The always insufficient balance of Nodus Bank

A recently released judicial document recounts the series of misdeeds that two Venezuelans allegedly committed in the administration of that bank in Puerto Rico, which when it collapsed left debts still unpaid for 3,500 savers.

The irregularities ranged from camouflaged payments for its own shareholders to the request, once the entity was intervened, for a commission to recover the lost funds. Even in the midst of the debacle, its owners managed to participate in the construction of at least one luxurious office tower in Las Mercedes, Caracas.

In May 2023, the financial authorities of Puerto Rico began the process to liquidate Nodus Bank, one of the many banks with a Venezuelan seal that have opened on the island (and in others in the Caribbean) since Hugo Chávez decreed the control regime, which lasted almost three decades.

After detecting a series of irregularities in the management of the entity, what should have been a routine closure procedure, with steps regulated in Puerto Rican laws, became, in the words of the head of the banking regulator, the “biggest challenge that this office has had.”

For a year now, the process of closing this bank of Venezuelan shareholders has been encountering a series of extraordinary events that make this an unprecedented case in the Puerto Rican banking market. Among the singularities was the fact that Tomás Niembro Concha, an old colleague of the Venezuelan banker Víctor Vargas and the largest shareholder of Nodus Bank, continued withdrawing money from the bank even though the institution was already intervened by the State. And not only that: he even asked for a commission, as a reward or incentive, to make it easier for the bank’s auditors to recover the accounts receivable.

“Mr Niembro, through Nodus Finance, went even further, proposing, through an email dated February 1, 2024, to collect loans from clients in Venezuela (in circumstances that had previously been unsuccessful) in exchange for a monthly payment of $80,000.00 and a commission of 8% on the amounts recovered,” denounces the Office of the Commissioner of Financial Institutions (OCIF), the local banking regulator in Puerto Rico, in a “Complaint and order to lift the veil corporate of Nodus International Bank, INC and impose restitution”, which was filed on April 4 .

The highest authority of the firm, lawyer Natalia Zequeira Díaz, details that part of the money of thousands of savers evaporated in other companies owned by Nodus’ own shareholders in the United States and other countries.

 

Nodus Bank operated for 14 years, until May 2023, when the Puerto Rico regulatory body intervened. Credit: screenshot from https://nodusbank.com/

Nodus International Bank was registered in San Juan, Puerto Rico in April 2009 and began operations in February 2010, with headquarters in suite 1501 of the City Towers Building on Ponce de León Avenue. The bank was registered in 2009 as a company of Optivalores Investment Company, this, in turn, a company incorporated months before in Barbados and which had among its directors one of the Castillo Bozo brothers , Juan José . Tomás Niembro only took open control of the entity in 2017.

It was a bank that a group of Venezuelans established to take advantage of one of the advantages that Puerto Rico offers: due to its status as a Commonwealth of the United States, its economy and banking system handle dollars, but without the degree of supervision that the Treasury American exercises over the banks. It was a very tempting opportunity for Venezuelan businessmen at that time, when the exchange control regime established by Hugo Chávez narrowed the access routes to the US currency.

From very early on, the Puerto Rican authorities began to raise red flags about the solvency of Nodus Bank and its compliance with the Bank Secrecy and Anti-Money Laundering Law. They carried out five examinations of the banking institution and from there emerged measures, controls and recommendations that, among other issues, noted that the bank had to issue 24 reports of suspicious activity, which it never did, and another 48 that it reported at the wrong time.

Autopayments, promises and some answers 

Even before being intervened, successive audits warned that the bank was benefiting its owners at the expense of savers’ assets. One of the cases detected corresponds to the Venezuelan businessman Ricardo Fernández Barrueco , former Tsar of Mercal , who fell out of favor with Chavismo and was arrested in 2009, when he tried to buy the telephone company Digitel and, in effect, bought several banks in Venezuela that were almost immediately taken over. .

Various versions, as well as the Puerto Rican regulatory entity, include Fernández Barrueco as a shareholder of Nodus Bank. Well: Fernández Barrueco himself obtained a loan from Nodus when the institution was already faltering. “On September 6, 2021, Nodus, without due authorization from the OCIF, granted a loan of $600,000.00 to Campomarino SA Panama, a company of Mr. Ricardo Fernández Barrueco who was a preferred shareholder of Nodus since June 23, 2021,” OCIF relates in the complaint.

