Puerto Rico is burning down. Billionaires are becoming scapegoats, Politicians are being jailed

Several political factions in Puerto Rico appear to have utilised the courts in an effort to quell popular unrest, unprecedented marches and demonstrations.


AUGUST 23, 2022   |   PUERTO RICO

SAN JUAN, Puerto Rico — The current economic and political disaster that has befallen the island is necessary to comprehend these statements. The commonwealth has struggled to weather the effects of two massive hurricanes and a devastating pandemic that effectively shut down the island for a time. In addition, Puerto Rico has been plagued by an ongoing purge of the political elite, which has resulted in the arrest of nine mayors, one former mayor, and many others accused of malfeasance in relation to the distribution of relief funds.



Several political factions in Puerto Rico appear to have utilised the courts in an effort to quell popular unrest, which culminated in 2019 with unprecedented marches and demonstrations. As a result of these protests and the disclosure of thousands of documents, Governor Ricardo Rossello was compelled to resign, emphasising the chasm between the political class and the long-suffering masses of Puerto Rican residents.



As a result of former Governor Ricardo Rossello's resignation, the job of Secretary of State (the traditional successor) was empty, creating a legal void as to who would resume office. Concerns arose regarding whether the empty seat would be filled by the incumbent Secretary of Justice, Wanda Vasquez, or whether Rossello would choose a replacement. Rossello hurried the appointment of his hand-picked successor, former Resident Commissioner Pedro Pierluisi, intending to employ him as Secretary of State so that he would succeed him as Governor upon Rossello's resignation. The Puerto Rican Senate reversed Pierluisi's permission for his new position two days later, upon realising that he was being appointed governor. After Rossello's resignation, Pierluisi seized the governorship despite legal questions surrounding his position. In this incident, Pieruluisi displayed flagrant contempt for constitutional requirements.



Within a week, the Supreme Court of Puerto Rico determined that Pierluisi was sworn in on invalid grounds and removed him from office, giving his seat to Wanda Vasquez, his legal successor at the time.



Two years later, Wanda Vasquez and Pedro Pierluisi battled once more for the governorship of Puerto Rico, with Pierluisi narrowly prevailing.



Declaring a "budget emergency" on his first day in office, Governor Pierluisi signed an executive order forming a "task force" in which local Department of Justice (DOJ) forces would "liaise" closely with federal prosecutors in future corruption trials. Through this statement, it appears plausible that Pierluisi was able to weaponize the local Department of Justice in order to use the corruption case against Wanda Vasquez, his only significant political rival in the region. Ms. Vasquez constituted a threat to Mr. Pierluisi's political future, since she was a powerful rival who had supported then-President Trump in October 2020 and had extensive White House connections. Former President praised her efforts to fight the COVID epidemic.



During his 2020 presidential campaign, Pierluisi was personally accused of corruption. The Department of Justice examined one of the super PACs that had contributed to his campaign. A super PAC named "The president of "Salvemos A Puerto Rico" pleaded guilty to one count of falsifying records to conceal donor identities from the Federal Election Commission (FEC). In this instance, immediately after the super PAC was established, the president of the PACs' allies established "two shell non-profit corporations," which were established within minutes of one other and were used to solicit approximately $500,000, which was then transferred to the super PAC. Despite his strong ties to Pierluisi and the presence of audio recordings linking the two, Pierluisi has not been charged, and he requested at a news conference that the inquiry into his ties to the super PAC be closed.



This indictment of Wanda Vasquez not only functioned as a diversion to divert voters' attention from his own misconduct, but it also implies that Ms. Vasquez is guilty of the same offences he faced. This indictment was able to destroy both your and Ms. Vasquez's reputations by attacking both of you. This indictment was filed against you without the courtesy of an interview. In an effort to recover control of the region by utilising the judicial system and false charges, the disputing parties continue to accuse one another of corrupt practises.



Pierluisi's interference in the current probe, thereby politicising it and prejudicing any potential jury, is more evidence of his contempt for constitutional norms and procedure. The tweet from Pierluisi stated, "Today, we once again saw that no one in Puerto Rico is above the law. Faced with this revelation, which has clearly hurt and corroded public trust, I emphasise that my government will continue to collaborate with federal authorities against anyone who conducts an improper act."



