K&L Gates Continues to Assist in Recovery of Hundreds of Millions of Dollars Lost Through 1996 Failure of One of Ecuador’s Largest Banks
6 August 2019
- A team of litigators from global law firm
K&L Gates LLP
that helped secure a 2015 $191 million judgment in compensatory damages for the Central Bank of Ecuador in a complex fraud action case involving the 1996 failure of Banco Continental -- Ecuador’s fourth-largest bank at the time -- has continued to assist the bank in attempting to recover the judgment, which now exceeds $600 million in assets and interest. The team’s latest victory came in the United States Bankruptcy Court for the Southern District of Florida, where Chief United States Bankruptcy Judge Laurel Isicoff in late July sided with the trustee and creditors to the bankruptcy on their claims of fraud against the debtor and vacated a bankruptcy discharge previously granted the debtor. The decision follows a six-month consolidated bench trial that ended in January 2019.
The underlying case alleged that, through a series of fraudulent transactions, the Ortega family that controlled Banco Continental siphoned approximately $150 million from the bank through loans to other Ortega-controlled companies in a manner which shielded those companies from subsequent claims when Banco Continental failed and was taken over by the Central Bank. The action, which involved a three-month trial in the Court of Appeal of the Commonwealth of the Bahamas, was one of the most high-profile cases resulting from a number of bank failures in Ecuador in the late 1990s, with the March 2015 judgment from The Judicial Committee of Her Majesty's Privy Council in London finding in favor of the Bank of Ecuador on its claims of breaches of fiduciary duty and dishonest assistance by the respondents.
K&L Gates Boston partner Michael DeMarco has served as lead counsel and international coordinating counsel to The Republic of Ecuador and their Central Bank on the case since the firm became involved with the matter in 2008, with Miami partner Jeffrey Kucera also involved in the latest action.
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