SEC Sues Top Execs at First BanCorp

MANHATTAN (CN) - First BanCorp's leaders lied to the company's independent auditor about $4 billion worth of mortgage-related transactions so the bank could "earn" an extra $100 million, and then falsified and backdated documents, the SEC claims in Federal Court.

The SEC sued First Bancorp's former CEO Angel Alvarez-Perz, 60; and former CFO and executive vice president Annie Astor-Carbonell, 50, both of Puerto Rico.

"Alvarez and Astor concealed the true nature of over $4 billion worth of mortgage-related transactions from the company's independent auditor and the investing public between 2000 and 2005," the complaint states. "First BanCorp, which purportedly purchased the mortgages, profited from these transactions by earning over $100 million in net interest income with minimal risk. The contra-party to the transactions, Doral Financial Corporation, which purportedly sold the mortgages to First BanCorp, improperly recognized income on these transactions during the relevant period. Alvarez also created and backdated certain documents and affirmatively misrepresented the terms of certain mortgage-related transactions to the company's independent auditor to avoid a restatement in November 2004."

Alvarez, CEO and chairman of the board during the relevant time, resigned in late 2005. So did Astor.

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