SEC Files Charges Against Storefront Bank
WASHINGTON (AP) _ The Securities and Exchange Commission filed civil fraud charges Friday against an uninsured storefront ″bank″ whose collapse threw more than $6.8 million in deposits of recent Salvadoran immigrants into jeopardy.
The commission also obtained a temporary order from U.S. District Court freezing the assets of three top officers of Latin Investment Corp. of Washington.
The corporation’s assets were frozen Dec. 15 when it was forced into seeking bankruptcy court protection from creditors. A bankruptcy judge has ordered the company liquidated.
The commission said it had contacted the government of El Salvador to locate any assets there that would be subject to a freeze order although the countries have no formal cooperation agreement.
A hearing on the commission’s request for an injunction against the defendants was scheduled for Jan. 14.
″There is evidence to suggest that individuals who were nominally drawing salaries of slightly in excess of $20,000 a year have acquired very expensive real estate in the Washington area. We intend to go after that real estate if we establish liability and try for the recovery of assets that may have been improperly diverted,″ said commission Chairman Richard C. Breeden.
Commission officials said they had referred the Latin Investment matter to Washington, D.C. local officials when it first came to light in 1987.
Breeden said if Latin had been chartered as a bank, supervised by local bank regulators and under federal deposit insurance there would have been little for the commission to do.
William McLucas, head of the commission’s Enforcement Division, said District of Columbia officials assured the commission on several occasions in 1988 that they were taking steps to ensure that Latin would get a bank charter.
The city’s Office of Banking and Financial Institutions was closed when called late Friday for comment.
According to the complaint, Latin Investment, founded in 1982, had about 3,500 investors who had placed about $6.8 million with the investment company as of August this year. Investors have said they deposited money with Latin because it had tellers who spoke Spanish.
The Wilson International Center, a private community group that is helping investors, said the amount in jeopardy was more like $13 million in deposits, an average of more than $3,700 apiece.
The complaint alleges that Latin, which operated without a bank charter or government banking insurance, misled investors into thinking their funds would be safe and available on demand.
Also named as defendants and as the target of various requested court orders were: founder Fernando Leonzo of Vienna, Va.; the corporation’s secretary, Leonel Salinas of Falls Church, Va.; and vice president Jose A. Cortes of Arlington, Va.
Leonzo, through his lawyer Charles Pearson, denied the commission allegations.
″We have a different version of events, and that will certainly come forward in due time,″ Pearson said. ″We’re not trying to hide anything. What we’re trying to do is repay depositors.″