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Leading Mexican banker investigated for $175 million fraud

August 30, 1997

MEXICO CITY (AP) _ A leading Mexican banker remained under house arrest Saturday while authorities investigated complaints that he had bilked some 200 investors out of $175 million.

The alleged swindle by Jorge Lankenau Rocha, chairman of the Abaco Financial Group that includes the nation’s 11th largest bank, has shaken the northern state of Nuevo Leon, where Abaco is based.

A district judge in Nuevo Leon ordered Lankenau’s 30-day house arrest on Friday. By law, he can be confined to his home in the Nuevo Leon capital, Monterrey, for another 30 days until the investigation is completed.

At least half the 200 investors, acting singly or in small groups, filed complaints of fraud last week against Lankenau and Abaco. Others are expected to follow next week.

The Treasury Department, meanwhile, has taken over management of debt-ridden Abaco and its subsidiaries, including the bank _ Banca Confia _ until the financial and legal mess is sorted out. The newspaper Reforma has estimated it may take up to $2 billion to clean up the group and safeguard investors.

Banca Confia will be cleaned up first, according to Treasury officials. Citibank announced Wednesday it had signed an agreement in principle to buy the bank, and both Citibank and Treasury officials have said the scandal will not affect the scheduled transfer of ownership in December.

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