Now that the Trump Ocean Club is going bankrupt, why not look at some of the other questionable real estate developments we've seen going up over the past years? After all, it isn't us, but the DEA, who continues to claim that Panama's real estate and construction sector is a repository for dirty money.
Enter the scene Gabriel Btesh and Felipe Alejandro Virzi. Close allies of president Ricardo Martinelli, who not only is part of an investigation in Italy for massive corruption, but also has some unexplained issues locally related to laundering money. Btesh and Virzi run a real estate development firm that builds towers all over the place. Btesh on paper owns newspapers El Panama America and La Critica, but is widely believed to be a proxy for Martinelli.
Anyway, on the Panama Forum website we found a post that alleges that the Btesh & Virzi "White Tower" project on Avenida Balboa is a money laundering scheme. Here's the story, start quote:
The White Tower Project:
This Avenida Balboa project consists of 196 residential units with four units per floor, all floors being equal in distribution except for the penthouse units. All four penthouse units currently remain unsold. There is a construction loan of only $826,000 dollars from Banvivienda registered. The book value for the project is $64 million dollars.
In total there are 100 unsold units. 57 have been sold to corporations and 39 to private individuals, however, most of these sales are bulk sales to anonymous or semi-anonymous groups mainly located in Spain. Currently there appear to be 0-2 closing per month with an average of 1.33 per month for the past six months, resulting in a sell-out estimation of 6-10 years.
Something that really stands out of the complete lack of American, Canadian and Northern European buyers. Buyers from the Anglo-Saxon world simply does not exist for the Btesh & Virzi projects.
The following table represents the current sales status for the project:
Owner Percent Note
- MERCHBANC GROUP 12.54 The Spanish Connection
- PANAMA BULK DEALS 20.68 Panama Law Firms
- DEVELOPER 51.29 The Developer
- NORMAL SALES 15.49 Normal buyers
The cash and loan table is shown below:
Sales status Percent Dollar value
- Units with loans 5.67 3.6 million
- Unsold units 51.29 32.91 million
- Sold cash 43.04 27.49 million
It should be noted that only $2 million dollars in mortgage loans have been issued for the project in total with a total sold portfolio of $31.1 million dollars making the White Tower a quite unique "all cash" building.
The highest loan from BBVA is for $1,516 per square meter, while the second comes in at $1,440 from ScotiaBank while the rest average $1,241 making the project virtually risk free for the local banks.
The developer, Btesh & Virzi holds their unsold inventory in MUNDIAL SERVICIOS FIDUCIARIOS, S.A. As of today, March 25th, 2013 this inventory represents 51.29 % of the building for a book value of $32.91 million dollars. Given a monthly maintenance fee of $1.45 per square meter it is estimated that the current holding cost for this inventory is about $21,000 per month, disregarding the applicable land taxes.
The Spanish Connection
According to EL MUNDO, issue number 6924 published on December 2, 2008 Spanish anti-corruption agencies were investigating the origin of massive amounts of money held by Merchbanc and JOAQUIN HERRERO GONZALEZ.
Sr Herrero purchased three units cash from Btesh & Virzi in Waters on the Bay using Passport number BF239367 and later purchased 14 units in cash in White Tower using an alternative passport number 17.830.453-W. He also purchased 3 additional units cash through the foreign corporation MERCHBANC (name could be misspelled on local title).
MERCHBANC S.A. is based out of Barcelona:
and current list FERNANDO CASTELLO CLEMENTE as a consultant/advisor. FERNANDO CASTELLO CLEMENTE and MARIA CRISTINA CASTELLO CLEMENTE purchased 7 additional units cash from Btesh & Virzi. Maria also used two different passports for her purchases, namely 40823404Z and BA936144.
This Spanish group currently own 12.54 % of the White Tower building, but they can own vastly more in the anonymous corporations holding units as well.
More information on Sr Herrero can be found here:
He apparently is famous for creating foundations in Liechtenstein to hide funds for his clients.
