On September 27th at the Waldorf Astoria Hotel in New York, Commercial Solar Power, one of the many victims of the Puerto Rico financial collapse, will host a press conference detailing the findings.
Sources close to the investigations suggest that there was massive and repeated government theft of public funds, going on for over a decade. The theft of public money along with widespread Wall Street fraud associated with the islands bond issues, resulted in $39,000,000,000 in bondholder losses.
Although all the specifics may not be known until September 27th, the following has been shared with us.
The Puerto Rico Power Authority (PREPA), one of the world’s largest government owned utilities has been burning No. 6, sludge oil for over a decade. The authority has been billing its citizens for the higher grade No. 2. Oil. The payments for this oil have been wired off shore and then kicked back to government officials family members. The difference in cost between No.2 and No. 6 oil is approximately 58%. In some years the overpayments exceeded $1.6 billion dollars.
Our source also states that the on-going EPA testing results could only occur with the utility burning sludge oil and that the equipment needed to burn sludge is different than the equipment needed for the burning of No.6 fuel. A quick walk through of PREPA’s plants showed that PREPA was indeed using NO.2 fuel burning equipment.
Additionally, a review of the agencies financial statements shows hundreds of millions in public funds missing from the equipment purchase and maintenance accounts each year.
PREPA alone is responsible for almost $2 billion a year in missing or stolen public funds.
An inter-agency review of Puerto Rico’s other municipal agencies reflected similar activity. It is estimated that as much as $3 billion dollars a year in public funds are unaccounted for in Puerto Rico.
Through reviews of the various agencies financial statements indicate those agencies were all technically bankrupt as early as 2007. Normally, bankrupt entities would not be able to secure any credit rating let along investment grade ratings. Without investment grade ratings the agencies could not issue bonds to raise more capital.
The typical fee for a credit rating is 1-2% but by paying the rating agencies as much as 9%, the Puerto Rico Municipal Agencies were able to secure good credit ratings.
These fraudulent credit ratings allowed Puerto Rico to issue new debt ultimately resulting in the financial collapse and a loss to the original bond holders of $39 billion dollars.
I am being told that all members of both the Congress and the Senate knew this when they voted to revoke all legal rights for the victims, the bond holders.
It is reasonable to expect that when a full disclosure is final made, Wall Street and Washington will have some explaining to do.
Mr. Lawless is a career Banker and CEO of Commercial Solar Power, Inc. Mr. Lawless has been working with the SEC, the FBI, The U.S. Attorney’s Office and the Treasury Department to uncover the reasons for Puerto Rico’s $70-billion-dollar bond default. Mr. Lawless has held Senior and Executive positions with Wells Fargo Bank, Home Savings and Washington Mutual Bank specializing in the issuance of debt instruments. Mr. Lawless holds a BA from Pepperdine University and a Master’s Degree from the University of San Diego.