Fact Check: Argentina

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New Player Card Set Features More Baez Cronies

Today, Fact Check Argentina released a new set of Money Trail Player Cards. This week’s set of cards, which include actual photocopies and links to bank transactions, court documents and indictments, features:

Juan Pedro Damiani, Uruguayan lawyer who set up Báez entities in Nevada

Federico Elaskar, founder of SGI Argentina and alleged Báez money launderer

Helvetic Services Group, Swiss company that has fronted for Báez’s money operations

Nestor Marcelo Ramos, owner of Helvetic Services and accused Báez money launderer

Our research team has uncovered some new facts about Baez – that he has actually threatened some of his “players”.  Take Federico Elaskar, for instance, who said in an interview with investigative reporter Jorge Lanata that Báez forced him out of his own company—SGI Argentina—in 2012, threatening him with bodily harm if he did not comply.

Elaskar also told Lanata that he used his firm, SGI Argentina, to launder at least 50 million euros on behalf of Lázaro Báez in 2011, even detailing the creation of an elaborate offshore financial structure to aid the operation.

Elaskar-EN-PSD infographic-temp-lg

Elaskar started working for Báez through a connection with Leonardo Fariña and other kirchnerista businessmen and real estate tycoons.

As our loyal readers know, the Baez network is extensive, and there’s always more to discover!  Check out our most recent set of Player Cards to find out more.

Have any details we are missing? Think there is another part of the story? Make sure to submit your ideas and information to our tip line—we value our readers’ opinions and frequently use tip line information for new updates.  Stay tuned for more player cards coming your way soon!



Diego Marynberg’s U.S. Empire

The business favors given by Economy Minister Axel Kicillof to Argentine financier Diego Marynberg have raised curiosity.   We have looked into Diego’s mysterious US$200 million financial maneuver with the Central Bank of Argentina (BCRA) under orders from the Economy Ministry of Axel Kicillof, and uncovered Marynberg’s ties to investigations in Argentina, which might be why he now hangs his hat in New York.  That is where the Marynberg money trail gets even more interesting.

After leaving Argentina, Marynberg started businesses and purchased properties, typically through shell companies, in New York, Baltimore, and Miami. Many of his firms continue in operation today, and his business network has extended to Venezuela, Uruguay, and Panama.  Here is a glimpse of the Marynberg U.S. empire:

 – Marynberg has worked at East River Management and Financial Services International since late 2001. Both firms appear to belong to him. East River Management is based out of an apartment on Central Park South, a property that the company purchased in 2006 for just over US$500,000. Commercial databases list this property as a residence of Diego Marynberg, and it is the listed address for other companies he owns. Independent real estate websites estimate the property’s value at US$1.1 million.

 – Marynberg and his family also appear to own or rent two properties in the New York City borough of Brooklyn: a three-bedroom apartment in Brooklyn Heights, which has an estimated value of US$1.5 million, and a second apartment in Brooklyn.

 – Latam Securities, Marynberg’s vehicle for allegedly participating in deals facilitated by MECON located in New York. Marynberg started Latam Securities in 2012. It appears to have been set up as a vehicle for Marynberg’s investment into Argentine bonds: there is no record of the firm’s existence or business operations prior to the recent news reports linking Marynberg to Kicillof.

– Marynberg’s FINRA filings indicate that he dedicates 10 hours a week to a company called Financial Services International as a manager. It is not clear if he works out of the Annapolis, Maryland, office, but he owns a luxury apartment on Harborview Drive in Baltimore, Maryland. Marynberg purchased the property in 2011 from his Financial Services International colleague Roberto Pichard for US$330,000. Independent websites place the value of the three-bedroom high-rise condo, which overlooks the Chesapeake Bay, at US$475,000.

