Bancredito sues 3 law firms after dismissal of criminal charges against Velutini

By THE STAR STAFF

Bancrédito Holding Corp. (BHC), the sole shareholder of Bancrédito International Bank & Trust Corp., has filed a lawsuit against three international law firms: McConnell Valdés LLC, Holland & Knight LLP and McDermott Will & Schulte LLP. The lawsuit seeks a jury trial and compensation for legal representation that led to a $15 million fine.

ThE action follows the recent dismissal of most criminal charges against Julio Herrera Velutini, the founder of Bancrédito, who faced charges of corruption alongside former governor Wanda Vázquez Garced and a former FBI agent.

“Those who, instead of protecting the interests of the bank and its shareholders, acted negligently, causing reputational and economic damage, must be held accountable under the law, just as Bancrédito has always done,” BHC CEO Luis Zapata said.

He emphasized the need to establish responsibility for those who compromised the institution’s name and prestige, as well as its assets and those of its trust beneficiaries.

The complaint, filed in the Eleventh Judicial Circuit in Miami-Dade County, alleges that the law firms exhibited gross professional negligence during negotiations with the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN). According to Section 33 of the complaint, the lawyers’ advice led the bank to abandon valid defenses and accept a consent order, admitting to facts that the lawyers knew to be false based on their involvement in prior evaluations.

Section 17 of the document notes that in 2020, McConnell Valdés and Holland & Knight provided a joint opinion letter to Puerto Rico regulators, claiming the bank’s anti-money laundering and Bank Secrecy Act compliance programs were adequate and stating that certain reports were unnecessary. However, when FinCEN began its investigation, those firms allegedly disregarded their previous positions, omitted available arguments, and advised the bank to accept inaccurate facts.

“Any reasonable attorney would not have advised the bank to accept a Consent Order that alleges the bank’s compliance programs deteriorated over time,” the complaint argues. “However, the attorneys themselves had concluded in their analysis that the programs were sufficient and had even improved.”

In 2023, BHC filed a lawsuit against Driven Administrative Services, which was appointed as a trustee to act as the bank’s board of directors during the liquidation process. The lawsuit, currently under appeal in Puerto Rico, accuses Driven of breaching its fiduciary duty by entering into the consent order with FinCEN based on the negligent advice of the bank’s attorneys. The complaint further contends that once all depositors were repaid in early 2023, the remaining assets should revert to the bank and its shareholders. Instead, Driven allegedly retained or sold artwork valued at over $22 million, despite no longer having obligations to the depositors.