Sunday, July 10, 2016

Did FBI and Justice Dept. Enable Puerto Rico’s Financial Meltdown?

OPINION


Did FBI and Justice Dept. Enable Puerto Rico’s Financial Meltdown?

The FBI and DOJ stood by while government officials in Puerto Rico committed $11 billion dollars in financial fraud

Possible DOJ Involvement in Puerto Rico’s Financial Meltdown

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SAN JUAN/TEMECULA—The ongoing controversy over Puerto Rico’s insolvency and efforts to enlist congressional support for legal bankruptcy protection for the U.S. territory have resulted in fingers being pointed at the local Federal Bureau of Investigation (FBI). Puerto Rico U.S. Attorney’s office is also under fire for an alleged failure to investigate and prevent a reportedly massive fraud that may have contributed to the island’s financial crisis.
I am CEO of Commercial Solar Power, Inc., a company that was reportedly forced into bankruptcy by what has been described as the “bizarre behavior” of the Puerto Rico Electric Power Authority (PREPA), which has been used to redirect as much as $100 million a year from the people of Puerto Rico to select government officials.
On February 24, 2015, a private lawsuit was filed using the Racketeer Influenced and Corrupt Organizations Act (RICO), claiming government officials at PREPA stole over one billion dollars in public money over 10 years and committed one of the largest municipal bond frauds in United States history.
Increasing municipal bond defaults have been a growing concern among investors and politicians over the past few years. With the pending defaults on almost $70 billion dollars in municipal debt issued by various Puerto Rico municipalities, the Securities and Exchange Commission (SEC) has reportedly increased its efforts to monitor this sector.
As I understand from confidential sources, SEC audits have uncovered material irregularities relating to the issuance of unjustified credit ratings by Fitch Group, Inc., “a global leader in credit ratings and research,” according to its website. My confidential source has indicated that the initial probe will focus on bonds issued by Puerto Rico’s largest utility company PREPA.
However, Daniel Noonan, global head of communications at Fitch Group, stated in an email, “We have no knowledge of any of the investigations” alleged.
It has also been alleged that law enforcement authorities in Puerto Rico stood by and did nothing for a number of years—an assertion that was substantiated by a phone call originating in Alexandria, Virginia. Some months ago, I received a call from a man stating he worked for the U.S. government, inferring he was with the Central Intelligence Agency (CIA).
I was told that Puerto Rico came on his agency’s radar years ago because the head of the PREPA fuel purchase office started making direct calls to the then-president of Venezuela, Hugo Chavez. An agency listened in and found out that PREPA was buying sludge oil from Venezuela and billing the utility for high grade oil. The difference in value—hundreds of millions per year (today it would be $700 million a year and is said to be still going on)—was allegedly kicked back to the fuel office manager and distributed to politicians and government officials on the island.
As the unnamed government agency continued to listen in on the calls, the caller claimed it became clear that family members of Puerto Rican FBI agents and family members in the Puerto Rico U.S. Attorney’s office were receiving payments based on these “kickbacks.”
He went on to tell me that the Puerto Rico’s FBI office and U.S. Attorney will do nothing about the oil kickback scheme and the bond rating scheme because they were participating in it. He went on to suggest that because of the separation laws regarding CIA activities and U.S. national law enforcement, there was not much he could do.
On Monday, a senior source in a related U.S. government agency, speaking to Caribbean News Nowon condition of anonymity, confirmed almost word for word what I had apparently been told.
In the meantime, I received a voice message from someone said to be calling from the San Juan FBI office in response to complaints I made to members of Congress. He claimed the matter was being “looked at” to determine whether the circumstances cross the boundary from civil fraud to a criminal offense.
On June 24, 2015, the government of Puerto Rico issued a 23-page legislative report, no less than a detailed confession, which outlines how government officials in Puerto Rico conspired with Wall Street firms to commit $11 billion dollars in financial fraud.
After reviewing this document and other evidence for many months, I believe the FBI is claiming that the best prosecutors in the DOJ have not yet found criminal grounds to move forward.
According to the legislative report itself, PREPA paid previous bondholders with capital received from new investors, which is the classic hallmark of a Ponzi scheme.
“The above mentioned was done to benefit the financial community that issued the debt and who today is collecting same, without any monies having been invested in improvements to infrastructure, all to the detriment of the best interest of the people of Puerto Rico. We believe that the actions and circumstances mentioned above caused the economic insolvency which has plagued PREPA in the past years,” the report said.
The debt was sold at discount, a large quantity of it between .60 to less than .50 cents to the dollar with the agreement to pay to the dollar in full upon maturity. Plus, the annual return yield was agreed to set high interest rates, and the principal and return are three-fold exempt from payment of local and federal taxes, the report continued.
The report claimed that the financial intermediaries and the institutional bondholders, despite being fully aware of PREPA’s fiscal situation, had no qualms with unjustly enriching themselves and with having the consequences of their negligent acts be paid for by the people of Puerto Rico.
“Meanwhile, and fully aware that PREPA did not have the resources to repay the debt, investment firms, banks, credit houses, consulting engineers, and PREPA itself failed to bring out into public light the need to make adjustments to the rates charged by PREPA,” the report stated.
Investors allowed PREPA to issue bonds. Then, PREPA borrowed from private banks to pay the bond’s interests, then borrowed from the Government Development Bank (GDB) to pay back the private bank loans. The GDB, in turn, issued more bonds to refinance all. Afterwards, PREPA would issue a new debt to pay GDB’s outstanding interests, pay principal and pre-pay the new bonds’ interests for several years—a cycle that is repeated over and over—and in which the original debt is never paid, the report outlined.
“This practice could constitute a fraud scheme for which the federal agencies that regulate financial instruments and the Security Exchange Commission could take action against and/or pursue civil suits against these institutions,” the report concluded.
It was also recommended that the report be forwarded to the U.S. Justice Department and the SEC for corresponding action.
The Puerto Rican Legislature itself is clearly suggesting that a criminal act had occurred and should be investigated.



