Cordova, et al. v. Lehman Brothers, Inc., et al. 05-CV-21169-Second ...

UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF FLORIDA

CASE NO . : 05-21169 -CIV-MOORE

MARCELA CORDOVA, JORGE FLORES,HENRY IURMAN, MARCOS MUSTIELES,and KATIA OCAMPO, individually and onbehalf of all others similarly situated ,

Plaintiffs ,

vs .

LEHMAN BROTHERS, INC ., a New YorkCorporation; MERRILL LYNCH & CO ., INC.,a Delaware Corporation ; RAYMOND JAMESFINANCIAL SERVICES, INC :, a FloridaCorporation ; OLIVA INVESTMENT GROUP,INC., a Florida Corporation; SUNTRUSTBANKS, INC ., a Georgia corporation, HSBCBank, U.S .A., Luis Cornide , and Robert A. de

la Riva,

Defendants .

SECOND AMENDED CLASS ACTION COMPLAINT

Plaintiffs, Marcela Cordova, Jorge Flores, Henry Iurman, Marcos Mustieles and Kati a

Ocampo, individually and on behalf of all others similarly situated, by their undersigned

attorneys, bring this action against Defendants Lehman Brothers, Inc . ("Lehman Brothers") ;

Merrill Lynch & Co ., Inc. ("Merrill Lynch") ; Raymond James Financial Services, Inc .-

("Raymond James") ; Oliva Investment Group, Inc . ("OIG") ; SunTrust Banks, Inc. ("SunTrust")

and HSBC Bank, U .S .A. ("HSBC") (referred to collectively - as "the Financial Institution

Defendants"), Luis Cornide ("Cornide") and Robert A . de la Riva ("de la Riva"), individually,

Second Amended Class Action Complaint 1

Kozyal< Tropin & Throclanorton, P .A .

2525 Ponce de Leon, 9th Floor, Miami, Florida 331341 Phone 305 .372 .1800 I Fax 305 .372.35081 kttlaw.com

(the Financial Institution Defendants, Cornide and de la Riva are referred to collectively a s

"Defendants") and respectfully state as follows:

INTRODUCTION

1 . Plaintiffs bring this action against the Defendants for their violations of Section s

12, 17(a), and 22(a) of the Securities Act of 1933 (Securities Act"), 15 U.S .C. §§ 771, 77q(a), and

77v(a) ; and Sections 10(b) and 27 of the Securities Exchange Act of 1934 ("Exchange Act"), 15

U.S .C. §§ 78j(b) and 78aa , and violations of Section 12 and 156 of the Securities Act, 15 U.S .C .

§§ 77(1) and 77(o), in connection with the sale of unregistered securities and the fraudulent

scheme perpetrated by Defendants and Pension Fund of America, its affiliated entities and

principals ("PFA"), in de frauding thousands of PFA's investors out of at least $ 127 million .

2. On March 28, 2005, The United States Securities and Exchange Commission

exposed PFA's fraud. On that day, the SEC filed a Complaint for Injunctive and Other Relief,

and the Court entered a Temporary Restraining Order and other Emergency Relief . It was only

with the filing of the SEC's action that Plaintiffs and the Class became aware of PFA's fraud and

began to uncover Defendants' roles in perpetrating an investment fraud .

PARTIES

3 . Plaintiff Marcela Cordova is a Bolivian citizen who purchased two Liberty Plu s

Trust retirement plans from PFA, one with Raymond James as the trustee and the other wit h

Merrill Lynch as trustee . Ms. Cordova has continued to hold her investments in PFA to date .

4. Plaintiff Jorge Flores is a Bolivian citizen who purchased a Liberty Trus t

retirement plan from PFA, with HSBC as the trustee. Mr. Flores has continued to hold his

investment in PFA to date .


Kozyak Tropin & Throckmorton, P.A ,

2525 Ponce de 1 eon, 9th Floor, Miami, Florida-33134 I Phone 305 :3721800 1 Fax 305 .372 .3508 1 kttlaw.com

5 . Plaintiff Henry Iurman is a Venezuelan citizen who invested approximatel y

$6,500 the Liberty Trust retirement plan issued and managed by PFA, and has continued to hold

his investment with PFA to date .

6. Plaintiff Marcos Mustieles is a Venezuelan citizen who invested approximatel y

$60,000 in a Capital Trust retirement plan issued and managed by PFA, with Lehman Brother s

serving as trustee and/or custodian . Mr. Mustieles has continued to hold his investment wit h

PFA to date .

7 . Plaintiff Katia Ocampo is a Bolivian citizen who purchased a Capital Trust

retirement plan issued and managed by PFA, with Defendant SunTrust serving as trustee and/o r

custodian . This plan was later transferred into the trust of HSBC sometime in 2003 or 2004 . Ms .

Ocampo has continued to hold her investment with PFA to date .

8 . Defendant Lehman Brothers is a national banking institution that is incorporate d

in New York and has its principal place of business in New York, New York. Lehman Brothers

is registered to do business in Florida with offices in Miami-Dade County .

9. Defendant Merrill Lynch is a national financial management and advisory

company that is incorporated in Delaware and has its principal place of business in New York,

New York. Merrill Lynch is registered to do business in Florida with offices in Miami-Dad e

County .

10 . Defendant Raymond James is a Florida corporation with its principal place of

business in St . Petersburg, Florida and offices in Miami-Dade County .

11 . Defendant OIG is a Florida Corporation, with principal place of business at 255

Alhambra Circle, Suite 680 Coral Gables, Florida 33134 . At all times material hereto, OIG has


Kozyak Tropin & Tbrockmorton, P.A.

2525 Ponce de Leon, 9th Floor Miami, Florida 331341 Phone 305 .372 .1800 I Tax 305 .372 .35081 kttlaw.com

served as the agent and representative of Raymond James and served as the principal agent fo r

communications between Raymond James and PFA, its principals, agents and investors .

12. Defendant SunTrust is a national banking institution that is incorporated i n

Georgia with its principal place of business in Atlanta, Georgia. SunTrust Bank is registered to

do business in Florida with branches in Miami -Dade County .

13. Defendant HSBC is a national banking institution with its principal place o f

business in Buffalo, New York, and at all times material to this action was registered to do

business in Florida with offices in Miami-Dade County . Defendants identified in paragraphs 8-

13 are sometimes referred to collectively as the "Financial Institution Defendants ."

14. Defendant Luis Cornide was a principal and insider of PFA who held the title o f

President of Pension Fund, PFA Assurance and Secretary of PFA International . Beginning in

1997 and continuing until 2005, Luis Cornide drafted , wrote , reviewed, revised and/or caused to

be published the promotional and offering materials that PFA and its sales agents presented to

Plaintiffs, including but not limited to informational brochures, sales agent information, and the

application form ("PFA investment contract") which PFA used to solicit Plaintiffs' investment .

At all times material hereto, Mr . Cornide exercised control over PFA's general affairs, including

the content of public statements disseminated by the company. At all times material to thi s

action, Cornide was a resident of Miami-Dade County, Florida.

15 . Defendant Robert de la Riva was a principal and insider of PFA who held the

title of Senior Vice-President of Pension Fund, Director of PFA Assurance and Secretary of PF A

International . Beginning in 1997 and continuing until 2005, Robert A . de la Riva drafted, wrote ,

reviewed, revised and/or caused to be published the promotional and offering materials that PFA

Second. Amended Class Action Complaint 4

Kozyak T-opin & Throckrnorton . P .A .

2525 Ponce de Leon, 9th Floor, Miami, Florida 331341 Phone 305 .372 .18001Fax 305 .372.3508 1 kttlawcom

and its sales agents presented to Plaintiffs, including but not limited to informational brochures,

sales agent information, and the application form ("PFA investment contract") which PFA used

to solicit Plaintiffs' investment . At all times material hereto, Mr. de la Riva exercised control

over PFA's general affairs, including the content of public statements disseminated by the

company. At all times material to this action, de la Riva was a resident of Miami-Dade County,

Florida.

JURISDICTION AND VENUE

16 . This Court has jurisdiction over this action pursuant to Sections 12, 17(a), and

22(a) of the Securities Act of 1933 (Securities Act"), 15 U .S.C. §§ 771, 77q(a), and 77v(a) ; and

Sections 10(b) and 27 of the Securities Exchange Act of 1 934 ("Exchange Act"), 15 U .S .C . §§

78j(b) and 78aa.

