Thursday, June 5, 2014

Doral Files Lawsuit Against Government of Puerto Rico

Doral Financial Corporation, a Puerto Rico-based financial services company, filed a lawsuit in the Court of First Instance of Puerto Rico and a Writ for Certification in the Puerto Rican Supreme Court, alleging that the government illegally nullified its agreement to refund the bank more than $229 million in tax overpayments. The filings can be found online at

Matt McGill of Gibson Dunn & Crutcher LLP, counsel in the U.S., and Ramón Rosario, Esq., and Anthony Murray, Esq., counsel in Puerto Rico, who are Doral's legal representatives, will hold a phone press conference today to discuss the specifics of the case filed by Doral, a major employer in Puerto Rico and the second-largest mortgage lender on the island.

"This is a blatant violation of contract and lawless act by the Hacienda and the Commonwealth of Puerto Rico," said Ted Olson, lead counsel for Doral Financial Corporation and former United States Solicitor General. "Doral and the Commonwealth have a binding and enforceable agreement that awards Doral the tax refund it is owed. If this administration can tear up the agreements reached by the last administration, then no taxpayer, employer, or investor in Puerto Rico is safe. We will ask the courts to uphold the rule of law and require that the Commonwealth live by its agreements."

"This is very unfortunate as we've been unsuccessful in convincing the Government to resolve the matter amicably," said Doral Financial Corporation CEO Glen Wakeman. "In that context, the bank's leadership was left with no other option than to take this legal action to protect its rights under the law and the interests of its various stakeholders, including its counterparties, bondholders, preferred shareholders, stockholders, employees and customers."

Previously, the Puerto Rico Treasury Department reached the conclusion that Doral’s request for a refund is not proper in law. Treasury says the 2012 closing agreement was intended to create a right to a refund for a tax overpayment in the amount of $229,884,087, but that no evidence has been presented to show that this overpayment ever took place.

Jesús F. Méndez Rodríguez was Treasury Secretary at the time the agreement was reached, even though it has been said that he was not personally involved with the signature of the agreement. When Mr. Mendez left his post as Treasury Secretary, he then became Executive Vice President – Puerto Rico Operations of Doral Financial Corp. The Puerto Rico Office of Ethics and the Puerto Rico legislature have both began further inquiries into this matter.


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