Saturday, March 19, 2016

Puerto Rico Braces for Its Own Zika Epidemic - NYT


Puerto Rico Braces for Its Own Zika Epidemic

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The governor’s office recently announced detailed plans to attack mosquito hot spots: cemeteries, abandoned houses, auto junkyards, unsealed septic tanks and piles of old tires.
Each of the island’s 78 municipalities has until April 1 “to clean up their acts,” Dr. Rullán said.
As of Friday, 900,000 of an estimated one million discarded tires had been picked up and moved to depots far from residential areas.
Much of the work was done by convicted drug abusers living in a network of halfway houses who can earn early release through public service, he said.
Many of the island’s hundreds of schools have no screens or air-conditioning. Since high school girls account for about 20 percent of all pregnancies here, officials plan to screen the windows to keep out mosquitoes.
That alone is a big job. “That means measuring each window,” Dr. Rullán said. “And what are you going to do about doors if you have 50 kids running in and out?”
As a first step, the public school dress code has been changed so girls can wear pants, and teachers are supposed to give mosquito repellent to all girls.
Here is a look at the most prominent rumors and theories about Zika virus, along with responses from scientists.
In the island’s 109 cemeteries and its many auto junkyards and public dumps, mosquito-control teams have begun spraying pesticides that kill the insect’s larvae. But the work is never-ending because rain washes it away.
Moreover, the island is dotted with hundreds of abandoned homes with water-collecting birdbaths and pools. Puerto Rico has 500,000 septic tanks, each of which can produce up to 1,500 mosquitoes a day if left unsealed.
Teams cannot enter an abandoned property or screen a septic tank when the owner is absent, “so we’re asking for a new law letting us enter,” Dr. Rullán said.
The ideal, he said, would be to spray every property within 150 yards — the distance a mosquito normally travels — of every pregnant woman’s home.
The island’s birthrate is about 10 per 1,000 women, and nearly 100 women a day become pregnant here. Just finding them all would be a gargantuan task.
A Hunt for Solutions
Other mosquito-control efforts are even less effective.
Highly visible fogging by trucks is what most people associate with government mosquito-fighting. Butpermethrin, the insecticidal fogger used for years, may actually be useless.
Tests at several sites have found that its ability to kill mosquitoes has significantly faded, so the island will have to choose a new pesticide and retrain workers to use it.
Even with the right chemical, the impact of fogging is dubious. Aedes mosquitoes typically hatch in gardens and slip into houses to hide in closets and under beds. When the spray trucks go by, many people close their windows, locking themselves in with the enemy.
Aedes mosquitoes are “sip feeders” and bite several times for each blood meal. The number required to make it likely that just one member of the household is infected is as few as three mosquitoes, experts have found.
Moreover, by a “very inconvenient coincidence,” the Environmental Protection Agency has effectively banned the chemical used here to kill juvenile mosquitoes, Audrey Lenhart, a C.D.C. entomologist, noted. The chemical, temephos, has been in use since 1965 and definitely works, she said. But it is not very profitable, so when the agency demanded safety data costing about $3 million to gather, the manufacturers decided instead to quit making it.
Puerto Rico still has a nine-month supply, Dr. Lenhart said, and the E.P.A. may issue an emergency use permit for more.
Mosquitoes are not the only mode of Zika transmission, however. Health authorities here have also been forced to grapple with an unexpected twist: the discovery that sex spreads the virus.
The government has frozen the price of condoms, threatening stores with fines of up to $10,000 if they raise them. (It did the same for repellent and window screens.)
At nutrition clinics, teachers like Ms. Morales have struggled to explain, as they hand out condoms, why the partners even of pregnant women should wear them.
In a radio interview in January, Puerto Rico’s health secretary, Dr. Ana Ríus, advised women to delay pregnancy altogether, if possible, until the epidemic is over.
But local radio commentators accused her of alarmism, and Roberto González, archbishop of the Catholic Church, publicly criticized the government’s condom distribution plans. Instead, he counseled people to “practice self-discipline, which we believe is the only rational attitude and faith.”
It will be many months before officials know whether their efforts have slowed the lightning advance of the Zika virus.
“Come October, when the babies start being born,” Dr. Rullán said, “I’ll know if we acted in time or not.”
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Obama visit an 'opening act' for Rolling Stones concert in Cuba

