico but the United States is right behind them.
The restructuring of our voting districts gave job guarantees to our career
politicians.  They no longer answer to each other or the people.  They come
into office relatively poor and leave 30 years later a multi-millionaires and
it’s not from their salaries.

Could you imagine that I let one of my employees accept a $500,000 spea-
king fee from a company and then let that employee direct our equipment
purchases to that company.  In Washington that is what it is all about.

Unfortunately, in a few days everyone will forget my name and with pre-
ssure from the administration and congressional politicians the Press will
kill this story.  I suspect the full magnitude of this criminal enterprise will
never be told. Billions of dollars buy a lot of cooperation.

It’s all our fault because come election day we will almost certainly vote
for the same corrupt career politicians that put this all in place.

God help America, how will we ever survive?


The opinions expressed in the preceding commentary are exclusively those of the author and do not 
necessarily represent those of the Puerto Rico Monitor.

Audit Uncovers Massive Municipal Bond Fraud In Puerto Rico

Commentary

Richard Lawless


A recent audit shows that the Puerto Rico Electric Power Authority, a
large government owned utility, used phantom income to materially
overstate the utility's income.  This intentional misstatement was used
repeatedly to issue billions of the dollars in municipal bonds that the
utility nor the  government could pay for.

Innocent investors are set to lose hundreds of millions of dollars because
of this fraud. Puerto Rico is pushing for access to Bankruptcy. Bankrup-
tcy would allow the island to force those unwitting investors to take even
more significant losses.

The SEC and FINRA have been made aware of this fraud and have opened
investigations. The implications of this massive municipal bond fraud are
significant. It would suggest complicity with the rating agencies, bond issu-
ers and bond sellers, cutting a wide swath across Wall Street, shaking inves-
tor confidence to its core.

Given the administration’s position to provide bankruptcy protection for
Puerto Rico and by extension, Chicago. It is unlikely that the DOJ will be
allowed to pursue this.  Fortunately, FINRA and the SEC are outside the
reach of the administration's political control.


Click here to read the forensic accounting report.



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 manager 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-banking companies some of which have been in the energy sector.


The opinions expressed in the preceding commentary are exclusively those of
the author and do not necessarily represent those of the Puerto Rico Monitor.