FBI Raids Puerto Rico’s Doral Bank Citing Unspecified Probes

By Alexander Lopez and Christie Smythe

The home office of Doral (DRL) Bank, the San Juan, Puerto Rico-based lender struggling to meet regulatory mandates, was raided by the FBI in a search for evidence related to “several ongoing investigations,” the agency said.
Federal Bureau of Investigation agents entered the bank’s offices about 8:15 a.m. in San Juan to collect information including computers and documents, said Special Agent Moises Quinones. He declined to comment further on the subject of the probes.
Doral Bank is part of San Juan-based Doral Financial Corp., which in July was trying to sell off parts of its business to maintain compliance with capital requirements, according to people familiar with the plan who asked not to be identified because the information was private.
The Federal Deposit Insurance Corp. has downgraded Doral from an earlier finding of “undercapitalized,” the company said in a regulatory filing in October. It was told to “immediately” increase the bank’s capital to the minimums required in a 2012 consent order or
submit a contingency plan for a sale, merger or liquidation, according to the filing.
This month, the company said it had received a notice from NYSE Regulation Inc. that it may be deemed non-compliant with listing standards unless it holds an annual meeting for 2014 by year-end.
After falling as much as 36 percent today in trading in New York, Doral closed down 16 percent at $3.40.
Miriam Warren, a spokeswoman for Doral, confirmed that investigators “have pursued the collection of certain information at the main offices of our institution.”

Bank Cooperating

The bank is cooperating fully with law enforcement and “we look forward to sharing more on the focus of the investigation as we learn more,” she said in a statement.
The bank’s commercial operations haven’t been affected, she said.
In a press conference today, Puerto Rico U.S. Attorney Rosa Emilia Rodriguez-Velez said the Doral search was being conducted by the white-collar crime unit regarding a federal offense. However, she said she wouldn’t exclude the possibility that the probe may also relate to the 2011 murder of a Doral executive, Maurice Spagnoletti, according to a radio broadcast of the news conference.
Spagnoletti, executive vice president of mortgage and banking operations at Doral, was shot dead in June 2011 on a highway in San Juan while driving home from work, according to the Associated Press.
Doral Financial, the holding company for Puerto Rico’s second-largest lender, has been in a legal dispute with the commonwealth’s treasury department over whether it is entitled to a $229.9 million tax refund. A judge in San Juan ruled in October in favor of Doral. Puerto Rico Treasury Secretary Melba Acosta Febo said the commonwealth would appeal.