17. This Court has personal jurisdiction over the Defendants and venue is proper i n

the Southern District of Florida because : a) each Financial Institution Defendant has offices in

Miami-Dade County and is registered to do business and is doing business in this district ; b) each

individual defendant resided and was employed by PFA in this district, and ; c) virtually all of the

Defendants' wrongful conduct occurred in the Southern District of Florida .

18 . Venue is also proper in this district pursuant to 28 U .S .C. §1391(c) because a

substantial part of the events, misrepresentations and omissions giving rise to Plaintiffs' claims

occurred in and/or originated from the Southern District of Florida and, as set forth in the

preceding paragraph, Defendants are subject to personal jurisdiction in this district .

19 . Further, in connection with the acts and course of conduct alleged herein, the

Defendants, directly and indirectly, have made use of the means and instrumentalities o f


Kozyak Tropin & Throckmorton, P.A .

2525 Ponce de Leon, 9th Floor, Miami, Florida 33134 1 Phone 305 .372 .1800 1 Fax 305 .372 .3508 1 kttlaw.com

interstate commerce, and the mails, in connection with the acts, practices and courses of busines s

set forth in this Complaint.

PFA's Business Schem e

20. PFA was a Florida corporation with its principal place of business located in

Coral Gables, Florida. Since 1999, up to and until March 28, 2005, when the SEC filed its

enforcement action and obtained a temporary restraining order against PFA and Defendants

Cornide and de la Riva, PFA and the Financial Institution Defendants as co-sponsors of offerings

of unregistered securities, offered for sale what they claimed were retirement trusts to investors

throughout the world, principally in Latin America . During this time, upon information and

belief, PFA attracted $127 million through the sales of purported retirement plans t o

approximately 3,400 investors .

21 . PFA, and its affiliated entities and principals , were unregistered investment

advisers that operated in Coral Gables, Florida. With affiliated entities PFA International, Inc .

and Claren, TPA, and their principals Cornide and de la Riva, PFA and the Financial Institution

Defendants successfully marketed investment securities by touting the safety of investing

through them with the Financial Institution Defendants serving as trustee, custodians and

fiduciaries of investor funds . PFA and the Financial Institution Defendants joint marketing ,

offering and promotional activities all originated from South Florida .

22. Through its network of sales agents and brokers, PFA offered two retirement trust

plans: a) the Liberty Trust, which is a monthly or annual contribution plan ; and b) the Capital

Trust, a one-time contribution plan . Approximately 85% of all investors choose the Liberty

Trust. The Liberty Trust required annual contributions of between $1,000 and $20,000 for ten t o



2525 Ponce de Leon, 9th Floor, Miami, Florida 33134 1 Phone 305 .372 .1800 1 Fax 305.372 .3508 1 kttlaw.com

fifteen years, and imposed significant early withdrawal penalties -- for example, 100% for the

first two years and declining thereafter for the entire term of the plan . The Capital Trust was a

ten-year plan that required a minimum one-time contribution of $10,000 . The investment

component of both plans provided investors with a choice of mutual funds offered by well-

known U.S. mutual fund companies, such as Fidelity, Legg Mason, Janus and Goldman Sachs .

The solicitation materials described an investment in mutual funds combined with a term lif e

insurance component, which purported to give investors a secure return on their investments .

PFA and the Financial Institution Defendants Jointly Marketed andWere Co-Sponsors of the PFA Offering and Promotional Materials

23 . PFA and the Financial Institution Defendants jointly marketed their relationship

to investors as an integral part of the PFA solicitation and promotional materials, describing the

role of the Financial Institution Defendants as providing the investor with the "safe handling" of

investor funds . The principal attraction of the PFA retirement trust was the promise that major

U.S . financial institutions, such as the Financial Institution Defendants, would be the custodians

and/or trustees of the investor funds and would be responsible for insuring safe handling of the

funds in accordance with the investor solicitation materials . . An integral part of PFA's busines s

plan was to represent to Plaintiffs the assurance of safety, to induce Plaintiffs' investment, by

highlighting the essential custodial role to be played by the Financial Institution Defendants . To

this end, PFA's original business plan stated that in order "to boost sales" PFA would "enter into

[custodial] agreements with large multi-national banks with strong recognition in Latin

America ." As stated by PFA's President, Cornide, in a letter dated June 17, 2003, PFA busines s


Kozyak Tropin & Thu-ockmorton, P.A .

2525 Ponce de Leon, 9th Floor, Miami, Florida 33134 1 Phone 305 .372 .1800 1 Fax 305 .372 .3508 1 kttlaw.eom

model was shared with Financial Institution Defendants from the very beginning of PFA's

operations .

24. Through solicitation materials distributed to each investor and co-sponsored by

the Financial Institution Defendants, Plaintiffs and the Class were assured that the Financia l

Institution Defendants , as trustees and/or custodians of their funds, would insure that the explicit

protections of the purportedly "secure" retirement trusts were fulfilled by PFA . The Defendant

Financial Institutions were aware that PFA was representing to Plaintiffs that the Financial

Institution Defendants would insure Plaintiffs ' retirement trusts funds were properly handled ,

segregated and managed .

25 . PFA's marketing and promotional materials , and the PFA investment contract ,

referred to Defendant SunTrust, Merrill Lynch, Lehman Brothers, Raymond James and HSBC as

"trustees," "trustee banks," "custodial banks," or "fiduciary banks ."

26. PFA and SunTrust jointly marketed their relationship to investors and described

the role of SunTrust as a "trustee for all participants of Pension Fund of America' s pension

plans." The investment contract required Plaintiffs to certify that the selected "mutual funds"

were presented "by SunTrust to me as an investment option available among other investment

options offered as part of SunTrust's Comprehensive Management and Trust Services ." The

investment contract provided that "payment should be made directly to SunTrust ." Plaintiffs

were provided with wire transfer information in order to effectuate direct payment to SunTrust .

The same investment contract called for SunTrust's signature as indicating "acceptance by th e

Bank Trustee." Finally, the investment contract provided that Plaintiff was instructing the



2525 Ponce de Leon, 9th Floor, Miami, Florida 33134 1 Phone 305.372 .1800 1 Fax 305 .372 .3508 1 kttlaw.com

fiduciary bank "to acquire participation [in designated mutual funds] in accordance with the

terms of this contract ."

27 . PFA and Lehman Brothers jointly marketed their relationship to investors an d

described the role of Lehman Brothers, Inc ., as being the "trustee bank". The investment

contract instructed Plaintiffs that "payment should be made directly to Lehman Brothers ." The

investment contract provided wire transfer information for Lehman's account at Chas e

Manhattan Bank in New York City, in order to allow Plaintiffs to entrust their funds directly t o

Lehman. The investment contract further called for signature by Lehman Brothers signaling th e

"acceptance by the Bank Trustee ." Finally, the investment contract provided that the investor s

were instructing Lehman "to acquire participation [in designated mutual funds] in accordance

with the terms of this contract." In related offering and promotional materials , investors were

promised that "if you invest with Pension Fund of America you will have the peace of mind of

knowing that your money is invested in companies like Lehman Brothers . . . which enjoy great

liquidity, stability and extensive experience since 1869, and is recognized as one of the majo r

financial institutions in the United States . "

28 . PFA and Merrill Lynch jointly marketed their relationship to investors and

described the role of Merrill Lynch as being the "custodian of the program ." Related offering

and promotional materials described the PFA investment with Merrill Lynch as "guaranteed b y

Merrill Lynch." In solicitation materials distributed to 'investors with Merrill Lynch's log o

embossed across the top, investors were promised "100% guarantee of capital by Merrill Lynch . "

In these solicitation materials, investors also were promised "guaranteed returns" ranging fro m

121 .6% to 125% of invested principal .


Kozyak Tropin & Thrackmorton, P .A .


29, PFA and Raymond James jointly marketed their relationship to investors an d

described the role of Raymond James as being the "sole custodian of the program ." The

investment contract represented to Plaintiffs that their "investment payment should be made

directly to Raymond James ." Related offering and promotional materials refer to Raymon d

James as the "custodian bank" and "guaranteed investors protections against losses" an d

"guaranteed a minimum return after 15 years of 120% of capital ."

