DDEC fines Politank $80,000, warns tax decree could be annulled

Economic Development and Commerce Secretary Carlos J. Ríos Pierluisi

By THE STAR STAFF

The Department of Economic Development and Commerce (DDEC by its acronym in Spanish) has imposed an $80,000 administrative fine on Politank Corp. following a new review by the Office of Incentives for Business (OIN) in Puerto Rico that found multiple compliance failures tied to the company’s tax-exemption decree under former Law 20-2012.

The findings appear in a supplemental memorandum dated July 8 and sent by DDEC Secretary Carlos J. Ríos Pierluisi to Senate President Thomas Rivera Schatz in response to an ongoing legislative information request. According to the document, the OIN conducted a fresh audit of Politank’s decree, No. 17‑20‑S‑163, and identified three main issues: failure to file required annual reports for tax years 2020, 2021 and 2025; late or incomplete filings for 2017, 2019, 2022, 2023 and 2024; and an alleged transfer or change of control made without prior authorization, as required by Article 10(c) of Law 20‑2012.

DDEC assessed a $10,000 penalty for each missing, late or deficient annual report, bringing the total fine to $80,000. Politank has 20 calendar days to submit the evidence and information requested in the deficiency notice, and 15 calendar days to correct or justify any incomplete filings. If the company cannot show that the reported transfer was approved in advance, qualifies for a statutory exception or received retroactive authorization, the OIN may seek to annul the decree effective as of the transfer date.

The matter reached the Legislature after an internal DDEC audit dated June 2 and signed by then-OIN director Ernesto Zayas García recommended evaluating sanctions against Politank, including fines and possible revocation of its decree. Rivera Schatz later asked DDEC and the Treasury Department for detailed information on the decree’s status and any related administrative or tax actions.

Before issuing the supplemental memorandum, DDEC had told the Senate that Politank’s decree remained active and that the initial audit was not a final administrative determination. Ríos Pierluisi said he ordered a de novo review of the file after the audit became public.

Politank has drawn public scrutiny because of its connection to La Fortaleza Chief of Staff Francisco Domenech Fernández, who founded the firm and reportedly owned it until late 2024. The case also overlaps with allegations by former DDEC Secretary Sebastián Negrón Reichard, who claimed Domenech intervened on behalf of Politank clients in matters referred to the Office of the Special Independent Prosecutor Panel. Those allegations remain under investigation and have not resulted in findings of wrongdoing.

Treasury officials have said they cannot begin any recoupment process for potentially unpaid taxes until DDEC issues a final determination on whether the decree will be revoked or annulled. Once DDEC reaches a decision, the Treasury Department said it will proceed under applicable laws and regulations.

DDEC defended the renewed review, saying the agency is responsible for protecting the integrity of Puerto Rico’s incentives program, which includes more than 10,000 active decrees. The agency told the Senate that all decree holders must receive the same procedural guarantees before any final administrative action is taken.

Later on Thursday, Politank Corp. President Manuel Torres Nieves alleged that the audit process conducted by the OIN is selective, noting the nearly 10,000 unaudited decrees within the agency.

“However, we must raise a red flag regarding the selective nature of this process targeting our company for an alleged audit, given that there are some 10,000 decrees at the Department that have gone unaudited for nearly a decade,” the company stated in a written release signed by Torres Nieves. “We have become aware -- through media reports and later via a received communication -- of information regarding alleged findings from an audit conducted by the Office of Business Incentives in Puerto Rico.”

“Regarding these alleged findings -- which we dispute and intend to contest -- our legal counsel will address them in a timely manner within the appropriate administrative, ethical, and judicial forums,” the company asserted in the statement. “We expect our constitutional right to due process to be guaranteed -- a right that has not been upheld in this instance -- as we did not receive the proper notifications, and confidential documents have been made public.”

Politank added that, out of deference to the administrative processes regarding which the DDEC had not notified the company in recent months, it would not issue further comments.