– Commercial databases indicate that Marynberg owns an additional property at in Miami Beach. The apartment was purchased by a Miami-based shell company called Renton Mercantile, Inc for US$625,000 in 2002. On the deeds formalizing the acquisition of his Baltimore property, Marynberg listed this Miami address as his own. Independent real estate websites estimate the condo’s value at US$1.04 million. The board of Renton Mercantile is composed of three Panamanian lawyers and Pichard. Renton Mercantil is also registered in the tax haven of Panama, though Pichard is listed as an officer only in Florida, in the United States.

All of this represents a huge expansion of wealth, with little known income to justify it, and coming in the years after Marynberg was linked to the collapse of three Argentine banks owned by his wife’s family, and the movement of US$200,000 of a client’s money, which a prosecutor said appeared to involve transactions orchestrated by Marynberg.

Latam Securities

At the epicenter of it all is Latam Securities.  Latam Securities’ employees include Jorge Pepa, an Argentine investment banker with ties to Minister Kicillof and his team at the Economy Ministry. Pepa started working for Latam in February 2014. Pepa is the brother-in-law of Nacho Figueras, an Argentine polo player and Ralph Lauren model. Pepa’s brother has also played for the same polo team as Figueras.

Pepa and Figueras have attended the same events in New York, including charity polo games set up by Help Argentina, a US aid organization that channels money to the poor in Argentina. The charity was co-founded by Emilio Ocampo, of Arcadia Advisors, and the polo events have been sponsored by BGC Partners, a US firm that was later accused of participating in the fraudulent bond trades in the Otkritie case – which Diego was also briefly linked to.

Figueras has a longtime business and sporting relationship with Neil Hirsch, the founder of Telerate. Hirsch’s former company Telerate made hundreds of millions during the 1970s and 1980s while serving as a subsidiary of Cantor Fitzgerald, the brokerage that would later turn into BGC, which assisted on the fraudulent trades in the Otkritie case.

Latam Securities’ chief compliance officer, Jonathan Jeffrey Shepland, has worked for five small firms in New York since 1996, two of which were expelled from FINRA. The regulatory organization revoked the license of Prestige Financial Center Inc. in 2011, after the SEC alleged that the firm had engaged in a fraudulent scheme that generated $1.3 million in profits for a secret firm account.

Another of Shepland’s firms, A.B. Watley, Inc., received a long list of sanctions before being expelled in 2006 after the SEC discovered it was illegally obtaining and using confidential information to make trades. Shepland started work at Latam in January 2014, almost a year after he left his previous position.

Howard Spindel, the financial and operations principal at Latam Securities, has worked in the securities industry for 32 years, and is currently registered with 35 firms. His main firm appears to be Integrated Investment Solutions LLC, and he acts as a consultant or compliance officer-for-hire for other firms. He joined Latam Securities in February 2014.

When Axel Kicillof’s Economy Ministry chose Latam Securities as the favored party in aUS$200 million financial maneuver earlier this year, he was directly linking the Kirchner government with this cast of characters, with Diego Marynberg at its center.  Why?

Argentina’s G-20 Delusion

­­­President Kirchner and her cabinet are reportedly in a celebratory mood after the conclusion of the G20 summit in Australia. According to the Kirchner government’s version of events, Argentina won the support of the G20 who came together in Brisbane to deliver a ‘historic’ ‘anti-vulture message’ in ‘full support’ of Argentina’s position on debt restructuring.

Of course, as is sadly often the case in Buenos Aires these days, the gap between what President Kirchner says, and what the world does, is often substantial. So as a service to our readers we thought we could help close that gap by providing some context.

The source of President Kirchner’s excitement is the G20 Leader’s Communique, released at the end of the summit to summarize what was discussed and resolved at the meeting.

The 2014 communique ran to 2,335 words, not including the annex. Of those 2,000+ words, only one sentence, comprised of 17 words, touches upon issues which could in some tangential way be read as relevant to Argentina’s default:

“We welcome the progress made to strengthen the orderliness and predictability of the sovereign debt restructuring process.”

