Dominican banker jailed in fraud case

Latin Lawyer (2009)

The Dominican Republic’s Supreme Court has sentenced the CEO of the country’s third largest bank to 10 years in prison, after finding him guilty of fraudulent accounting and embezzlement worth over US$400 million.

On 25 September, the court’s penal chamber ordered Pedro Castillo to pay compensation worth US$338 million to Banco Dominicano del Progreso and its holding company, Grupo Progresso, as well as fining him a further US$420,000 on top of his prison term.

Francisco Alvarez, a partner with Headrick Rizik Alvarez & Fernández, which advised the plaintiffs, says the decision “sets an example that will allow Dominicans to have a safer financial system and gain confidence in the judicial system of the country”, adding that the ruling marks the first time the loss was not borne by the government or Dominican Republic’s Central Bank. Banco Dominicano del Progreso and Grupo Progresso brought the case in 2006, accusing Castillo of money laundering, breach of trust and embezzling more than 14 billion Dominican pesos (US$400 million).

Local financial institutions Caribbean Card System, BDP Finance International Corporation and Credicobros also added their names to the list of plaintiffs. Last year a Miami court hearing a civil case against Castillo also ruled against him on 403 counts of fraud, awarding damages worth US$80 million. In the past year, five former bankers have been given prison terms in the Dominican Republic for crimes related to bank fraud, including Luis Alvarez Renta, convicted of embezzling funds from the island’s Banco Intercontinental which subsequently collapsed, sparking a recession in the country.

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