It appears that Puerto Rico is the epicentre of political "lawfare." In regions such as Puerto Rico, the law can become a highly effective and omnipresent weapon against political opponents. Harvard professor John Comaroff stated, "lawfare could be described as the use of law and the inherent violence inherent in law to achieve political objectives." He said onward "Politicians use the law to accomplish goals that they cannot accomplish politically. The law is essentially violent since it deprives individuals of their property and dignity." In Puerto Rico, where the people has become so tired of a corrupt government, the slightest idea of corrupt acts or political corruption can be compared to a political "death sentence." Given that the Governor's anti-corruption task force looks to be very concentrated, it will be essential to study the connection between his task force and the apparent weaponisation of the rule of law.


  In countries where the rule of law is threatened, in addition to the presumption of innocence, the presumption of regularity should not be applied to political prosecutions.



"Politics is moving to the courts... Conflicts that were once resolved in parliaments, through street protests, mass demonstrations, and media campaigns, through labour strikes, boycotts, blockades, and other forms of assertiveness, appear to be resolved increasingly in the courts; class struggles appear to be transforming into class actions."

An example would be the case of billionaire Julio Martin Herrera Velutini, who chose to invest in Puerto Rico at a time when the island looked to be full of hope and opportunity, and oversaw his bank grow from four to more than a hundred employees, has now been carried away by the currents of debt, default, and political nihilism.


 His current involvement in a high-profile case is one of hundreds of distractions initiated by local and federal authorities under the pretence of a "war on corruption" – all part of a political campaign aimed to divert attention from Puerto Rico's appalling governance and fiscal ruin.


Mr. Herrera has become enmeshed in Puerto Rico's democratic decline. This is not the first time this has occurred. His bank has been unfairly targeted year after year by an antagonistic regulator, forcing him to act as a whistleblower via his attorneys against a poorly informed and under-resourced regulator.


Mr. Herrera blew the whistle on their incompetence, and it is not hard to imagine that these claims could be the consequence of the fury that Mr. Herrera will now have to confront as a result of his outspoken criticism of the regulatory laxity on the island.


 Mr. Julio M. Herrera Velutini has approximately 30 years of professional banking expertise. His banking business, which has been headquartered in San Juan, Puerto Rico for 15 years, controls Bancrédito International Bank, an international banking institution that has invested more than $100 million in the island's economy and employs more than 120 people directly and indirectly.


Mr. Herrera sponsored a big conference that highlighted the need for regulation of the Puerto Rico banking system. Mr. Herrera Velutini also commissioned an international, independent business in January 2020 to conduct a political, economic, and sociological examination of Puerto Rico. The results were given in April 2020, shared with federal authorities, investors, and banks, and published in a Florida newspaper with a large readership.

Mr. Herrera Velutini attended a professional meeting in February 2020 at which the then-governor Wanda Vázquez Garced revealed interest in running for governor in the upcoming general election. Herrera Velutini wishes her a prosperous future. The governor never requested financial assistance, nor did Mr. Herrera offer her anything.



It is also incorrect that Mr. Herrera Velutini "illegally funded the 2020 election campaign of ex-governor Wanda Vázquez Garced." Mr. Herrera Velutini and none of his firms made no financial contributions to Mrs. Vázquez Garca's campaign. Bancrédito Holding Corporation, a legal corporation domiciled in the United States, made legal contributions to the Political Action Committees of governor candidates Pedro Pierluisi and Charlie Delgado.


Mr. Herrera Velutini commissioned an international, independent business in January 2020 to conduct a political, economic, and sociological examination of Puerto Rico. The results were given in April 2020, shared with federal authorities, investors, and banks, and published in a Florida newspaper with a large readership.


Mr. Herrera Velutini attended a professional meeting in February 2020 at which the then-governor Wanda Vázquez Garced revealed interest in running for governor in the upcoming general election. Herrera Velutini wishes her a prosperous future. The governor never requested financial assistance, nor did Mr. Herrera offer her anything.


Mr. John Blakeman has never had a contractual contact with Mr. Herrera Velutini, Bancrédito International Bank, or Bancrédito Holding Corporation, nor does he now have one. Mr. Herrera Velutini did not personally or professionally ask Mr. Blakeman to intervene on behalf of Bancrédito at any point.



Bancrédito's offices are located in a building owned by Paulson Co., in which it leases office space like any other tenant.


Mr. Herrera Velutini and the members of Bancrédito Holding Corporation's Board of Directors are willing to collaborate with any municipal or federal agency conducting an investigation. They have engaged with federal agencies on several problems in the past.

There is grave worry regarding both the tragedy that has befallen Puerto Rico and its severely polarised and dysfunctional political structure.