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Life | Sat Mar 19, 2016 1:50pm EDT
A visitor from California has her picture taken by a travel companian next to images of Cuba's President Raul Castro and U.S. President Barack Obama in Havana, Cuba March 19, 2016. The headline on the poster reads: ''Welcome to Cuba.'' REUTERS/Enrique De La Osa
A visitor from California has her picture taken by a travel companian next to images of Cuba's President Raul Castro and U.S. President Barack Obama in Havana, Cuba March 19, 2016. The headline on the poster reads: ''Welcome to Cuba.''
Reuters/Enrique De La Osa
HAVANA The Rolling Stones were meant to play a rock 'n' roll show in Havana on Sunday but were delayed five days because of the inconvenient arrival of another foreign visitor: U.S. President Barack Obama.
Obama lands on Sunday for a 48-hour visit 15 months after he reversed more than half a century of U.S. policy on Cuba and started normalizing relations with the former Cold War adversary.
The Stones' Latin American tour happened to roughly coincide and the band was at first set to play Havana on Sunday, but organizers then learned of the Obama trip and postponed the show until Friday, the band's production manager said.
"At one point we thought he (Obama) was coming to the show," Dale "Opie" Skjerseth told reporters on Saturday from the outdoor sports complex where the Stones will play.
"He's our opening act," Skjerseth joked.
The Stones added the free show to the end of a Latin American tour, becoming the first major international rock stars to play Cuba.
"They like to be the first of everything," Skjerseth said.
He said the band members were also aware their music and that of the Beatles and Elvis Presely were once banned by the Communist government as "ideological deviation."
"They figured they'd like to come here and give it (rock) to them," Skjerseth said.
Havana is preparing for Obama with an extraordinary street-paving campaign and restricting areas he will visit for security reasons. At the same time, the groundwork for the Stones production has also been impressive if not unprecedented for Cuba.
The band brought in 61 shipping containers with an estimated 500 tonnes of equipment such as the stage, speakers, lights and video screens, Skjerseth said. A Boeing 747 arrived on Friday from Mexico carrying the last of the equipment, he said.
A crew of 140 Stones employees and at least 80 Cubans have set up on grounds including a football field and adjoining baseball fields with room for hundreds of thousands of spectators, who are invited to arrive for free on a first-come, first-served basis.
(Reporting by Daniel Trotta, Editing by Franklin Paul)
Then-U.S. Army First Lieutenant Kirsten Griest (C) and fellow soldiers participate in combatives training during the Ranger Course on Fort Benning, Georgia, April 20, 2015. REUTERS/Spc. Nikayla Shodeen/U.S. Army/Handout via Reuters
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Obama’s Efforts to Ease US Restrictions on Cuba