Isolation can lead to a warped sense of reality. And so, when you’ve been as ostracized by the international community as President Kirchner has, it’s easy to see how 17 vague words in a memo could somehow be construed as a ‘win’ worth celebrating. No matter that those words made no reference to Argentina. Nor to the so-called vultures. Nor to US legal rulings and Argentina’s contempt of court. Nor to RUFO or the countless other gimmicks that Argentina has claimed preclude them from settling with their creditors.

No matter either that this ambiguous sentence seems awkwardly, almost randomly, stuck onto the end of a paragraph that is headed, “Building a stronger, more resilient global economy” and otherwise has very little to do with the sovereign debt issue.

In reality, these 17 words represent the bare minimum that the G20 could have given President Kirchner. A passing mention, an afterthought, to the effect of, “yes Cristina, we acknowledge you, but frankly we’re not that interested.”

Not that President Kirchner seems to have gotten that message. She seems especially thrilled with an additional bullet point that didn’t even make it to the main communique but was buried deep in an annex at the end of the document:

“Given the challenges litigation poses and in order to strengthen the orderliness and predictability of the sovereign debt restructuring process, we welcome the international work on strengthened collective action and pari passu clauses. We call for their inclusion in international sovereign bonds and encourage the international community and private sector to actively promote their use. We ask our Finance Ministers and Central Bank Governors to discuss the progress achieved on this and related issues.”

President Kirchner thinks this bullet point bolsters her case. In fact, it only highlights what a problem child Argentina has become for the international community.

For starters, with regard to the “challenges litigation poses,” the ratings agency Moody’s conducted a study that found that out of 34 modern restructurings, Argentina’s is the only one that has led to “persistent litigation” because Argentina “was and remains unique in its unilateral and coercive approach.” In other words, Argentina’s behavior is the only reason the G20 is even having to address this issue.

Second, to the extent that the bullet mentions any specific efforts, its praise is reserved for proposed changes to contract rights that are to be made going forward. It says nothing about the contractual promises that Argentina made to bondholders – including the strong pari passu clause, the broad waiver of sovereign immunity, and the agreement to submit in any disputes about the bonds to the judgment of New York courts. The bullet also references proposals that have come from private-sector groups, such as the proposals made by the International Capital Markets Association. The overall takeaway from this language is: ‘These matters are properly left to sovereign borrowers and their private-sector creditors – this is not really the G20’s problem (but, just to placate Argentina, we’ll agree to “discuss” it).’

When you add it up, it’s not exactly a full throated endorsement of Argentina’s tactics. Rather, it only provides further evidence that the G20 is doing the bare minimum to make Kirchner and Kicilliof go away without ignoring them entirely.

There is of course a more straightforward way for President Kirchner to win the support of the international community. Instead of making up good news, she could sit down with creditors and negotiate a fair resolution. That would generate headlines worth reading.

Kicillof’s friend Diego: the Russian and Venezuelan connections

Yesterday, we reported on Diego Marynberg and the private bond transaction with the BCRA favoring his trading company, Latam Securities, a maneuver allegedly ordered by Axel Kicillof and his inner circle at the Economy Ministry.  When Juan Fabrega confronted Kicillof about the curious insider maneuver, according to published reports, Kicillof instrumented Fabrega’s downfall at the BCRA.

Kicillof’s friend Diego Marynberg currently lives in New York and has luxurious offices that face Central Park.  From there, the young Marynberg (he is 44, a year older than Kicillof) runs his operation, which has been linked to two of the Kirchner government’s most valued political and commercial allies: Russia and Venezuela.

It so happens that Diego was named as a witness in a 2012 legal dispute in London, involving two Russian-owned investment funds, Otkritie and Threadneedle, and several former employees of Otkritie. Threadneedle was accused of selling Argentine sovereign bonds to Otkritie at falsified prices, thereby defrauding Otkritie of US$175 million.

