A US court has found one of the Dominican Republic's most powerful financiers liable in a conspiracy and fraudulent money transfer case in which letters of credit (L/Cs) from a failed bank were used as collateral to obtain loans.

The verdict is seen as a victory for the Dominican authorities. They have been trying to recoup millions of dollars stemming from the 2003 collapse of the country's third-largest bank.

US$59 million award

Dominican financier Alvarez Renta was accused of conspiring to obtain money from the failed Banco Intercontinental (Baninter).

Renta was found liable on three counts of racketeering and fraudulent money transfer by a federal jury in Miami that also awarded the Dominican government commission liquidating Baninter at least US$59 million

Economic crisis

The court heard that companies controlled by Renta would borrow money from Miami banks using L/Cs from Baninter as collateral. The loans would then be funnelled through several accounts before finishing up in an account of a company that paid direct to Renta or to the suppliers of his extravagant lifestyle.

As the money disappeared into Renta's hands, Baninter was repaying the loans but could no longer do so when the L/Cs failed to yield the money the bank was owed. This precipitated the bank's US$2.2 billion collapse, which in turn set off a major economic crisis in the Dominican Republic.

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