30 . PFA and HSBC jointly marketed their relationship to investors and described th e

role of HSBC as being PFA's investor's "trustee bank ." In related offering and promotional

materials, PFA and HSBC promised PFA investors "total safety because the money deposits are

received directly by HSBC Bank USA." Investors were told that "payments should be made

directly to HSBC Bank USA." Investors were promised that "your money will be in the best of

hands : HSBC Bank USA ." PFA and HSBC represented to investors that "PFA and HSBC Bank

USA had created the Liberty Plan Trust ." PFA and HSBC' s joint promotional materials

promised Plaintiffs the "your investment will be protected" because "HSBC Bank USA is the

fiduciary bank for the Liberty Plan Trust ." The offering and promotional materials provided to

investors referred to the PFA Trust repeatedly as "products of PFA and HSBC Bank USA ." The

PFA and HSBC joint offering materials even represented to Plaintiffs that the PFA retirement

trusts were regulated by the Securities and Exchange Commission and the Florida Office o f

Financial Regulation . The investment contract instructed Plaintiffs to "make payments directl y

to HSBC Bank USA."

31 . PFA solicitation and marketing materials were co-authored, edited, reviewe d

and/or approved by SunTrust, Lehman Brothers, Merrill Lynch, Raymond James and HSBC and

Second Amended Class Action Complaint 1 0

Kozyalc Tropin & Throckmorton, P.A .


were designed by PFA and the Financial Institution Defendants to attract investors by lulling

them into a false sense of security .

32. PFA solicitation and marketing materials were used on a continuous basis

beginning in 1999 through 2005 to solicit new investor funds. The joint solicitation of investor s

was a continuing offering .

33 . PFA investors, including Plaintiffs and the Class, relied on the specifi c

representations in the PFA offering and solicitation materials , particularly those related to th e

essential role to be played by the Financial Institution Defendants in safeguarding thei r

investments.

PFA's Fraud

34. Unbeknownst to Plaintiffs and the Class, the money invested through PFA wa s

diverted and dissipated through a massive fraud perpetrated by PFA, with the knowledge and

participation of the Financial Institution Defendants .

35. Despite making affirmative representations to the contrary, each Financia l

Institution Defendant improperly pooled investor funds in accounts, thus failing to segregat e

each individual retirement trust established by the Class members .

36 . Despite making affirmative representations to the contrary, each Financia l

Institution Defendants allowed PFA to exert complete control over the investor funds entruste d

to each Financial Institution Defendant .

37 . By structuring the PFA account(s) in a manner directly contrary to the

representations made to investors, the Financial Institution Defendants oversaw the diversion o f

millions of dollars of investor funds to non-investment purposes . The Financial Institutio n


I -- ----- ----_----- ----.ICozyak Tropin & Throckmorton, RA .

2525 Ponce de Leon, 9th Floor, Miami , Florida 33134 1 Phone 305 .372 .1800 1 Fax 305 .372 .3508 1 kttlaw.com.1

Defendants failed to disclose to investors that PFA's insiders were siphoning as much as 9 0

percent, and sometimes 100 percent, of investor funds for non-investment purposes . For

example, PFA's principals, Cornide and de la Riva, used the investors' funds to pay themselve s

exorbitant salaries and bonuses, and buy millions of dollars of real estate in Coral Gables and th e

Florida Keys . From 1999 to March 28, 2005, unbeknownst to investors, Cornide and de la Riva

received payments from PFA totaling $15 million - 35% of the $43 million in revenue th e

companies reported for the same period .

38 . With the Financial Institution Defendants knowledge, PFA charged excessive

front-load fees on the mutual fund component of the retirement trusts and failed to disclose to

investors the full extent of other fees being charged or collected . For example, the Financial

Institution Defendants knew PFA regularly charged some investors average fees and costs of

80% on first-year contributions, placing only a small fraction of investor funds in the designated

mutual funds . In other cases, PFA placed none of the investor contributions into their designated

mutual funds, instead using 100% of investors' funds to pay commissions, fees, costs or wa s

otherwise diverted by PFA .

39. In order to conceal the fraud, PFA, with the knowledge of Lehman, Merril l

Lynch, Raymond James, OIG and HSBC, and SunTrust directly, sent investors fraudulen t

account statements, which misrepresented the status and balance of investor retirement trus t

balances . Annual statements indicated an investor's "final balance" or "total contribution ;" these

figures only reflected the total initial investment, failing to disclose the significant amount s

diverted by PFA and the much lower amounts actually used to purchase mutual funds . The

annual statements and certificates delivered to investors, vastly overstated the actual amount o f


Kozyak Tropin & Throck norton, P.A .

2525 Ponce de Leon, 9th Floor, Miami, Florida 33134 1 Phone 305 .372 .1800 1 Fax 305 .372 .3508 1 kttlaw,com

investor holdings . Nevertheless, the Financial Institution Defendants continued to permit PFA t o

use their names, logos and corporate reputations to market and solicit investments .

The Defendants Financial Institutions' Across-The-BoardFraudulent Omissions and Misrepresentations

40 . Each Financial Institution Defendant expressly undertook a fiduciary duty to

Plaintiffs and members of the class . Each Financial Institution Defendant had a duty to disclos e

material facts relative to their investments with PFA . Each Financial Institution Defendant mad e

false representations of material fact to Plaintiffs and members of the class of investors and

omitted to disclose material facts to Plaintiffs and members of the class of investors . At all

relevant times Defendants committed these acts knowingly or acted with severe recklessness .

41 . The investment contracts offered by PFA, described herein, and co-sponsored by

the Financial Institution Defendants , are securities not exempt from the registration requirements

set forth under Section 5 of the Securities Act of 1933 ; 15 U.S.C. § 77e . Neither PFA nor the

Financial. Institution Defendants registered the securities they jointly marketed and sold to

investors. Defendants had actual knowledge that the securities at issue were required to be

registered , failed to disclose this fact to investors , and solicited investors to purchase

unregistered securities notwithstanding the lack of compliance with federal and state registration

requirements .

42 . PFA also was required by law to be a registered broker-dealer and was not

otherwise exempt from registration . In addition, PFA was required by law to be a registered

investment advisor and was not otherwise exempt from registration. PFA failed to properly

register as a broker-dealer or as an investment advisor . The Financial Institution Defendants ha d


Kozyak Tropin & Throckmorton, .P.A .


knowledge that PFA was required to register as a broker-dealer and investment advisor, kne w

that PFA had failed to so register, but failed to disclose to investors, who were unaware of U .S.

registration requirements, that PFA was operating illegally in violation of federal and state law .

43. After receiving investor funds, each Financial Institution Defendant pooled th e

monies into one account over which PFA exerted complete control . The manner in which each

Financial Institution Defendant structured and administered the account into which PFA investo r

funds were deposited was in direct contravention to the representations made to Plaintiffs that the

funds would be individually invested in accordance with investor instructions . Each. Financial

Institution Defendant knew that its account structure and administration was contrary to what

had been promised to PFA's investors ,

44. After receiving investor funds, each Financial Institution Defendant allowed PF A

to exercise complete control over investor funds and direct the investment of the pooled funds .

None of the Financial Institution Defendants disclosed to PFA's investors that they were no t

investing the monies they received from investors in their stated capacity as "Custodian, "

"Trustee" or "Fiduciary" Bank in the manner instructed by each investor. Each Financial

Institution Defendant knew that their failure to disclose that they were taking sole investment

instructions from PFA was a material omission in what had been represented to PFA investors

and was contrary to the promise made to investors that the funds entrusted to the Financial

Institution Defendants would be invested in the designated mutual funds as instructed by eac h

investor .

45. After receiving investor funds, PFA and each Financial Institution Defendant

charged excessive front-load fees on the mutual fund components of the retirement trusts . None


Kozyak Tropin & Throclanorton, P.A .


of the Financial Institution Defendants disclosed these excessive fees to PFA's investors . Each

Financial Institution Defendant knew that the fees being charged were excessive and that th e

failure to disclose these charges was a material omission in PFA's offering and promotiona l

materials .

46 . After receiving investor funds, PFA arbitrarily decided whether and when to buy

the term life component of the retirement trust . Each Financial Institution knew that the investor

funds in their possession were not being used to purchase the promised life insurance contracts .