The funds used to purchase these units from Btesh & Virzi in Panama most likely originate from illicit tax evasion activities in Spain and the rest of Europe. Surely Btesh & Virzi are up the date on the know your client regulations and would report strange wires from foundations in Liechtenstein?
Another Spanish business man JOSE MANUEL AMATRIAIN ARRULA purchased three units cash. A Spanish corporation SAMU-BANYOLES,S.L. also purchased one unit cash.
Panama Law Firms
There are four Panamanian law firms that stand out in the sales for White Tower, namely:
- ILLUECA Y ASOCIADOS (Illueca)
- NEDELKA SOTOMAYOR (Sotomayor)
- ICAZA, GONZALEZ-RUIZ & ALEMAN (Icaza)
- OWENS & WATSON (Owens)
Illueca created 13 anonymous corporations with the generic name WHITE followed by the unit number. Nominee directors were provided for all units and all of them closed in late 2011, expect for two which closed in February 2012. Due to the nature of the closings it is safe to assume that this was a bulk transaction paid for in cash as no mortgages appear for any of the units. The total amount appears to be around $4 million dollars. Part of the cash deal are the entire 40th and 41st floors.
Sotomayor is the next law firm to execute a massive bulk cash deal at $2 million dollars. All the sales close shortly after Illueca's and stretch from February to April and are also excuted with the generic names WHITE followed by the unit number.
Icaza executes a minor cash sale at $1 million dollars using offshore corporations CRETA GLOBAL, ESTOCOLMO INTERNATIONAL, LITHUANIA INTERNATIONAL illustrating the clients preference for names containing European cities and/or countries.
Owens & Watson is the next Panamanian lawfirm to execute a massive bulk sale of $4 million dollars. This one continuous on the standard with European countries, for example ALEMANIA LAND CORP, FRANCIA LAND CORP, ITALIA LAND CORP, PORTUGAL LAND CORP, SPAIN LAND CORP, POLONIA LAND CORP mixed with more generic names such as BORGETTO MANAGEMENT, S.A, LOMBARDIA LAND INTERNATIONAL, S.A and PRECIOUS ESMERALD, INC.
There are currently several corporations with the name WHITE followed by a unit number, for example:
- WHITE 11-C, S.A.
- WHITE 11-D, S.A.
- WHITE 20-B, S.A.
- WHITE 22-A, S.A.
- WHITE 22-D, S.A.
with the follow dignitaries listed:
- PRESIDENTE: FELIPE ALEJANDRO VIRZI LOPEZ
- TESORERO: ANALIDA DEL CARMEN VIRZI VALLARINO
- SECRETARIO: ELVIRA MARIA VIRZI VALLARINO
These five corporations were created by LCDA. DORA STANZIOLA DE CHEVALIER indicating that a new "cash" deal is pending for these and possibly other units.
Apart from the Spanish Merchbanc purchasers and the bulk purchases arranged through the four lawfirms above there are a few, very few, normal buyers in this high-rise. In fact there are only three units that were sold to private individuals holding Panamanian permanent residency cards, two natives and one foreigner.
Eleven units were sold to Panamanian corporations using a variety of lawfirms with and without nominee directors. Ten of these were cash deals.
There were also seven private cash buyers and eight private buyers that required a loan to complete their purchases.
This project has had 15 % normal sales completed since its inception in 2006/2007. The rest represents bulk deals with people associated with Merchbanc in Spain and four lawfirms in Panama creating anonymous holding vehicles for unknown owners. The project remains over 50 % unsold.
It is hard to reach any conclusion but that substantial amount of money laundering is taking place.
This project should be seized by Panamanian authorities and the origin of the funds for each unit and the construction investigated to the fullest extent possible.
End of quote. That last paragraph seems a bit optimistic given the warm relationship between Btesh & Virzi and Ricardo Martinelli: Gabriel Btesh was part of the party that accompanied Martinelli to an upscale resort on Sardinia for a free vacation that the Italian prosecutors consider a bribe.