$4 Billion securities fraud in PREPA, will be paid by the people of Puerto Rico
An official report from the Puerto Rico legislature reveals that from 2009 till 2012, the Puerto Rico Electrical and Power Authority (PREPA) illegally borrowed $4 billion dollars in a Ponzi scheme that “benefitted the financial community” but left PREPA insolvent.
For this reason Puerto Ricans pay 300% more for their electricity, and a “Financial Control Board” will force them to pay for PREPA’s illegal and unpaid debt. You can view the entire 23-page report here:
With shocking clarity, the 23-page report details how almost all of PREPA’s $4 billion was used to “refinance” existing debt, over and over again…but paying only the interest and very little of the underlying principal.
In underlined words on page 12, the report states that from 2009 to 2012 “only 18% of the debt was used to finance the Capital Improvement Plan, while the remainder was used to re-finance the existing debt, capitalize interest, and issue advanced notes to pay future interest.”
Page 15 states that the $4 billion was borrowed “to benefit the financial community that issued the debt…without any moneys having been invested in improvements to infrastructure, all to the detriment of the people of Puerto Rico.”
Page 18 identified all this as “a fraud scheme for which the federal agencies…and the Securities Exchange Commission could take action and/or pursue civil suits against these institutions.”
The “institutions” include the investment banks, hedge funds, asset managers and law firms that created these debt instruments. In effect, they created a classical “Ponzi scheme” in which new investors were continually recruited, in order to pay off the claims of prior investors.
The Ponzi scheme has now gone bust.
SOME SERIOUS QUESTIONS
Pages 21 and 22 of the report show that the legislature of Puerto Rico was referring this entire matter to the Justice Departments of the US and Puerto Rico, as well as the SEC.
The report was dated June 9, 2015, which creates some serious questions…
If the “entire matter” was referred to the Justice Department and the SEC, why was no one investigated?
Why was none of the money returned?
Why was no one sued, fined, or jailed?
Why were none of the investment banks, hedge funds or asset managers held responsible?
Why are the people of Puerto Rico…who pay 300% higher electricity rates and an 11.5% sales tax…being forced to pay for the “financial community’s” crimes?
Why is a Financial Control Board being sent down, to make sure that the people pay for it?
THE FINAL (AND VERY SAD) QUESTION
Why has the legislature of Puerto Rico not pursued this, for the past ten months?
After all…it was their report !
Did some of them receive “benefits,” along with the financial community?