It was not the only case of that type. In promissory notes and loans that, in some cases, it even waived, the banking institution approved 29.2 million dollars – more than a quarter of the current debt – to two companies registered in Miami under the names of Nodus Finance and Intercorp MS LLC , whose beneficiaries coincide with those of the bank’s majority partners, the Venezuelans Tomás Niembro and Juan Ramírez Silva.

A year has passed since the intervention process and at least 2,500 clients - as one of the bank’s owners confirmed to Armando.info - still do not know what will happen to their savings. The bank’s owners are confident, in any case, that the scandal will soon dissipate. It was not possible to obtain a response from Ricardo Fernández Barrueco before the publication of this report, but he later clarified that although he acquired preferred shares, that does not make him part of the board of directors or those responsible for what later happened in the institution. . In fact, he warns that they also owe him almost twice as much as what they lent him: "I am a saver in the form of an investment called preferred shares with a return of 5%; I invested 1.9 million to receive annual interest from the bank, that that’s all".

On behalf of the board of directors, its president, Juan Ramírez Silva, responded from Miami, who stated that they will soon provide a solution to all hooked savers. “It is an issue that is moving forward and is being resolved, but at this moment we are in the middle of an administrative issue,” he said on the other end of the phone. 

“We are the first to want this to be clarified, but at this moment the lawyers have warned that anything we say can go against everything that is in the administrative process,” he said.

Also consulted by Armando.info , Tomás Niembro, the aforementioned main shareholder of the bank, pointed out, in response to several questions, that although the process may take between 12 to 18 more months, a proposal to settle the debts is already on the table: “ The shareholders have made several proposals and action plans before the administrator, trustee and now liquidator. "In principle all approved and suddenly denied."

In October of last year, he guaranteed, through a statement signed by him and which, according to Niembro himself, was published on his networks on that date, that “prior to the voluntary delivery, Nodus returned more than US$ to customers.” 110 million (57% of total liabilities), which meant a great treasury effort.” Today he reiterates those words. Through written communication requested for this work, he stated that they have compensated more than 4,500 of the 7,500 clients who totaled about 200 million dollars in the bank. He further added that there was no forgiveness of the debt they gave to Nodus Finance, his other Miami company. “It is also absolutely false.”

Collapse timeline

The ups and downs of Nodus Bank emerged in 2022 when 23 savers residing in Argentina, Brazil, Colombia and Uruguay formalized a series of claims about funds frozen in the bank, totaling more than $1.3 million. It was just a little more than 1% of the debt officially recorded today, but the message it conveyed was forceful: Nodus International Bank was in trouble.

But a good part of those affected are Venezuelans. Many of them have preferred not to be seen. Even so, in Caracas there are still those who review various milestones of decline of Nodus Bank and who warned about the climax of this story: “Credit cards began to rebound in October 2022,” one of the affected account holders remembers well. while wondering how to rescue his assets. At that time when the first symptoms of its crisis were emerging, the bank told its clients that they should notify each transfer made to triangulate with the correspondent bank. He then chose to suspend credit cards, because his Mastercard membership had been withdrawn. And there would come a point, already close to the final collapse, in which even debit cards failed.

Rumors were then circulating about funds allegedly frozen in Nodus Bank by the US federal government. Only now are these rumors confirmed as true, due to the information that the complaint has opened. 

The balance of the credit portfolio and financial assets reflects that “as of June 2023, Nodus had a total of $9,935,950.33 of funds blocked by the Office of Foreign Assets Control of the United States Department of the Treasury (OFAC). in English)". Tomás Niembro, director of the bank, did not give Armando.info any answer about the identity of these sanctioned clients.

In any case, this shortfall of almost 10 million dollars takes another bite out of the depleted fund available today to respond to its savers. The bank’s latest balance sheet shows that it currently barely has the cash to repay about $2.7 million of the nearly $87 million it owes its clients. The account statement published on March 31 of this year also includes 8.4 million in liquid assets deposited in financial instruments from other countries, an amount that barely represents 10% of the debt. But the availability is even less: more than half of these funds are stuck in Panama’s Atlas Bank, another financial institution that is going through a similar liquidation process in the isthmus, after suffering chronic problems of insolvency and illiquidity. 

