:format(jpeg):focal(512x46:522x36)/cloudfront-us-east-1.images.arcpublishing.com/gfrmedia/LGPYLVJ4RNELHE7L2O3MAZGHHI.jpg "Bancrédito Holding Corporation Files Lawsuit Against Driven Administrative Service for $15 Million Fine")
Bancrédito Holding Corporation Files Lawsuit Against Driven Administrative Service for $15 Million Fine
Thursday, [Date]
Bancrédito Holding Corporation, the parent company of Bancrédito International Bank & Trust Corporation, has filed a lawsuit against Driven Administrative Service, LLC. The lawsuit alleges that Driven caused the $15 million fine issued by the Financial Crimes Network (FinCEN) last month. Bancrédito Holding Corporation claims that Driven committed professional negligence and breached its fiduciary duty during the bank’s liquidation process and in negotiations with FinCEN.
Driven Administrative Service was appointed as the bank’s administrator and later receiver of the liquidation process by the Office of the Commissioner of Financial Institutions in 2022.
According to the legal appeal, Driven refused to communicate with Bancrédito International and provided incorrect information about the bank. It is also alleged that Driven excluded Bancrédito from the FinCEN negotiation process and made adverse admissions against the bank and its shareholder.
The lawsuit against Driven comes three weeks after Bancrédito’s parent company warned of legal action unless the penalties enforced by trustee Driven and FinCEN were modified.
The legal document states, “As a direct result of the actions of the defendant (Driven), the bank and the plaintiff have faced damages, including, but not limited to, a civil monetary fine of $15 million imposed by FinCEN.” The document requests payment of costs and fees, as well as compensation determined through trial but exceeding $75,000.
Bancrédito Holding filed its appeal with the Court of the Eastern District of North Carolina, as Driven is registered as a corporation in that jurisdiction. However, Driven has also been registered with the Department of State of Puerto Rico since 2021.
Last month, after an investigation that began in 2019, FinCEN concluded that the International Banking Entity (EBI) intentionally violated the Banking Secrecy Act (BSA) between 2015 and 2022. The investigation revealed thousands of unreported suspicious transactions that should have been reported through Suspicious Activity Reports (SARs).
Furthermore, FinCEN found that the founder of Bancrédito, Julio M. Herrera Velutini, processed hundreds of millions of dollars in transactions for himself, clients, and other foreign financial institutions.
In its defense, Bancrédito Holdings stated that the bank hired three independent audit companies to review its compliance with the BSA and anti-money laundering (AML) programs. The bank received a “fair” rating for 2019 and “satisfactory” ratings for 2020 and 2021, indicating progress in compliance procedures over time.
The bank also allegedly hired a consultant approved by the Office of the Commissioner of Financial Institutions in 2022 to review transactions between 2016 and 2021. The regulator approved the analysis carried out by the consultant.
However, as the bank was in a strong financial position, it entered into a voluntary liquidation plan with Driven and the Office of the Commissioner of Financial Institutions. Bancrédito Holdings alleges that Driven, as the administrator and then trustee with full control of the bank’s assets, hid information and denied access to EBI records.
Bancrédito Holdings requested access to the bank’s books and records multiple times but claims that Driven failed to provide the requested documentation.
Regarding the negotiations with FinCEN, Bancrédito Holdings alleged that Driven intentionally ignored requests from the bank’s main shareholder to participate in the investigation. The lawsuit claims that if the shareholder had been allowed to participate, they could have provided crucial information that would have resulted in a better outcome for the bank in resolving the investigation.
Earlier this year, during the liquidation process, Bancrédito Holding sued the commissioner of the Office of the Commissioner of Financial Institutions, Natalia Zequeira Díaz, to gain access to the investigation of FinCEN. However, the federal court rejected the request for a restraining order against the commissioner.
Bancrédito’s parent company indicated that an agreement had been reached for a penalty payment of $97,000 based on the look back, far from the $15 million fine imposed by FinCEN.
In addition to demanding a sum in excess of $75,000, Bancrédito Holdings requested the court to prohibit Driven and anyone acting on its behalf from breaching their fiduciary duty to the bank. The company also demanded that Driven deliver and provide unlimited access to the requested books and records and cover the costs and expenses of the litigation incurred by the plaintiff.
The lawsuit will be heard in the Court of the Eastern District of North Carolina.
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[Image Caption: Bancrédito Holding Corporation files a lawsuit against Driven Administrative Service, alleging professional negligence and breach of fiduciary duty during the liquidation process.]