Each Financial Institution knew that the failure to purchase the term life insurance coverage

which had been promised to PFA investors with the investor monies entrusted to them was

contrary to what had been promised to PFA's investors in the joint offering and solicitation

materials .

47. After receiving investor fiends, each Financial Institution Defendant, except

SunTrust, allowed PFA to send investors fraudulent account statements which misrepresente d

the status of investor balances . The annual statements, which bore the logo and name of each

Financial Institution Defendant, except SunTrust or OIG, indicated an investors' "final balance"

or "total contribution" ; the disclosed amounts only reflected the total initial investment, failing to

disclose the much lower amount actually still on deposit with the Financial Institution Defendant .

By not disclosing the huge amounts of deducted commissions, fees and costs, and diverted funds,

the annual statements mailed to investors misrepresented the actual amount of investor holdings .

Each Financial Institution Defendant knew that the failure to disclose the much lower balances

they were actually holding was a material omission intended to disguise PFA's diversion of

investor funds, lull investors into holding their investments and, in the case of Liberty Plan Trus t


Kozyak Trohin & Throckmcrton, P .A .


investors, induce investors into making annual "investment renewal" contributions in "Trust "

with the Financial Institution Defendant . In the case of SunTrust, the fal se and misleading

account statements, containing the same omissions noted above, were sent directly by SunTrust .

48 . The Financial Institution Defendants' uniform failure to disclose to investors th e

facts set forth above, constitutes material omissions of fact and/or misrepresentations in

connection with the purchase and sale of securities under federal securities laws .

The Role of SunTrust

49 . SunTrust was the first financial institution to co-sponsor PFA offering and

promotional materials and to promise investors the safe handling of entrusted funds. In fact,

SunTrust played an integral role in the formation of PFA and the development of its business

plan. Ary Velasco, Vice-President and Business Development Officer for SunTrust, was a

childhood friend of Luis Cornide . As early as September 15, 1997, Mr . Velasco met with

Cornide to discuss creating "domestic trusts for foreign grantors ." During meetings through th e

late Spring and Summer of 1999 (5/13, 6/4, 6/11, 7/2, 7/9, 7/10, 7/17 and 7/31), SunTrust me t

with Defendants Cornide and de la Riva to formulate PFA's business plan and initial offering

and promotional materials . SunTrust officials, Ary Velasco and Oscar Suris, offered direct inpu t

and helped formulate PFA's initial offering and promotional materials . SunTrust's lawyers at

Baker McKenzie and Steel Hector were also consulted by SunTrust regarding PFA's offering

and solicitation documents and business plan .

50. Even before PFA began operations, in July 1999, SunTrust officers Ary Velasc o

and Oscar Suris reviewed and helped select the mutual funds to be offered by PFA .


Kozyak Tropin 3z. Throckinorton, P.A .

2525 Ponce de Leon, 9th Floor, Miami, Florida 33134 1 Phone 305 .372.1800 I Fax 305 .372 .3508 1 kttlaw.com

51, In internal memorandum dated September 10, 1999, Ary Velasco acknowledged

that PFA would be offering investors the assurance that SunTrust would "act as Trustee for the

individual non-resident Latin American clients" of PFA .

52 . Even before PFA began operations, in a September 14, 1999 memo SunTrust' s

Trust Department advised Mr. Velasco that the relationship proposed to be offered by SunTrust

and PFA needed to be reviewed by the Bank's Fiduciary Oversight Committee to address

"banking/insurance/fiduciary questions ." SunTrust never disclosed to PFA investors that this

required compliance review of the promised "fiduciary" or "trustee" relationship with individual

PFA investors never was secured .

53. The SunTrust Account Opening Form for PFA, dated September 22, 1999, reveal s

that SunTrust and PFA as co -sponsors of this new investment product were sharing on a 50/5 0

basis an "institutional fee" equal to 50 basis points to be paid by the mutual fund clients selecte d

to part icipate in the PFA program . SunTrust and PFA never disclosed this fee kickback to PF A

investors .

54. On September 30, 1999, Ary Velasco received and reviewed the initial PFA

investment contract to be sent to investors containing the various representations and promises

about SunTrust's role in securing the safe-handling of investor funds .

55 . In solicitation materials reviewed and approved by SunTrust, investors were tol d

that their funds would be held in segregated accounts "in Trust" by SuriTrust . Contrary to these

representations , investor funds deposited with SunTrust were commingled in accounts titled i n

the name of PFA and under the control of PFA's insiders . SunTrust's failure to maintain

segregated investor accounts "in Trust" for the investors provided PFA's insiders unfettere d


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control over the diversion of investor funds . This structure was in direct contradiction with

SunTrust's representations to PFA investors concerning its role as trustee and its assurances to

investors in solicitation materials that SunTrust would act to secure the funds' safekeeping .

SunTrust failed to disclose to investors that their funds were being maintained in commingled

accounts under the direction and control of PFA's insiders .

56. SunTrust further offered investors the option of placing their money in mutua l

funds managed directly by SunTrust, such as "SunTrust Capital Appreciation Fund" or

"SunTrust Tax Sensitive Fund", as the investment component of the PFA investment Trust,

thereby solidifying SunTrust's role as the investment promoter and co-sponsor and further

permitting SunTrust to earn additional fees .

57. PFA's investment trusts were marketed as providing both an investment and

insurance component . Pursuant to individual Trust Agreements entered into directly with

investors, SunTrust undertook a duty to, inter alia : "(1) retain as assets all mutual fund shares,

insurance contracts, annuity contracts, if any, purchased for the benefit of the Beneficiary at the

direction of the Grantor [investor], (2) pay all premiums on insurance policies . . . . and (3) provide

investors 120 day written notice before resigning as the Trustee of their funds," In application

forms received by investors, investors were told that "The Trustee bank is the owner &

beneficiary of the policy so you must mark (section 3 .2) which trustee bank will be used for the

client's plan ." Investor application forms contained an application for insurance through PFA

Assurance or "Cayman General Insurance Co . Ltd." Through these solicitation materials,

application forms, and relationship with PFA, SunTrust had actual knowledge that investor funds

would be used to purchase insurance policies for the benefit of the investor . Despite this


Kozyak Tropin & ThrockmoiTton, P.A .

2525 Ponce de Leon, 9th Floor, Miami , Florida 33134 1 Phone 305 .372 .1800 1 Fax 305 .372.3508 1 kttlaw.com

knowledge, and its representations to investors that it would retain all insurance contracts and

pay all premiums, SunTrust knew that none of the investor funds deposited in SunTrust' s

accounts were ever used to purchase insurance directly from insurance companies . SunTrust also

knew that it never took possession of any insurance contracts, nor did it pay insurance premium s

as set forth in its agreement . Notwithstanding this knowledge, SunTrust continued to jointl y

solicit investors with PFA while intentionally failing to disclose any of the foregoing facts .

58 . In addition to its role as Trustee, SunTrust became a co-sponsor of th e

unregistered securities marketed and sold by PFA and its agents and perpetrated a fraud by

knowingly allowing its corporate name, corporate logos, and . - most importantly - its corporate

reputation, to be utilized in marketing and solicitation materials which contained fals e

representations, omissions and provided false assurances to investors regarding the safety of thei r

investment.

59. As soon as the investor funds began to roll in, SunTrust learned that PFA was

indiscriminately diverting investor funds contrary to promises made to investors. In November

of 1999, Robert de la Riva faxed Ary Velasco a page from a PFA Sales Manual which promised

Liberty Plan Participants that a minimum of 30% of their first year contribution would g o

directly into the designated mutual funds. Yet, throughout November 1999, SunTrust wa s

receiving from PFA regular "Pension Plan Deposit Instructions", indicating the diversion by

PFA of 80% or more of the funds entrusted to SunTrust by investors . With each "Pension Plan

Deposit Instruction" received by PFA, SunTrust acquired direct knowledge that the

representations made to Plaintiffs were being breached by PFA with SunTrust's full knowledge

and assistance .


_ I(_ozyak TropiD & Throckmorton, P.A .