The same thing happens with an amount of one million dollars transferred to Crossbar FX, a currency exchange company that entered into voluntary liquidation in the United Kingdom.

While the money was disappearing, according to the Puerto Rico regulatory body, “under the subterfuge that they would assist Nodus in the effective implementation of the Liquidation Plan,” the bank owners employed another company through which they continued draining their vaults: “A “Through Financial Technology, Mr. Niembro was, in effect, receiving a ’salary’ that resulted in an indirect benefit from the liquidation process, and that he was using said corporate structure to obtain funds from Nodus,” the investigation document says.

When asked by instant messaging about the 8% commission that he supposedly requested to facilitate the collection of the loans secured by the complaint, Niembro evaded responding.

Without money but with buildings

Financial Technology is a firm registered in Barbados, but with physical offices in Venezuela, owned by the Altamira Resource Administrator, whose final beneficiary is Tomás Niembro Concha himself.

Niembro, 63 years old and of Spanish origin, has held various executive positions in the financial industry from Banco Latino, one of the entities ruined by the banking crisis of 1994. He then joined Víctor Vargas’ group in the now failed Banco Occidental de Discount (BOD), from where it served as a decisive operator in the 2006 purchase and absorption of Corp Banca. He also appeared as director of other banks of the Víctor Vargas emporium that were ultimately intervened in Curacao, Panama and the Dominican Republic.

Until this week, he also presented himself in his professional LinkedIN profile – which was removed on Wednesday, after he was asked to interview for this job – as director of the company Desarrollos Inmobiliarios y Valores BAN CA (DIV BAN CA).

 

Until this week Tomás Niembro presented himself as Director of a luxury building construction company in Caracas. His profile was removed from the Web after being contacted for this job. Credit: Linkedin Tomás Niembro Concha

DIV BAN CA describes itself as a company specialized in “real estate investment, development and promotion”, which, in its case, could be translated as the construction of luxury towers in Caracas; more precisely, in Las Mercedes, the pink zone in the southeast of the Venezuelan capital and showcase of the bonanza that the economic bubble of Chavismo-Madurismo provided to its friendly business class. An example: since last year, an imposing building with a glass façade has stood next to the south sidewalk of Orinoco Street in Las Mercedes, between London Street and the main avenue. It’s called Tower 302 . Its features include eight floors with protection against ultraviolet rays to keep the spaces cool. The lobby is adorned by a light sculpture created by the architect and interior designer, José Antonio Totón Sánchez. The offices and commercial premises, whose areas range from 115 to 1,400 square meters, are sold from $70,000. Even with so many attractions, including a privileged location, the building remains almost empty.

Evidence abounds of the connection between DIV BAN CA and the businessmen behind Nodus Bank. The legal representative of the construction company is Adriana Silva who, in turn, served as general manager of Nodus Bank. Silva is the first cousin of Juan Francisco Ramírez Silva, one of the owners of the bank in Puerto Rico. In addition to his profile on LinkedIn, Tomás Niembro’s relationship with the construction company is confirmed through the minutes of the Commercial Registry of the company Proyecto Inmobiliario 302 CA, which originally purchased the three plots where Tower 302 was built, together with Crisanto Bello and Miguel Ángel Antoni, the founders of the business group.

Ramírez Silva told Armando.Info that he did not know about that company. Niembro, for his part, responded that it is not a construction company: “DIV BAN CA never had any assets. Nor did it lay a single brick (...) it was established for the purpose of leading an issuance of commercial papers.”

Real Estate Project 302 CA was established in May 2014. In August 2015, the company became owner of the plots where the building was built. At the time of purchase, the land was valued at just over 10.4 billion bolivars, the equivalent of about 1.5 billion dollars according to the official exchange rate at the time. That same month, the company and the property were transferred to the name of a firm registered in Barbados, called 1305 Fox Corp. Niembro, the banker, was part of the board of directors of this company registered in Venezuela during the years 2015 and 2017.