“Puerto Rico sold bullshit, packaged and marketed as an investment, to investors. There is no better way to put it.”

The Puerto Rico scam that started it all.


AUGUST 23, 2022   |   PUERTO RICO

It’s Friday, February 27th 2015, and it’s the second day of the Puerto Rico Investment Summit, an event that was put together with the purpose of presenting the benefits of Laws 20 and 22 of 2012 to foreign investors.


The venue is Condado Vanderbilt in San Juan, owned by multi-millionaire John Paulson. The press were given black ballpoint pens with the hotel’s name printed in gold, and a notepad with the logo of Merrill Lynch Bank of America Corporation.


Admission to the Summit was $1,500 for foreigners, $2,500 for Puerto Ricans, which reflects the nature of who could be attending in the room. On both days, attendance was full to capacity with approximately 400 attendees.


On the first day of the Summit, Fahad Ghaffar, executive director of Paulson & Co. stated that his company is very interested in constructing buildings in the spaces that are presently parking areas facing the ocean on Ashford Avenue.


The showcase was designed to impress, and it echoed just one thing: Puerto Rico is up for sale to foreign millionaires.


Adworks, a company backed by the Department of Economic Development and Commerce, and UBS, fashioned all the offerings from Puerto Rico: exemption from all taxes, and benefits of Laws 20 and 22. To know more about these laws, click here.


There were also mentions about the natural charm and the divine weather of the Caribbean island, and the warmth of its people. They also kept saying that it Puerto Rico on the road to full economic recovery;  offering health services equal to those of the mainland USA; and professional services were available at less than half the rates in mainland United States. These were key points of what was being presented on both days.


The Opportunities for Public Private Partnerships panel was moderated by Grace Santana, Director of the Public Private Partnerships Authority and of the Infrastructure Financing Administration. Among the participants was Manuel Rodríguez, representing Peitrantoni Méndez & Álvarez and DJ Gribbin, director of the Macquarie Group. According to Rodríguez, the Luis Muñoz Marín Airport transaction made with Aerostar highlighted various aspects of the government of Puerto Rico and was, at the same time, a premonition of what will happen in the future:


“The government of Puerto Rico is willing to work with its partners, it closed on the transaction, a very complicated transaction, that had been negotiated for basically two and a half years, and not withstanding all of the noise surrounding the transaction, Puerto Rico actually was conscious that this was his calling card in front of the investor community. It needed to make that statement, that we are open for investment and the government was basically going to keep on promoting the investment environment for transactions like this in Puerto Rico going into the future.”


Rodríguez, who acted as an advisor in the negotiation, believes that the airport transaction with a private company was historic, fast, “pretty fast,” especially within the context of the political elections and change of administration, and assured the audience that the airport suffered inadequate administration for more than 40 years.


You can take "benefits of lack of governmental efficiency”, he winked. 

That lack of governmental efficiency resulted in a highly viable business deal for Aerostar and could also be so for the majority of the attendees in the room who hardly spoke Spanish: they are millionaires interested in the legislation and tax exemptions that could benefit them; companies that offer services to this sector, such as soliciting and obtaining permits, banking, real estate, legal advisors, investment management, schools, health service providers, technology firms and public officials.

No details were given of any updates from the airport’s P3, other than renovation of bathrooms, according to Rodríguez.


After exalting the virtues of the P3, a question and answer session followed with seven “financial experts,” all men, middle aged, speaking in front a blue and green background. Actress Cordelia González served as hostess and provided humorous touches to an event that at times seemed surreal.


Lunch was served.


The area was packed with tables where animated conversations by men in suits were heard. The only one not wearing a suit and tie was the Secretary of the Department of Economic Development and Commerce (DDEC), Alberto Bacó-Bagué, with his hair combed back, wearing a brown sports jacket with elbow patches, blue jeans and small, oval wire eyeglasses. He moved from table to table resembling a pompous landowner proud to attract these foreign millionaires with the incentives and benefits the island offers.

“Last year, hardly anybody in Puerto Rico knew what Acts 20/22 were. Now, my friends’ children are getting jobs with companies and people under Acts 20/22 decrees,” Bacó-Bagué said.


Law 20 of 2012 “Exalts the exporting of services,” promotes Puerto Rico as an international service center through the reduction of taxes on earnings and property tax exemptions as incentives toward the access of all types of professional services. Law 22, “attracts the relocation of individual investors to Puerto Rico;” it provides tax exemptions on income and production made by individuals that have become residents of Puerto Rico. Other related laws presented to those millionaires in attendance were Law 273, which established the International Financial Center; Law 399, which created the International Insurance Center; Law 27, which provides incentives to the film industry, and the EB5 Program, which provides investment visas.