2525 Ponce de Leon, 9th Floor , Miami, Florida 33134 1 Phone 305 . 372 .1800 1 Fax 305.372 .3508 1 kttlaw,com

60. In November 24, 1999, a SunTrust account officer (believed to be Odalys de Oso )

acknowledged in a handwritten memo that the Master Custodial Agreement executed by PFA

and SunTrust was inconsistent with the separate Trust Agreements SunTrust had executed with

individual PFA investors . The Master Custodial Agreement referred to PFA as the grantor of

deposited funds, whereas the Trust Agreements were entered into with the individual

investors/grantors . This fundamental inconsistency, which allowed PFA to exert direct control

and divert investor funds on deposit at SuziTrust, was known to SunTrust ; however, the PFA

account officer memorialized that she was told by senior SunTrust officer, Oscar Suris : "do not

worry about this now ."

61 . The same November 24, 1999 memorandum directly questioned whether th e

Trust Agreements signed by the individual PFA investors should disclose the fact that investo r

funds were being deposited in an account controlled and titled in PFA's name . Again, SunTrust

senior officer, Oscar Suris, instructed that this fact not be disclosed to individual investors .

62. Finally the November 24, 1999 memorandum reveals (1) that SunTrust knew tha t

PFA investors were being charged undisclosed bank fees, even though PFA was supposed to b e

paying them and (2) that SunTrust was forwarding to PFA, for response, direct investo r

communications and instructions directed to SunTrust by PFA investors pursuant to the terms o f

the individual Trust Agreements .

63 . Despite the early knowledge that it was acting contrary to representations made t o

PFA investors, SunTrust continued to commingle investor fiords, title them in PFA's name and

allowed PFA to divert substantial amounts of investor funds .


. .. .Kozyak Tropin & Throckmortol

'

i

'

P.A .


64. In April 2000, SunTrust's lawyers upon review of PFA's revised offering and

promotional materials advised Ary Velasco that "the up front penalty on revocation" being

charged to PFA investors were "steep ". Yet, SunTrust, approved and authorized PFA to utilize

and continue to mislead investors about the magnitude and severity of fees and charges bein g

deducted from their investment .

65. Throughout the period 1999 through 2001, SunTrust issued numerous certificates

and statements directly to investors under the SunTrust logo and seal, and signed by SunTrus t

bank officer Odalys del Oso, which knowingly misrepresented the balances held by Suntrust "in

Trust" for the investors, thereby concealing from investors the fact that up to 90% of their

principal investment had been looted by PFA's insiders .

66 . SunTrust also sent false and misleading information to investors vouching for the

character of PFA's insiders and the safety of PFA's investments . For example, on or about May

1, 2000, SunTrust, through its Vice-President, Ary C . Velasco ("Velasco"), authored a letter

addressed : "To whom it may concern." The letter was written on Sun Trust's letter head,

contained the SunTrust logo and a return address for SunTrust Bank, Miami, N .A. at SunTrust's

Brickell Avenue, Miami headquarters . SunTrust knew the letter would be widely distributed to

investors and prospective investors by PFA .

67. In the letter, Velasco states that he and PFA insider Cornide have been "persona l

friends for over twenty years ." Velasco continues by stating that Cornide and de la Riv a

"discussed with me their vision for the firm ." Velasco touts Sun Trust's relationship with PFA ,

vouches for the integrity and soundness of PFA's business as having a "solid foundation for long




term investors" and invites investors to call Sun Trust should they have any questions o r

concerns about PFA :

Today, as Trustee for the Personal Retirement Trust and theEducational Trust, SunTrust enjoys an excellent relationship withPension Fund of America, a relationship that continues to grow . Asone of the world's largest and strongest financial institutions,SunTrust provides a solid foundation for long-term investorsseeking to prepare for their retirement or assure the education oftheir children through the plans provided by Pension Fund ofAmerica .

We are proud of our association with Pension Fund of America

and are honored to be trustee for your personal retirement and/or

educational trusts. Please feel free to contact us with any questions

or concerns .(emphasis supplied) .

68. The very next day after authorizing the glowing letter of recommendation o n

behalf of PFA, on the morning of May 2, 2000, SunTrust's Ary Velasco met with Cornide and d e

la Riva to review "concerns" SunTrust had with the investment agreement being sent to PF A

investors who selected the College Education Trust . PFA revised the document to attempt to

address SunTrust's "concerns"; yet Mr. Velasco's handwritten notes reflect that he knew the

investment agreement was "confusing" in parts and that SunTrust had lingering concerns

regarding the revocation penalties being charged to PFA investors . None of these concerns were

disclosed to PFA investors who had entrusted their funds to SunTrust. Nor did SunTrust attempt

to correct the PFA offering and promotional materials or Velasco ' s letter of recommendation ,

which were being used to solicit additional investments .

69. To make matters worse, in June 2000, Mr. Velasco personally traveled to Aruba -

at the request of PFA - to make a personal presentation and sales pitch at a PFA 's sales meeting .


Kozyak Tropin & Throcianorton, P.A .


At this event, Mr. Velasco again repeated SunTrust's complete confidence in PFA, assured the

sales force present that the investor funds were secured by SunTrust's direct involvement, and

failed to disclose any of the material misrepresentations and omissions regarding PFA's handling

of funds of which SunTrust was already aware . Mr. Velasco made these representations and

omissions knowing they would be widely disseminated to investors . SunTrust was a proud

sponsor of the PFA Aruba Conference and even paid for the "Welcome One Hour Cocktail and

Dinner Reception. "

70 . Through 2000 and 2001, SunTrust in letters authorized by Ary Velasco , continued

to vouch for PFA's business affairs and promise investors SunTrust ' s role in securing their

investments, knowing these letters of recommendation would be used to solicit new investors .

71 . In the fall of 2001, SunTrust filed suit against PFA in the Circuit Court of the

Eleventh Judicial Circuit in and For Miami Dade County, Florida, Case No . 01-20718 CA 08 . In

its Complaint, SunTrust claimed, contrary to earlier representations to investors, that "[f]rom

almost the beginning, SunTrust has advised PFA that it believed various provisions of the

Agreement and/or law were not being adhered to [by PFA] ." (emphasis supplied) . SunTrust

further stated in its lawsuit that it had not obtained required sub-accountings for investor funds

for periods in February 2000 through June, 2000, including a sub-accounting it had sought from

PFA for April 18, 2000-a scant twelve days before SunTrust authored the May 1, 2000, letter

touting the strength of its relationship with PFA and its role as personal Trustee over the

investors ' funds.

72. SunTrust also claimed in its lawsuit, but never disclosed to investors, that "PF A

lacked a sophisticated accounting system which it had represented to SunTrust it possessed . It


Kozyak Tropic* Throckrnorton, P.A .

2525 Ponce de Leon, 9th Floor, Miami, Florida 33134 1 Phone 305.372 .1800 1 Fax 305 .372 .3508 1 ktdaw.corn

was additionally apparent that this accounting system was not appropriate for the requirements o f

proper accounting of the individual trusts, including the capability of issuing annual statement s

and Fiduciary Tax Returns (1041) .'.'

73 . SunTrust also revealed in its lawsuit that "Annual statements to the beneficiaries

of each individual trust have not been provided in form and content consistent with Florid a

Statutes ." SunTrust also decided to exit the relationship with PFA as early as September 7, 2000,

and requested that a successor trustee be appointed .

74. At no time, however, did SunTrust disclose to its beneficiaries/investors that PFA

was in violation of its agreement or the law, PFA's accounting system was not appropriate for

the requirements of proper accounting of the individual trusts, that investor sub-accountings had

not been provided or performed, that SunTrust had abdicated its fiduciary responsibility by

relying on PFA's inadequate accounting system to provide such sub-accountings, that PFA was

incapable of producing such sub-accountings, or that it believed that PFA had misrepresented to

investors SunTrust's role as Trustee . SunTrust further failed to disclose that it had been secretl y

seeking to exit its relationship with PFA for well over a year .

75. Pursuant to representations made in agreements solicited directly with th e

investors, SunTrust was required to provide each investor with at least 120 days written notice

before resigning its duties as Trustee . Despite acknowledging a duty to disclose this information

to investors, SunTrust resigned as Trustee in 2001 without giving investors notice of its

resignation . SunTrust further failed to disclose to investors the illegalities, problems and

deficiencies with the investment trusts it had co-sponsored with PFA which SunTrust ha d


Kozyak Tropin & Throckrnorton, P.A .

