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Former Bank CEO Gets 112 Months in Prison After $24.9 Million Fraud Scheme

A former bank CEO has been sentenced to more than nine years in federal prison after admitting his role in a multimillion-dollar fraud scheme that prosecutors say helped lead to the failure of a Puerto Rico-based bank.

Tomás Niembro Concha, 64, the former CEO of Nodus International Bank, was sentenced to 112 months in prison and three years of supervised release, according to the U.S. Department of Justice. He was also ordered to forfeit more than $16.9 million, representing proceeds he derived from the wire fraud conspiracy.

Niembro, a Spanish and Venezuelan national, pleaded guilty on March 19 to conspiracy to commit wire fraud and conspiracy to violate the International Emergency Economic Powers Act.

Federal prosecutors said Niembro led a scheme to fraudulently obtain at least $24.9 million from Nodus Bank while also participating in a separate conspiracy to evade U.S. sanctions involving Venezuela.

Prosecutors Say Millions Were Siphoned From the Bank

According to court filings summarized by the Justice Department, Niembro conspired with Nodus Bank Board Chairman Juan Ramirez and others to siphon money from the institution.

Prosecutors said the conspirators concealed from other board members, bank executives and the Office of the Commissioner of Financial Institutions of Puerto Rico that certain loans and investments benefited Niembro and Ramirez personally.

From 2017 through 2023, Niembro, Ramirez and others caused Nodus Bank to invest $11 million in a Miami-based lender, according to the Justice Department. Prosecutors said the money was then loaned to Niembro and Ramirez for their own benefit.

The government described those investments as “sham investments” used to conceal the conduct.

The alleged self-dealing continued through another series of transactions involving a company the two men jointly owned.

Bank Bought 47 Promissory Notes Worth About $25.3 Million

Between January 2018 and September 2021, prosecutors said Niembro and Ramirez fraudulently induced the bank’s board and comptroller to purchase at least 47 promissory notes from Nodus Finance.

The notes totaled approximately $25.3 million.

Nodus Finance was a Miami-based business jointly owned by Niembro and Ramirez, and the Justice Department said the men used proceeds from those transactions for themselves.

The situation came to a head in March 2023, when Puerto Rico’s Office of the Commissioner of Financial Institutions notified Nodus Bank that the institution would be placed into liquidation.

According to the Justice Department, Niembro and Ramirez then fraudulently caused Nodus Bank to accept a loan portfolio from Nodus Finance to pay down debt associated with the 47 promissory notes.

Federal prosecutors said the broader fraud ultimately contributed to Nodus Bank’s failure in 2023.

A Separate Scheme Involved U.S. Sanctions on Venezuela

Niembro’s criminal case also involved a separate sanctions-evasion conspiracy.

Between 2021 and 2023, prosecutors said Niembro conspired to conduct prohibited financial transactions with an individual who had been designated a Specially Designated National, or SDN, by the U.S. Treasury Department’s Office of Foreign Assets Control.

The individual had been sanctioned for providing material support to Venezuela’s state-owned oil company, Petróleos de Venezuela, S.A., commonly known as PDVSA.

According to the Justice Department, a company associated with the sanctioned individual had an outstanding loan of approximately $2.5 million with Nodus Bank that predated the sanctions.

Niembro obtained authorization from OFAC for Nodus Bank to foreclose on the sanctioned individual’s home in Southampton, New York, to help satisfy that loan.

But prosecutors said another agreement was happening behind the scenes.

Prosecutors Say a $4 Million Private Deal Violated Sanctions

According to the Justice Department, Niembro and the sanctioned individual separately arranged for Nodus Bank to sell the Southampton property back to the individual through a front company for $4 million.

That private transaction wasn’t authorized by OFAC and was prohibited under U.S. sanctions, prosecutors said.

“The defendant abused his position with Nodus Bank to commit fraud for his own enrichment and to willfully evade sanctions on a designated individual,” Assistant Attorney General A. Tysen Duva of the Justice Department’s Criminal Division said in announcing the sentence.

Duva said the case demonstrated the importance of holding financial-system “gatekeepers” accountable when they use their positions to facilitate crimes.

The sanctions conspiracy resulted in Niembro’s guilty plea to conspiracy to violate the International Emergency Economic Powers Act.

Niembro Must Forfeit More Than $16.9 Million

In addition to serving 112 months in federal prison, Niembro was ordered to forfeit more than $16.9 million.

The Justice Department said that amount represents the value of proceeds Niembro personally derived from the wire fraud conspiracy.

IRS Criminal Investigation investigated the case with assistance from the Office of the Commissioner of Financial Institutions of Puerto Rico and the Treasury Executive Office for Asset Forfeiture.

The case was prosecuted by the Justice Department’s Criminal Division and the U.S. Attorney’s Office for the Southern District of Florida.

For consumers, the case offers a dramatic example of why financial institutions are subject to both internal controls and outside regulatory oversight. Bank customers generally won’t see the decisions happening inside a boardroom, but regulators and law enforcement agencies can investigate when executives are suspected of using an institution’s money for their own benefit or conducting prohibited transactions.

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