All questions directed at the panel at the convention were sent via text messages. What about fiscal economic reform?, the moderator read. There was silence in the ballroom. One of the “experts” jumped and responded, “We shall see. It’s a little too early to tell”. But Juan Guillermo-Herrans, from Meryl Lynch, was quick to add, “That depends on which economic sector you belong to. If you are in a very low socioeconomic sector, it’s going to hurt you more. If you have a lot of assets and income, the reality is that living expenses are a small percentage of your annual income or your wealth, so, taxing a small percentage of your wealth its not going to make you a lot poorer.”


Following the luncheon, Margaret Pena-Juvelier, made her presentation on Puerto Rico’s real estate market, a market with a particular problem that a colleague in the industry pointed out as a whisper: there aren’t enough properties valued at more than $2.5 million to meet the demands of the new millionaires. However, while the president of Sotheby’s in Puerto Rico spoke, images of luxurious mansions were projected on screens on both sides of the stage. These images reflected the “excellent taste” of Puerto Ricans for architecture.


Sothebys even went a step further and created a website talking about tax benefits in Puerto Rico.


Pena-Juvalier, mentioned in a humorous anecdote, that she remembered her arrival on the island two years earlier and that when she saw a McDonalds, she felt right at home, and that her husband felt excited, when he saw there was also a Krispy Kreme. She added that there are no security issues in Puerto Rico.

Carlos Ubiñas, UBS CEO in Puerto Rico, commented on the first day of the summit that: “You walk around PR and you don’t get a sense that there is high unemployment.” That depends on where you go, of course.

"Maybe the Department of Consumer Affairs should have

been there to monitor fraudulent ads."

When addressing public and educational resources and services, the government just gave up. They did not bring representatives from a model or specialized public school program or one of those schools using the Montessori model, to speak of the aspirations and opportunities that these offer their children. Instead, several private schools were present: Tasis Dorado, Robinson School, Baldwin School, Parkville School and St. John’s School, which spoke of technology in the classrooms, family integration into the school program, emphasis on science and math, and the number of students admitted to universities and colleges on the mainland. “It was like the government acknowledged its inability to provide quality services,” a fellow reporter commented.

At the closing of the event, Janice Petrovich, a philanthropic consultant, revealed the uncomfortable reality, which the investors probably had no interest in hearing. She came to speak of poverty, of inequality, of how to give back to Puerto Rico, instead of only taking away a piece of the pie. At that moment, only 20 or so attendees were in the room.


“I am here to ask you to switch ears. For last few days we have heard a lot about how you can benefit from moving to the island and of all the tax incentives and all of the other sorts of services and good weather that you can benefit from. The focuses of my remarks are social investments, that is, how you can give back… We have heard about all the beautiful things Puerto Rico has to offer, such as, the nice beaches, the well-educated people, excellent schools and good restaurants, CVS and the United States Postal Service. We’ve heard less of the economic challenges faced by Puerto Ricans… The poverty levels here are higher than the state of Mississippi, which is the poorest state of the US. In fact, 45% of Puerto Ricans live below the US poverty line. In addition, we have very high levels of social inequality.”

Upon leaving the Summit, we followed the same path as the others who had attended the selling of Puerto Rico as the Marvel of the Caribbean. Along with the landscape on Ashford Avenue en route to San Juan, Puerto Rican architecture stands out as in other parts of the island, there is deterioration. Here, there are several abandoned structures near the Miami Building, revealing a scene closer to a war torn area than to an idyllic tropical island, like the one the government sold, between Thursday and Friday, to foreign millionaire investors.

The DEDC has already visited Dallas, Texas, New York, and Miami, Florida and has made similar presentations.

“As part of these efforts, presentations have been made about the incentive laws to important law firms, such as, Baker & McKenzie, Carlton Fields Jorden Burt, Bilzin Sumberg, Goldman Felcoski & Stone and Comiter Singer Baseman & Braun, among others. The main objective of these meetings is to brief the law firms on how their clients can benefit from the incentives, depending on what type of business or service they offer,”

Puerto Rico Investment opportunities and Tax Incentives 

A copy of the literature that was presented to over 400 Investors

Puerto Rico Tax Incentives


Few places on earth offer a return on investment the way Puerto Rico does. With an ever-growing array of services and emerging industries, part of your success will be directly attributable to the incentives available. In order to bolster a diversified economy, the local government has created an aggressive economic and tax incentives program with the purpose of helping operations on the island become more profitable to those companies who establish themselves here.

