Wealth Advisor Rockville, MD
Jose Ramirez, once a top broker for UBS Puerto Rico, the Swiss banking giant’s branch in Puerto Rico, was sentenced to a year and a day in prison on March 26. Months ago, Ramirez pleaded guilty to criminal bank fraud for his role in a bank scheme which involved sales of the firm’s proprietary closed-end bond funds. In the scheme, which involved many investors losing their life savings, Ramirez, a man who is known in Puerto Rico as “The Whopper”, pocketed over $1 million in commissions.
Ramirez is first former UBS Puerto Rico employee to serve jail time for the scheme.
Ramirez, a 60-year-old father of three, said to Judge Thomas F. Hogan in a Washington DC federal court, “I’m not here to blame anyone else. I ruined my record, my life and the lives of those who looked up to me.”
In addition to the 366-day sentence, Judge Hogan also ordered Ramirez on two years of supervised release, a $500 fine and granted Ramirez’s request to voluntarily report to prison.
The government had recommended giving Ramirez the maximum sentence of 33 months but instead the judge gave Ramirez a much shorter sentence,
According to CNBC, Judge Hogan said, “I’m faced with a human being who has admitted his wrongdoings, and I think is remorseful for his actions.”
In November 2018, Ramirez pleaded guilty for his part in the scheme to fraudulently obtain and misuse credit lines to purchase securities.
In a statement given to CNBC, Peter Stack, a spokesman for the Swiss banking company said, “UBS terminated the employment of Mr. Ramirez in January 2014, following an internal investigation that determined (1) he had permitted or encouraged clients to engage in improper conduct, and (2) had provided misleading responses to firm management when questioned about it.”
From January 2011 through September 2013, Ramirez told his clients to improperly borrow money to invest in UBS Puerto Rico bond funds, and subsequently the sales of which generated around $1.2 million in commissions for him.
Using credit lines to purchase securities was not allowed by UBS Puerto Rico, but Ramirez says other brokers advised clients to use loans to purchase securities. He alleges in his sentencing memorandum that UBS “was fully aware of the transactions” that were going on.
On March 23, Ramirez finally broke his silence and named seven individuals he alleges were either involved in, had knowledge of, or encouraged the transactions of the UBS Puerto Rico scheme. In his sentencing papers, Ramirez named the following: Doel Garcia, a UBS executive, Ramiro Colon, a UBS Puerto Rico branch manager and his former supervisor, Carlos Ubinas, the chairman and president of UBS Puerto Rico, as well as four current or former UBS Puerto Rico brokers: David Lugo, Fernando Castillo, Leslie Highley and Luis Sanchez.
In response to these allegations, a spokesman from UBS said: “In its sentencing papers, the DOJ described Mr. Ramirez’s offense as ‘brazen’, found that he took various steps to ‘circumvent’ UBS controls and to ‘obscure’ from UBS what he was doing, and found that Mr. Ramirez ‘took advantage of all parties involved.’ In light of these findings, Mr. Ramirez’s last-ditch efforts to blame his victims for his own criminal conduct should be seen for what it is: an attempt to escape responsibility for his own wrongdoing.”
CNBC reached out to lawyers or representatives of these individuals.
The trial attorney for the U.S. government, Cory Jacobs said he refuted the claim that Ramirez was UBS’s “scapegoat.”
Jacobs told Judge Hogan, “UBS did an internal investigation that identified the defendant as the hub of the fraud.” Hogan also said that people would go into UBS and ask for “the whopper special.”
Jacobs also told the Judge that Ramirez had cooperated with the government but hadn’t given enough information to prove beyond a reasonable doubt that other bankers were also involved in fraudulent conduct.
UBS told CNBC, “UBS refutes any insinuation of wrongdoing by any of the people he has tried to implicate.”
A lawyer for David Lugo said, “Mr Lugo did not engage in the activities for which Mr. Ramirez was charged, and to which Mr. Ramirez pled guilty. Nor was Mr. Lugo ever even charged with conducting such activity. Mr. Lugo’s employment arbitration against UBS-PR was settled to the satisfaction of both UBS-PR and Mr. Lugo.”
Meanwhile, UBS settled with FINRA and the SEC for around $34 million for charges involving the sales practices of bond funds and failure to supervise.
According to data compiled by SLCG, the Swiss banking company paid out nearly $480 million to clients in FINRA settlements and awards. However, there are over 800 pending cases against UBS Puerto Rico. In addition, the Swiss bank has disclosed that there is an ongoing Department of Justice investigation into the impermissible reinvestment of loan proceeds, in regard to the Puerto Rico funds. UBS says they are fully cooperating in the investigation.
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