2525 Ponce de Leon, 9th Floor, Miami, Florida 33134 1 Phone 305 .372.1800 1 Fax 305 .372 .3508 1 kttlaw.com

detailed in its lawsuit and which internal documents indicate SunTrust knew about beginning i n

November 1999 .

The Role of Lehman Brother s

76. Beginning on or about December 2000, Lehman Brothers began serving as a

trustee and/or custodian for the PFA investment trust .

77. Like the other Financial Institution Defendants, Lehman Brothers represented t o

investors that it would be acting in the capacity of a fiduciary and ensure the safe handling of

investor funds. In an e-mail from Lehman's Guillermo Vega to Eric Urena and other Lehman

agents dated September 25, 2001, Mr . Vega wrote "What is [PFA's] current relationship with

SunTrust and how close are we to having this relationship completely at Lehman as original

advised."

78 . PFA's principals worked with Lehman to develop a Lehman approved document

to jointly market the investment . PFA and Lehman agreed that PFA could use Lehman's log o

and name on its web site to solicit investments . Eric Urena wrote to several other Lehman

employees on December 19, 2002, recalling "pension fund of america & Lehman on website :

this was brought up previously and at that time it was considered ok sandy & leo recall the

discussion with simon amich, the manager at the time . . . "

79. Further, in early 2001, Lehman sent PFA an order form for Lehman Brother s

marketing materials, logos, T-shirts, and other marketing paraphernalia .

80. With Lehman's knowledge, PFA issued "Certificates of Guarantee" for its Liberty

Plus Plan guaranteeing investors a return on their principal of 120% over a 15-year perio d


Kozyak Tropin .& Throclunorton., P.A .


irrespective of market performance . The Certificate identifies Lehman Brothers as the custodian

bank .

91:. Further, with Lehman's knowledge, investment contracts sent to .,investors and

identifying Lehman Brothers as Custodian, stated that investors were guaranteed a minimum

payment of 120% of their principal investment after 15 years if they invested in the Liberty Plan

or 110% after 10 years if they invested in the Capital Plan . Such representations were knowingly

false and were made with Lehman's knowledge and consent .

82. For each investor who placed their funds in trust with Lehman, a certificate wa s

issued to the investor confirming Lehman Brothers' status as "Trustee", describing the

investment, confirming receipt of the investment, and containing the official Lehman Brothers

seal with the notarized signature of a Lehman Brother's "Authorized Official" set forth at the

bottom right hand corner of the certificate . Lehman Brothers knowingly permitted PFA to issue

such certificates and use Lehman's name. The certificates contained material omissions in that

they listed the total principal amount of the investor' s initial investment without disclosing that

up to 90% of the investor's funds had already been siphoned away by PFA's insiders .

83 . In this way Lehman Brothers became a co-sponsor of the unregistered securitie s

marketed and sold by PFA and its agents and perpetrated a fraud by knowingly allowing its

corporate name, corporate logos, and - most importantly .- its corporate reputation, to be utilized

in marketing and solicitation materials which omitted material facts and provided false

assurances to investors regarding the safety of their investment .

84 . Like the other Financial Institution Defendants, Lehman knew that it was

identified in marketing materials as having a significant role in managing and securing the


Kaz}ralc Iropin. & Tbrocl mortoi?_, .?.A,_ . .

2525 Ponce de Leon, 9th Floor , Miami, Florida 33134 1 Phone 305 .371 1800 1 Fax 305 .372 .3508 1 kttlaw .com

investment. For example, solicitation materials reviewed by Lehman and describing Lehman as

Trustee, stated that Lehman would acquire funds and hold them as per the investor's instructions .

Instead, as Lehman well knew, Lehman maintained the funds in commingled accounts in th e

name of PFA and took direction solely from PFA, not the investor . Further, as Lehman well

knew, PFA and its insiders, not the investors, had absolute control over how, and to whom, the

funds were disbursed .

85 . Lehman knew, contrary to the investment contract and to solicitation material s

touting Lehman's role as Trustee, that it was depositing investor funds in a co-mingled account

and not in accounts maintained in the name of the investor. Lehman failed to verify that the

funds were invested as per investor instructions . Notwithstanding Lehman's knowledge of the

foregoing material facts, Lehman failed to disclose to investors that it was receiving instructions

with respect to the funds directly and solely from PFA, was depositing investor funds in a

commingled account and had never obtained verification whether or not the instructions pursuant

to which it was disbursing investor funds were consistent with the investor's directions .

86. With respect to sub-accountings for investor funds, Lehman knew, as SunTrus t

had alleged in its lawsuit (described above) that PFA was operating in violation of the law, that

PFA's accounting system was woefully inadequate and that PFA was incapable of producing the

very sub-accountings in order to fulfill its "custodial" responsibilities to investors .

Notwithstanding Lehman's knowledge of the foregoing, at no time did Lehman advise investors

that: (a) PFA's accounting system was wholly inadequate to perform such a task, and ; (b) PFA

was incapable of producing accurate investor sub-accountings or performing other tasks required

by law .


Kozyak Trop it 8: Throcknmorton, P .A .


87 . Lehman also had direct knowledge that PFA was not providing investors wit h

insurance as represented in the investment contract or solicitation materials . The PFA investment

contract identifying Lehman as "Trustee Bank" contained an "Insurance Application" form. The

summary section of the investment contract instructs the investors with respect to the insurance

form and provides in relevant part as follows : "This section is the insurance policy application.

Please fill out this section for all participants that are choosing an annual plan with insurance

coverage . The trustee bank is the owner & beneficiary of the policy so you must mark

(section 3 .2) which trustee bank will be used for the client's plan." (emphasis supplied )

88 . Lehman reviewed the form investment contract provided to investors and wa s

fully aware of the representations being made therein . Notwithstanding Lehman's knowledge

that the PFA trusts were to contain an insurance component for the benefit of the investors, and

notwithstanding Lehman's knowledge that the investment contract provided that Lehman would

be the "owner & beneficiary of the policy", Lehman never made an y transfers from the PFA

accounts directly to any insurance companies for the premiums on alleged insurance policies as

described in the investment contract and never verified that funds distributed at PFA's directio n

were being used to purchase insurance for the benefit of the investors . In light of its joint

representations in marketing materials and the investment contract, Lehman knew, or wa s

severely reckless in not knowing, that none of the funds held in its accounts were used t o

purchase insurance .

89 . Lehman knowingly failed to disclose to investors , however, the fact that funds

were not used to purchase insurance for the benefit of the investors or that funds disbursed from


KocyakTropin .Throckrnorton,-P .A .


Lehman accounts were not paid directly to insurance companies for the premiums on allege d

insurance policies .

;90. In an email dated January 29, 2002, Lehman Administrative Manager Sandr a

Baez wrote to Eric Urena and Leo Roche (Lehman brokers responsible for the PFA account)

asking for "evidence that authorize Pension Fund Of America to engage in the following- 3''

party deposits -Margin in a pension account -option trading in a pension account -owner

account trading patters . Lehman engaged in option and margin "trades" for PFA's investors, at

PFA's direction and received funds directly from investors (third party checks) without an y

evidence that PFA was authorized to engage in these activities .

91 . Despite Lehman's and PFA's joint promises to investors in the investment

contract and solicitation materials that funds entrusted to Lehman would be invested in mutua l

funds in accordance with investor instructions , Lehman knew that PFA was engaged in

unauthorized trading activity, but failed to disclose this fact to investors . To further illustrate, on

April 11, 2002, Lehman's Eric Urena wrote to Defendant Cornide "telecom equipment &

telecom svcs are killing us!! Worldcom is now a penny stock ; quest is close to becoming

one. . . WORLDCOM PREFERRED STOCK IS YEILDING 15% . . . SCARY! ! ! The Bonds are in

Double digits . . . . as of today's close if all the stocks where here at expiration you'd be down $87 3

. . .yes we've gone from + $40,000 to -$873 . . . . "

92 . Lehman knew, but failed in its duty to disclose, that the IPM, one of PFA's larges t

investors , had sued PFA in November 2002 for multiple acts of fraud and malfeasance . By Court

order dated February 10, 2003, Lehman was required to return all of IPM's funds held in PF A

related accounts. Lehman failed to disclose the existence of the lawsuit and the allegation s


Kozy,A Tropip & Thr-ockinorton, P .A .

