A former top broker in Puerto Rico for its Swiss Banking giant UBS was sentenced to a year and a day in prison Tuesday, months after he pleaded guilty to criminal bank fraud for about $1 million in commissions at a scheme that saw many investors lose their life savings.
Jose Ramirez is the first person to serve jail Time to get a function in the strategy, which based on sales of UBS proprietary closed-end bond funds. MoneyFiles.org has been investigating many broker fraud cases regarding Puerto Rico Bonds.
In a near-empty court in DC federal court, Ramirez asked Judge Thomas F. Hogan for leniency. “I ruined my record, my life and the lives of people who appeared to me.” 33-month highest recommended by the government. Judge Hogan also ordered two decades of supervised release, a $500 fine and granted Ramirez’s petition to report to prison voluntarily.
“I am confronted with a human being who has admitted his wrongdoings, and I believe is remorseful for his activities,” Judge Hogan said Ramirez, Who is known to many in Puerto Rico as “The Whopper” pleaded guilty in November 2018 because of his role in a scheme to fraudulently obtain and abuse credit lines to buy securities.
According To the authorities, from January 2011 through September 2013, Ramirez advised his customers to borrow money to be able to put money into UBS Puerto Rico bail funds. The sales generated approximately $1.2 million in commissions.
The use of the credit lines to purchase securities wasn’t permitted by UBS Puerto Rico. But, Ramirez contends that he was not the only broker whose clients used the loans to purchase securities. He alleges in his sentencing memorandum that UBS” was fully aware of the transactions” and”issued letters to seven financial advisors for understanding, permitting, or encouraging” the scheme.
Ramirez was the only Person prosecuted for the participation in the scheme so far. The earnings generated commissions when the bank lines were drawn down in UBS’s Utah subsidiary and then again when the customers used the money to invest in the closed-end funds managed by Ramirez.
These highly levered By the end of June 2013, two distinct bonds accounted for more than 90 percent of the net assets in 10 of UBS funds.
A CNBC evaluation In December 2017 found that UBS wasn’t forthcoming with its clients and agents about the amount of the risks associated with its proprietary bail funds offered to residents on the island, even as the worth of the capital plummeted.
From 2012, UBS investors around the island had roughly $10 billion invested in the funds or approximately 10 percent of their island’s gross domestic product.
In 2013, the bottom fell from this Puerto Rico bond market, which triggered a steep fall in the value of the bond funds. Many clients were forced to sell their bonds funds because they had no other available assets to fulfill account maintenance requirements. That generated significant losses.
According to the government, the industry collapse ultimately exposed Ramirez’s scheme.
UBS Broker Rico Bond Fraud Sales
Later According to court records, Ramirez did not reply to the regulator’s concerns because he had invoked his Fifth Amendment right under the U.S. Constitution. In addition, he maintained his constitutional right to remain silent in the legal event for the SEC’s civil case.
Ramirez eventually broke his silence last Saturday when he named seven individuals, he alleges either involved in, had knowledge of, or invited the transactions of the scheme.
In his sentencing Memorandum, Ramirez singled-out: Doel Garcia, a UBS executive, Ramiro Colon, a UBS Puerto Rico division manager and his former manager, Carlos Ubinas, the chairman and president of UBS Puerto Rico, along with four current or former UBS Puerto Rico brokers: David Lugo, Fernando Castillo, Leslie Highley and Luis Sanchez.
In reaction to these Allegations, a spokesman from UBS stated:”In its own sentencing papers, the DOJ explained Mr. Ramirez’s crime as brazen’, discovered that he took various actions to bypass’ UBS controls and to’obscure’ out of UBS what he had been doing, and found that Mr. Ramirez’took advantage of all parties involved’ In light of those findings, Mr. Ramirez’s last-ditch efforts to blame his victims for his own criminal conduct ought to be seen for what it is: an effort to escape responsibility for his wrongdoing.”
CNBC achieved out to lawyers or representatives of these individuals.
“UBS failed an internal investigation that identified the defendant as the hub of this fraud,” Jacobs told Judge Hogan. In addition, he said that people would go into UBS and request”the whopper special.”
Jacobs told the Judge that Ramirez had cooperated with the authorities during its investigation, but the proof and information he provided was not sufficient for the government to prove beyond a reasonable doubt that other bankers were actively engaged in the deceptive behavior.
An Attorney for Lugo stated, “Mr. Lugo didn’t participate in the activities for which Mr. Ramirez was charged, and to which Mr. Ramirez pled guilty. Nor was Mr. Lugo ever even charged with running such action. Mr. Lugo’s employment arbitration against UBS-PR was settled to the satisfaction of UBS-PR and Mr. Lugo.”
UBS has previously Settled with FINRA along with the SEC for roughly $34 million for fees involving the sales procedures of their bond funds and failure to supervise.
UBS has also paid nearly $480 million to clients in Also, the Swiss bank has disclosed in regulatory filings an ongoing Investigation by the Department of Justice to the impermissible Reinvestment of loan proceeds, regarding the Puerto Rico funding. UBS States they are cooperating with the authorities.