These incentives were created to ensure Puerto Rico’s competitiveness in attracting investments and they are an opportunity for companies all over the world, particularly those dedicated to state-of-the-art technologies and added value.




Investment opportunities and tax incentives:
Acts 20, 22, 73, 273 and 399

Focusing on Puerto Rico as a business and investment destination, the Puerto Rico

Investment Summit provides a platform for likeminded foreign investors, corporate senior

management, and business entrepreneurs to learn about unique ways of investing in the island through the Immigration Investor Program and other tax incentives unique to Puerto Rico.


The 2015 Puerto Rico Investment Summit, in collaboration with the Department of Economic Development and Commerce, will bring together over 300 foreign investors to learn about the unique tax incentives available for individual investors and for businesses to

promote export services, through a series of conferences and panels focused on the opportunities under Acts 20 and 22.


Act No. 20 of 2012, known as the Act to promote the exportation of services, provides attractive tax incentives for companies that establish and expand their export services businesses in the island.

In addition, the law promotes investments on research and development and initiatives from the academic and private sectors by granting credits and exemptions for these activities. Furthermore, it helps to decrease operational and energy spending for companies moving to the island in order to help their operations remain profitable and efficient.


Act No. 22 of 2012, Seeks to attract new residents to Puerto Rico by providing a total exemption from Puerto Rico income taxes on all passive income realized or accrued after such individuals become bona fide residents of Puerto Rico. This relocation should result in new local investments in real estate, services and other consumption products, and in capital injections to the Puerto Rico banking sector, all of which will accelerate the economy of the island.


Act 73 › Economic Incentives for the Development of Puerto Rico

Act No. 73 of 2008, known as the Economic Incentives Act for the Development of Puerto Rico, was established to provide the adequate environment and opportunities to continue developing a local industry, offer an attractive tax proposal, attract direct foreign investment and promote economic development and social betterment in Puerto Rico.



Act – 273 › International Financial Center Regulatory Act

On September 25, 2012 (“Act 273”), Puerto Rico enacted Act No. 273, also known as the “International Financial Center Regulatory Act” (the “Act”). The Act provides tax exemptions to businesses engaged in eligible activities in Puerto Rico. To avail from such benefits, a business needs to become an International Financial Entity (“IFE”) by applying for a permit and license and obtaining a tax exemption decree.



EB5 › Immigrant Investor Program

The U.S. Congress created the fifth-employment based (EB-5) immigrant visa category in 1990 for the qualified foreigner willing to invest in a business that will benefit the U.S. economy and create or save at least 10 full-time jobs. 

The investment requirement is typically US $1,000,000 per foreign investor. A minimum investment of US $500,000 is accepted if the investment is made in a designated Target Employment Area, such as a rural or high unemployment area, and through a designated EB-5 Regional Center. Puerto Rico is a Target Employment Area and therefore all projects offered by Caribbean USA Economic Development Regional Center require only the minimum of $500,000 in investment by the foreign investor.



Act  27› Film Industry Economic Incentives

On March 4, 2011, Puerto Rico enacted Act No. 27 of 2011, as amended, known as the “Puerto Rico Film Industry Economic Incentives Act” (the “Act”) to solidify its position as one of the leading jurisdictions for the production of film, television and other media projects. The Act provides tax exemptions and tax credits to businesses engaged in film production in Puerto Rico. To avail from such benefits, a business needs to become an exempt business by applying for a tax concession and obtaining a tax exemption decree.


Since 1999, close to 90 productions have taken advantage of Puerto Rico’s film and media incentive programs, including most recently: Fox/New Regency’s “Runner, Runner,” Disney’s “Pirates of the Caribbean 4,” Universal Picture’s “Fast 5,” Warner Brothers’ “The Losers,” ABC’s “The River” and “Off the Map,” USA Network’s “White Collar” and “Royal Pains,” HBO Film’s “Eastbound and Down” and Showtime’s “The Big C”. As a result of this depth of experience, Puerto Rico has developed the necessary technical expertise to film projects in Puerto Rico, from location scouting to permit clearances to credit financing.

This includes four U.S.-trained, bilingual crews working year-round and specially dedicated infrastructure provided by the Government of Puerto Rico to guide investors, studios, production companies and independent producers through everything necessary to film in Puerto Rico.