An advisor to the construction group agreed to speak with Armando.info on behalf of shareholders Bello and Antoni, on the condition that his name not be mentioned. According to his version, the construction of Tower 302 did not receive money from Nodus Bank. “It was financed with loans from six national and three international banks; none is Nodus Bank,” he swore. 

He justified the presence of Niembro on the board of Real Estate Project 302 CA, “between 2016 and 2017”, as a guarantee that the BOD – subject in 2019 to administrative measures by the banking regulator in Venezuela, Sudeban – would have required as a guarantee of that the businessmen would pay a loan of 12 million dollars.

DIV BAN CA, for its part, began to create subsidiaries and related companies in 2014, and began to erect its works just when the socioeconomic crisis that impoverished the country and encouraged the migration of millions of Venezuelans was developing in all its harshness. Against the tide, while the market became poorer and real estate prices plummeted, the construction and developer invested millions of dollars in the purchase of plots and construction of towers in the most expensive areas of Caracas. 

Div Banca Group, the holding company that includes DIV BAN CA and its family of companies, indicated on its website that it was the promoter of four other residential property constructions, which it classified as exclusive. Although they took down the website this week – after being contacted for this report –, images of their catalog of works remain, among which were some small but luxurious buildings in La Castellana, a middle and upper class urbanization in the northeast of Caracas.

The portfolio includes buildings 2605 and San Felipe, located on Avenida San Felipe, between the first and second intersections of La Castellana. The first contains three bodies with 14 apartments. One of its penthouses is currently for sale for $1.2 million, and monthly rents for the apartments are around $5,000. In the parking lot you usually see trucks of the year, almost always without license plates to identify them. Meanwhile, the second building has a semi-Olympic pool, gym, sauna, spa, beauty salon and private elevator for each apartment. It can be conceived as a small club for 12 homes.

The advisor who stood up for the partners of Proyecto Inmobiliario 302 CA on condition of remaining anonymous, admits that for these buildings, under another corporate umbrella, they did receive a loan of a little more than 5 million dollars from a financier which generically calls “Nodus”, without specifying whether this refers to Nodus Bank, the bank of Puerto Rico, or Nodus Finance LLC, a financier registered in the state of Florida, in the United States, by the owners of the bank, and the that the Puerto Rican authorities demand the reimbursement of a quarter of the bank’s assets.

In parallel, the anonymous spokesperson for the construction company assured that “all the credits that Nodus gave us are credits that we have paid both in interest and capital,” he said. He added: “Tomás Niembro’s relationship with us is a purely commercial relationship through Nodus. What do we know? Yes. That we have an extraordinary relationship? Of course. At the end of the day we also have nothing to do with the bank [ Nodus Bank ]. Whatever that man [ Tomás Niembro ] has done in Puerto Rico, well, it will be in the hands of the authorities of Puerto Rico, and I believe that the authorities of Puerto Rico have already investigated enough.”

In any case, the complaint from the banking regulator in Puerto Rico explains that, before the bank’s collapse, its owners took over a loan portfolio with problematic loans and a fee for managing those loans. Including credits for the construction of buildings? It is not clear. “One week prior to the signing of the Liquidation Plan, the shareholders, who were and continue to own both Nodus Finance and Nodus, released Nodus Finance from liquid debt of $25,738,875.65 that could have been used for the benefit of Nodus depositors. , in exchange for a portfolio of delinquent and delinquent loans and with an administration fee for the collection of those same loans,” the complaint states.

While the final details of the construction of Tower 302 are being finalized in Venezuela, the ramifications of the Nodus Bank case are beginning to spread throughout the United States. It was learned that the Argentine group Alto Tromen filed a civil lawsuit last week against Nodus Bank and its shareholders, Tomás Niembro and Juan Ramírez Silva, for $350,000 before a federal court in the Southern District of Florida, presided over by Judge David S. Leibowitz. .

In return and according to information reached the Armando.info editorial team at the close of this story, Tomás Niembro himself filed, on Friday afternoon, a lawsuit against the OCIF of Puerto Rico and its authorities, demanding a process which he describes as biased and for a series of actions that, he assures, “target specifically against Venezuelan banks.”

Thomas Brown