2525 Ponce de Leon, 9th Floor, Miami, Florida 33134 1 Phone 305 .372 .1800 1 Fax 305 .372 .3508 1 kttIaw .com

contained therein to investors . Lehman further failed to disclose that in December 2003 Lehman

had delivered $4.8 Million in investor money directly to a PFA account at HSBC, without

authorization and in apparent disregard of the February 10, 2003, state court order . ., .

93 . Further, on February 28, 2003, a group of fourteen (14) PFA investors filed a

lawsuit in Miami Dade Circuit Court against PFA, SunTrust and Lehman alleging that the

Trustee banks had breached their fiduciary duties, had resigned without giving the investors

proper advanced notice and that monies had been improperly transferred from the Trustee Bank

accounts to PFA . Lehman failed to disclose the existence of the lawsuit and the allegations

contained therein to investors .

94. Each of the foregoing omissions, taken individually and/or collectively, ha d

Lehman disclosed them to investors, would have prompted investors not to invest their

retirement and other savings "in Trust" with Lehman .

The Role of Merrill Lynch

95. Sometime in the first half of 2001, Merrill Lynch agreed to serve as a trustee

and/or custodian of investor funds .

96. Like SunTrust and Lehman before it, Merrill Lynch knew that it would be hel d

out to PFA investors as the "custodian" or "trustee" of investor funds and the vehicle for assurin g

investors the safe handling of their funds. Merrill Lynch failed to maintain separate accounts in

the name(s) of each investor, thereby facilitating PFA's insider's looting of investor funds .

Merrill Lynch failed to disclose to investors that fields entrusted by them to Merrill Lynch were

subject to the complete and unfettered control of Defendants Cornide and de la Riva . Merril l


Kozyak Tropin & ThrockmorLon, P .A .

2525 Ponce de Leon, 9th Floor, Miami , Florida 33134 1 Phone 305 . 372 .1800 1 Fax 305 .372 .3508 1 kttlaw.cora

Lynch omitted to disclose material information it acquired regarding PFA's active an d

continuing offering and solicitation fraud, which ended up injuring numerous PFA investors .

97. In addition to providing PFA certain atypical custodial and banking services ,

Merrill Lynch knowingly allowed its corporate name, corporate logos, and - most importantly --

its corporate reputation, to be utilized in solicitation materials to assure investors of the safety of

their investment . In addition, Merrill Lynch personnel personally met or corresponded with the

two largest PFA investors, the Instituto Guatemalteco de Seguridad Social (1GSS) and the

Instituto de Prevision Militar Inverma (IMP), to directly encourage their investment and directly

represent to them Merrill's promise of safe-handling of PFA investor funds . As detailed below,

these two investors ended up entrusting nearly Sixty-Eight Million Dollars ($68,000,000 .00) to

Merrill Lynch and PFA . Merrill knew, or was severely reckless in not knowing, that Merrill's

representations to IPM and IGSS, and their resulting sizeable investments, also would be use d

and were used to solicit other PFA investors .

98. In solicitation materials distributed to investors, with Merrill Lynch's log o

embossed across the top, investors were promised "100% guarantee of capital by Merrill Lynch",

with "Guaranteed Return of 121 .6%", of invested capital, all of which was "Guaranteed by

bonds issued by the Government of the United States of America ." Other solicitation materials

contained essentially the same representations but promised higher "guaranteed returns" returns

totaling "123 .5%" or "125%" of invested principal . Merrill Lynch also knew that the solicitation

materials provided to PFA investors falsely represented both the "backing of the SIPC" and

described the PFA investment with Merrill Lynch as "guaranteed by Merrill Lynch ."


Kozyak Tropin & Throckmor-ton ., .P.A .

2525 Ponce de Leon, 9th Floor, Miami , Florida 33134 1 Phone 305 . 372 .1800 1 Fax 305 .372 .3508 1 kttlaw.com

99 . In the summer of 2001, the first PFA investor, IPM, was jointly solicited by PFA

and Merrill Lynch to open a "retirement trust account" at Merrill Lynch, with pension fund s

belonging to members of the Guatemalan Armed Forces and their families .

100 . Numerous communications, including a letter of recommendation, were authored

by Merrill Lynch certifying the relationship between PFA and Merrill Lynch and praising

Cornide and PFA for their trustworthiness and business success . In addition, as detailed above

Merrill Lynch officials met personally with IPM to encourage their investment . These letters

and direct solicitation were used to promise IPM a guarantee of safety in entrusting funds to PFA

and Merrill Lynch . Merrill Lynch knew, or was severely reckless in not knowing, that Merrill's

letters and representations to IPM, and IPM's resulting investment, would be used and was use d

to solicit other PFA investors .

101 . In October 2001, IPM directly transferred to Merrill Lynch nearly EIGH T

MILLION DOLLARS ($8 ,000, 000 .00) .

102. Contrary to the representations that had been made to IPM, the funds wer e

deposited into an account titled in the name of "Pension Fund of America , LLC". Merrill Lynch

knew that the manner in which it structured the account was contrary to the representations mad e

to IPM and being disseminated to other PFA investors being solicited to entrust their funds to

Merrill Lynch. Merrill Lynch also omitted to disclose that PFA, through Cornide and de la Riva,

exercised complete control over the investor funds entrusted to Merrill Lynch.

103 . Within two months from the opening of the IPM Account, the looting of the funds

entrusted to Merrill Lynch began. Merrill Lynch allowed Cornide and de la Riva to transfer i n

excess of THREE MILLION DOLLARS out of the IPM Account . Specifically, on or about


Kozyak Tropin & Throckmorcon, P.A .

2525 Ponce de Leon , 9th Floor, Miami , Florida 33134 1 Phone 305 . 372 .1800 1 Fax 305 .372 . 3508 1 kttlaw.com

November 15, 2001, PFA transferred $1,399,583 .12 to a savings account at Ocean Bank . Fifteen

days later, PFA transferred $ 1,080 ,000 .00 to another Merrill Lynch account numbered 738-

07T64, one of several accounts titled in the name of PFA at Merrill Lynch . Only. five days later ,

an additional $944,461 .00 was transferred out of the IPM Account to yet another PFA account at

Merrill Lynch numbered 738-07T72, before being wired to a SunTrust Bank Account on

December 14, 2001 . Merrill Lynch did not disclose the diversion by Cornide and De la Riva of

investor funds. Merrill Lynch knew the unfettered control over investor funds being exercised

by Cornide and de la Riva was contrary to representations made to investors .

104. Merrill Lynch knew of the diversion of investor funds as it occurred . In fact ,

Merrill Lynch officer, Eduardo Coloma, the Merrill Lynch financial advisor who managed the

IPM Account, acknowledged under oath that he communicated with Cornide and de la Riva,

Pension Fund of America's principals, on a monthly basis to discuss the activity in the IPM

account. Three Million Dollars ($3,000,000.00), or about 50% of the pension funds initially

deposited in the IPM Account, were withdrawn or transferred out of the IPM Account during the

first two months of Merrill Lynch's receiving the pension funds, and Merrill Lynch apparently

did not even question it . At no time did Merrill Lynch disclose this diversion of investor funds

by Cornide and de la Riva or do anything to retract the representations and solicitations of other

PFA investors based on Merrill's role as "custodian" or "trustee" Bank .

105 . A review of the activity in the IPM Account at Merrill Lynch reveals that Cornid e

and. de la Riva were diverting money for PFA's benefit and their own personal use . The transfers

to PFA substantially increased Pension Fund of America's net worth as of October 2001, i n

comparison with the company's net wroth at the time it began transacting business with Merril l


Kozyak Ti-opin & Throckmorton , P.A .

2525 Ponce de Leon , 9th Floor, Miami , Florida 33134 1 Phone 305 . 372 .1800 1 Fax 305 .372 . 3508 1 kttlaw.com

Lynch. PFA's net worth increased from one to ten million dollars, in the time frame of eleve n

months . Merrill Lynch knew, or was reckless in not knowing, that this artificial increase in

PFA's net worth was being actively used to falsely represent to investors the financial stabilit y

and strength of PFA.

