U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20721 / September 17, 2008
Accounting and Auditing Enforcement Release No. 2881 / September 17, 2008
Securities and Exchange Commission v. Angel Alvarez-Perez and Annie Astor-Carbonell, 08-CV-8009DAB (Batts, J.) (S.D.N.Y. filed September 16, 2008)
First BanCorp's Former CEO and CFO Settle Civil Charges with SEC for Aiding and Abetting Fraud By Doral Financial
The Securities and Exchange Commission filed civil charges against Angel Alvarez-Perez and Annie Astor-Carbonell, former officers and directors of First BanCorp, a NYSE-listed bank holding company based in Puerto Rico. The Commission charges Alvarez and Astor with aiding and abetting violations of the federal securities laws by Doral Financial Corporation, another NYSE-listed bank holding company based in Puerto Rico. Alvarez was First BanCorp's Chief Executive Officer, and Astor was the company's Chief Financial Officer, during the relevant period.
According to the Commission's complaint, which was filed in the United States District Court for the Southern District of New York, First BanCorp senior management, including Alvarez and Astor, concealed the true nature of more than $4 billion worth of mortgage-related transactions from the company's independent auditor and the investing public between 2000 and 2005. First BanCorp, which purportedly purchased the mortgages, is alleged to have profited from the transactions by earning over $100 million in net interest income with minimal risk. The contra-party to the transactions, Doral Financial, which purportedly sold the mortgages to First CanCorp, is alleged to have improperly recognized income from the transactions. The Commission further alleges that First BanCorp senior management, including Alvarez and Astor, created and backdated certain documents and affirmatively misrepresented the terms of certain mortgage-related transactions to the company's independent auditor to avoid a restatement in November 2004.
The Commission charges Alvarez and Astor with aiding and abetting violations of Sections 10(b), 13(a) and 13(b)(2)(A) of the Securities Exchange Act of 1934 and Rules 10b-5, 12b-20 13a-1 and 13a-13 thereunder and with violating Rules 13b2-1 and 13b2-2 of the Exchange Act. Without admitting or denying the Commission's allegations, Alvarez and Astor consented to being permanently enjoined from violating those provisions of the federal securities laws. In addition, Alvarez consented to a five (5) year officer and director bar and $100,000 civil penalty, and Astor consented to a five (5) year officer and director bar, $75,000 civil penalty and to an administrative order suspending her privilege to appear and practice before the Commission as an accountant for five (5) years.
Doral Financial previously consented to the entry of a court order enjoining it from violating the federal securities laws and ordering that it pay a $25 million civil penalty [LR-19837 (Sept. 19, 2006)]. First BanCorp consented to a similar court order and an $8.5 million civil penalty [LR-20227] (Aug. 7, 2007). The Commission acknowledges the assistance of the United States Attorney's Office for the Southern District of New York, the Federal Bureau of Investigation, the Board of Governors of the Federal Reserve System and the Federal Deposit Insurance Company.
