WorldCity Business Magazine

No more red carpet

by Marcela Sanchez

Those who think they are above the law in Latin America may find Miami a bit less hospitable these days. South Florida’s federal courts are demonstrating a new willingness to take on well-heeled crooks whose crimes may have occurred outside the United States. There was a time when these lawbreakers could rely on a permissive Miami culture or influence at home to avoid prosecution.

In November 2005, a District Court jury in Miami ordered Luis Alvarez Renta, a powerful Dominican financier and nephew of designer Oscar de la Renta, to pay the government of the Dominican Republic more than $176 million for his role in the 2003 collapse of the country’s third largest bank, Baninter.

Miami prosecutors, too, are going after former Haitian President Jean-Bertrand Aristide in federal court for allegedly embezzling millions of dollars from the Haitian treasury. Also on the docket is a case against rotisserie-chicken magnates Juan Luis Bosch and Dionisio Gutierrez. The powerful cousins, whose Pollo Campero restaurants are about as ubiquitous in Central America as Starbucks is in the United States, are accused of diverting nearly half of the company’s earnings to personal accounts in Miami banks.

Lawyers and law professors across the United States and Latin America consider these cases an encouraging new trend against white-collar crime. Until recently, Miami judges tended to dismiss international financial fraud cases on grounds that a U.S. court had neither jurisdiction nor competence to make a ruling, strengthening Miami’s reputation as a haven for Latin America’s powerful crooks.

But now more and more judges, particularly in Miami, take on foreign cases in part because the Patriot Act and other anti-terrorism laws have expanded the jurisdiction of U.S. courts. Michael Gordon, law professor at the University of Florida, calls it a “spillover effect” of the U.S. war on terror. He said that strengthened and expanded U.S. anti-money-laundering laws increase access to bank records.

Those laws, traditionally used in drug trafficking and terrorism cases, also apply in the United States against the proceeds from any criminal activity, including bank and tax fraud. The impact of these changes in civil litigation is just now being realized.

Gordon also attributes the increase in prosecutions to having more bilingual judges in Miami who are comfortable with cases that require an understanding of Latin American legal systems.

Some legal experts argue that turning Miami or any other U.S. city for that matter into Latin America’s court is risky. They warn that the more U.S. courts try cases of violations committed south of the Rio Grande, the less incentive countries in the region may have to develop their own viable legal systems. But for other legal experts in the region who have seen Latin America’s weak rule of law rendered impotent against the economically and politically powerful, justice is justice and where the case is tried is of secondary importance.

Robert Amsterdam, a Canadian lawyer who represents Bosch and Gutierrez’s uncle, Juan Arturo Gutierrez, says he grew frustrated trying to bring a case against the two men in Guatemala. Trying a case in a U.S. court, he believes, sends a strong message that there is no impunity for anyone. With that, he said, you are “already halfway” in helping strengthen the rule of law in the region.

The recent verdict against Alvarez Renta is expected to help buttress the ongoing criminal case in the Dominican Republic against him and former bank executives. It also “creates new hope” among average Dominicans that there is justice to be found even if it is not in Dominican territory, said Dominican lawyer Carlos Salcedo, who represents the Dominican Central Bank in the banking crisis case.

The verdict was the first against anyone connected to the collapse of Baninter, which triggered a major economic crisis in the Caribbean nation. It also represented the first time a Latin American state was so determined to prosecute a member of its elite that the case survived a change in power between opposition parties.

Clearly, U.S. courts will not reform Latin American judiciaries, which figure among the least trusted institutions in regional opinion polls. Yet the courts, particularly those in Miami, may have a positive impact on those systems well beyond what the anti-terrorism laws intended.