Marynberg testified that he was in contact with the defendants about serving as an intermediary in the sale of 1.65 billion bond warrants. He also claimed that when he learned that Threadneedle was planning on carrying out the maneuver at an off-market price, he withdrew from the transaction. He was not charged with any wrongdoing.

Nonetheless, Marynberg’s involvement in that case is noteworthy for a number of reasons. First, it demonstrates that among all the financiers capable of serving as an intermediary for a bond trade, Marynberg was singled-out by an obscure Russian fund that was plotting a fraud. And second, although he was charged with no wrongdoing, Marynberg’s involvement may have gone beyond the ultimately fruitless conversations about serving as an intermediary. Otkritie’s lawyers were concerned exclusively with the fraud committed against their clients, but they also alluded to the collaboration of other actors who enabled the crime:

 Argentinean Warrants are a relatively thinly-traded security and that it is implausible that the co-conspirators obtained the volume of Warrants used in the Fraud without the help of still-unknown co-conspirators.

 The commercial court of London awarded Otkritie $150 million in damages in 2014 over the fraud that momentarily starred Diego Marynberg.

Diego also has an ownership stake in Venezuela’s second largest banking institution: Mercantil Servicios Financieros CA, or Banco Mercantil. Mercantil Servicios Financieros is also the owner of a Florida subsidiary, Commercebank.

The precise scope of his ownership of Banco Mercantil is unknown. Media reports have described him as the owner (rather than one shareholder among many) through his fund Geo Equity Opportunities I Ltd, domiciled in the British Virgin Islands. According to Bloomberg News, the fund’s principal asset is Banco Mercantil. Marynberg is also the owner or officer in numerous companies whose names are English analogs of Mercantil Servicios Financieros.

But despite his ownership, neither Geo nor Marynberg have been mentioned in the Venezuelan press, which is dominated by the Maduro government, a close ally of Cristina Kirchner. None of the officers or board members who have been revealed to date can be otherwise tied to Marynberg. The same Bloomberg report that labeled Marynberg the owner of Banco Mercantil also refers to Geo as a US$90 million fund, far less than Banco Mercantil’s value.

WikiLeaks cables show that Banco Mercantil employees were in regular contact with the US embassy during the Chávez era, and were occasionally critical of the Venezuelan regime. However, Marynberg appears to have forged a productive relationship with Chávez and his successors. In a rare interview with Infobae in 2006, Kicillof’s favored financier hailed the potential of the Venezuelan economy and said market skepticism of chavista policies was exaggerated.

Diego’s ties to the Venezuelan government have also been juicy for his firm Adar Capital Partners, which is registered in the British Virgin Islands, a well-known tax haven, and is a member of the International Swaps and Derivatives Association (ISDA). The Central Bank of Venezuela (BCV) hired Adar to negotiate a contract with Goldman Sachs for a gold swap in 2013.

It is unclear why Venezuela’s Central Bank hired Diego’s firm for this task, given the lack of evident background in gold markets for either the firm, or for Diego. It’s also unclear why Venezuela couldn’t negotiate directly with Goldman Sachs, thus cutting out any role for Adar as a middleman. Adar was to receive a 0.25% commission. Given that the transaction value was in excess of US$1.8 billion, that meant a US$4.5 million payday for Marynberg.

Extracting phenomenal profits from his close friendships with political insiders is a great business for the young Argentine Economy Minister’s favorite financier.  And his reputation seems to be one of a skillful operator for deals that are carried out away from the public eye.

Meet Diego Marynberg

Financier Diego Adolfo Marynberg has recently emerged as a new face in the complex web of alleged corruption in Argentina.  But who is he?  Marynberg has a very colorful past and maintains an intensely low profile.  We know from news reports of his close relationship with Argentina’s Economy Minister Axel Kicillof.  These same reports have highlighted allegations by Argentine prosecutors of illicit enrichment and money laundering.

All of this came to light recently when Juan Ricardo Mussa filed a formal criminal complaint, accusing Marynberg of conspiring with Kicillof for illicit enrichment and money laundering.  The complaint urges the court to investigate allegations that while Marynberg informally advised Kicillof on Argentina’s debt situation, he set up a fund called Latam Securities that acquired US$200 million in Argentine bonds as a kind of political speculative maneuver.  Kicillof, according to a report by Clarin reporter Marcelo Bonelli, “intervened in favor of Latam to have the Central Bank of Argentina (BCRA)” sell Marynberg those bonds “in a direct and advantageous manner.”  According to Bonelli, it was then-BCRA President Juan Fabrega’s discovery of the maneuver, and his confrontation with Kicillof about it, that led to Kicillof’s “operation” to oust Fabrega, who resigned in October and was replaced with a Kicillof crony, Alejandro Vanoli.

Another investigative reporter, Daniel Santoro – whose family has faced intimidation by agents of the Kirchner government as recently as this year – confirmed from business community sources that the US$200 million bond operation favoring Latam took place.

For Kicillof’s part, sources at the Economy Ministry have claimed that Kiciloff “ doesn’t know Marynberg.” Really?  Let’s take a closer look at the web of relationships.  In January 2014, Marynberg hired Jorge Pepa, a New York-based Argentine investment banker, to head his team at Latam Securities. Pepa has a longtime association with Kicillof and his Deputy minister, Emmanuel Alvarez Agis, who Pepa was in regular contact with during 2014 after he arrived at Latam Securities.  In fact, La Poliítica reported that in 2013 Pepa used his connections at his former employer, Union Bank of Switzerland (UBS), to collude with Marynberg and Kicillof to set up a “money trail” for the insider bond maneuver.  These activities were allegedly carried out with the knowledge of Economy Ministry officials who had direct access to the plans and actions that President Cristina Kirchner would be taking each day, according to court filings.

Marynberg’s past dealings raises questions about why Argentina’s Economy Minister would allow himself to be so closely linked to all of this.  We’ve dug a little deeper into Marynberg’s past and this is some of what we’ve found:

After serving as an advisor to Argentine Central Bank boss Javier González Fraga in the early 1990s, Marynberg’s first brush with publicity came in a string of banking collapses in the late 1990s. In 1996, Lausanne, Switzerland-based Socimer International Bank acquired a 30% stake in Argentina’s Banco Patricios, which was owned by Alberto Szpolski, Marynberg’s father-in-law. Socimer owned Banco Medefin, another troubled Argentine bank. Marynberg then became a director of Socimer and its subsidiary firms in Argentina.  All three banks had collapsed by 1998, and a judicial investigation uncovered massive irregularities in favor of family members of the bank’s owners, and as criminal indictments began to be issued, Diego fled Argentina.

As Mussa’s criminal complaint filed in October details, Marynberg was named, though not charged, in a fraud case filed in Argentina stemming from the banks’ collapse. Two former clients sued Socimer broker Pablo Stabholz for US$200,000, alleging that he had transferred bonds issued by the local manufacturing firm Alpargatas to a bank in Miami, and then to his own accounts in New York. Marynberg told Argentine prosecutors that he had advised the clients to transfer their money to Miami, but he was not charged in the case.

Nonetheless, according to the indictment the prosecutor in the case believed that Marynberg had conspired with Stabholz, taken the money himself, and used his subordinate Stabholz as a scapegoat.  The judge acquitted Stabholz. Though the decision was appealed, and the court re-opened the case, it appears there has been no further judgment.  If the prosecutor was right, Marynberg got away with the money, and with impunity.  This is a familiar story.

Why would Argentina’s Economy Minister engage in such maneuvers with a character like Marynberg who, despite his extremely low profile in recent years, has been at the center of very shady cases involving bank and securities fraud.  It’s clear that Marynberg benefits from this relationship.  Here’s our question: What does Kicillof get?

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