106. Despite its actual knowledge of PFA's diversion of investor finds, Merrill Lynch

and PFA continued to jointly solicit additional investors . The next PFA investor to fall victim t o

Merrill Lynch' s false promises was IGSS .

107. PFA and Merrill Lynch jointly solicited IGSS to invest promising the safe

handling of investor funds . Despite knowing of the active diversion by Cornide and de la Riva

of the IPM funds entrusted to Merrill Lynch, PFA and Merrill Lynch made the same promises to

IGSS as they had made to 1PM -- and disseminated to other investors -- regarding Merrill

Lynch's role in securing the safe handling of investor funds and the "guarantee" of investmen t

security .

108 . The first IGSS investment was made on September 19, 2002 . Accompanying the

investment was a confirmatory letter to Merrill Lynch's offices on Brickell Avenue in Miami ,

Florida . The letter sought, consistent with the joint solicitation materials described above ,

confirmation of IGSS's investment of $5,000,000, that 100% of its capital was "guaranteed b y

Merrill Lynch," with a "guaranteed return of 120% over five years," and further "guaranteed b y

bonds issued by the Government of the United States of America . "

109. The next day on September 20, 2002, in reaction to Merrill Lynch's receipt of th e

September 19, 2002 letter, Eduardo Coloma, the Merrill Lynch broker primarily responsible fo r

overseeing investments made through PFA, accessed Merrill Lynch's internal "Universa l


Kozyak Tropin .& Thrcclanorton, P.A .

2525 Ponce de Leon , 9th Floor, Miami , Florida 33134 1 Phone 305 .372 .1800 1 Fax 305 .372 . 3508 1 kttlaw.com

Deposit System" for account 730-07627. Contrary to the representations made to IGSS an d

other PFA investors, the account was opened in PFA's name, with Cornide and de la Riva

exerting complete control over the funds . A contemporaneous handwritten note dated September

20, 2002, proves that Merrill Lynch knew the account had been opened in a manner inconsisten t

to what had been promised and stated : "The fundamental problem is that IGSS is not the titl e

owner of the account ." In addition , Merrill Lynch was clearly on notice of the promises of

"guaranteed returns" and of investment security "guaranteed by Merrill Lynch" when it received

the initial IGSS letter, and yet Merrill Lynch took no action.

110. Notwithstanding, Merrill Lynch's direct knowledge to the contrary, IGSS wa s

issued certificates stating "Merrill Lynch as Custodian (member SIPC)" certifying that the full

Five Million Dollars invested by IGSS was being held in "Senior Unsecured Bonds" and in a

"Merrill Lynch Principal Protected Guaranteed Product . "

111 . By the late Fall of 2002, IPM became aware of the diversion by . Cornide and de la

Riva of the funds entrusted to Merrill Lynch . On November 26, 2002, 1PM filed suit against

PFA and its insiders in Miami Dade County Circuit Court, Case No 02-29737 CA 27 . The

lawsuit asserted claims against PFA and its insiders for conversion, unjust enrichment, temporary

injunction, constructive trust, breach of contract, fraud, breach of fiduciary duty, fraud in the

inducement, civil conspiracy, violations of Florida Statutes § 517 .12 and §517 .301, and

accounting. IPM's lawsuit outlined PFA's fraudulent conduct and the looting of investor

accounts . Merrill Lynch knew, or was severely reckless in not knowing, of the lawsuit shortly

after it was filed, yet did not disclose this lawsuit to investors or withdraw its earlier letters o f

recommendation authored by Mr. Coloma .


Kozyak Tropin & Throckmorton, P .A .


112. Shortly after the filing of the IPM lawsuit, Merrill Lynch received additional

funds from IGSS. On January 7, 2003, IGSS entrusted an additional $9,000,000 to Merril l

Lynch. Again, IGSS sent a confirmatory letter to Merrill Lynch's offices on Brickell Avenue in

Miami, Florida. Again, the letter sought Merrill Lynch's confirmation of IGSS's investment at

"an annual rate of return of 4 .32%," for a "term of 1,826 days," "payment date of January 7 ,

2008," and "Guaranteed by bonds issued by of the United States of America ."

113 . Thereafter, on February 5, 2003, IGSS made a third investment. IGSS sent ye t

another letter to Merrill Lynch's offices on Brickell Avenue in Miami, Florida . For a third time,

IGSS "sought confirmation of IGSS's investment of $5,000,000," at an "annual rate of return of

4.70%," for a "term of 1,825 days," "payment date of February 4, 2008," and "Guaranteed by

bonds issued by the United States of America ." Internal documents confirm that these funds

were transferred directly to Merrill Lynch's account at Mellon Bank, Pittsburg, PA . Similar wire

transfers directly to Merrill Lynch's account were made through March 2003 .

114. Because Merrill Lynch had knowingly structured the IGSS account in a manner

contrary to the promises made, Cornide and de la Riva had unfettered control and access to the

newly deposited funds . The looting of IGSS's funds commenced within 3 days of the IGSS

initial deposit in September 2002 . Beginning on September 24, 2002 and continuing through

April 2, 2003, PFA's insiders directed Merrill Lynch take $13,600,000 of the funds entrusted to

Merrill Lunch by IGSS and wire it to accounts maintained by Comide and de la Riva at other

financial institutions, including accounts established at Defendant SunTrust and to an account at

First Union bank in the name of Beckenham Trading Co . Merrill Lynch knew the diversion of


Kozyak Tropin & Thioclammorton, P.A .


funds was contrary to representations made to IGSS and failed to disclose the unfettered contro l

that Cornide and de la Riva exercised over the funds entrusted to Merrill Lynch .

115. In addition, contrary to the "guaranteed" rates of return promised investors, as of

February 28, 2003, Merrill Lynch' s internal records, showed PFA's account as having a "YT D

Return: -3 .22%," far from the " guaranteed" rates of return and growth promised in the joint

solicitation materials . Moreover, PFA was experiencing significant trading losses, as Merril l

Lynch's own records reflected . Notwithstanding Merrill Lynch's knowledge of the foregoing ,

Merrill Lynch failed to advise investors of these facts and instead permitted PFA to continue t o

solicit investors with the promise of Merrill Lynch's backing as Trustee and using Merril l

Lynch's name , logo and corporate reputation.

116 . On February 10, 2003, the Circuit Court for the Eleventh Judicial Circuit In and

For Miami-Dade County, Florida, entered an Order compelling the liquidation and transfer of al l

funds at Merrill Lynch {and additional funds held by Lehman) that belonged to IPM. As a result

of that liquidation order, approximately $4.8 Million in funds were returned to IPM from

accounts at Merrill Lynch. Obviously, by this date, Merrill Lynch had actual knowledge of th e

liquidation order and underlying lawsuit . Merrill Lynch omitted to disclose to investors the fact s

relating to the IPM lawsuit or the circumstances which prompted the court-ordered liquidation o f

IPM's account at Merrill Lynch in early 2003 .

117 . Further, Merrill Lynch failed to retract the false and misleading solicitation

materials used to solicit millions in investments and failed to provide investors with

supplemental information disclosing the truth about PFA and its history of lies . Rather, not until

May 2003 did Merrill Lynch seek to obtain assurances solely from PFA that PFA would cease


Kozyak Tropin & Throckmorton, P.A .2525 Ponce de Leon, 9th. Floor, Miami, Florida 33134 1 Phone 305 .372 .1800 1 Fax 305 .372.3508 1 kttlaw.com

using Merrill Lynch's name in association with future PFA investments . Merrill Lynch made no

effort to confirm whether PFA was actually retracting its false solicitation materials, nor did

Merrill Lynch make any effort of its own to inform investors of the facts relating to PFA's fraud .

118 . While Merrill Lynch delayed in receiving confirmation fxozn PFA as to whethe r

the false solicitation materials had been retracted, many other PFA investors were falsely

solicited to invest using the same joint PFA/Merrill Lynch solicitation materials . Although an

exhaustive review of PFA investor records is not possible at this time, the following Plaintiff ,

PFA investors and Class members were solicited to entrust their funds to PFA and Merrill Lync h

as "custodian" Bank, including : (1) Plaintiff, Marciela Cordova (June 19, 2003), (2) George

Valdivia (July 2, 2003), (3) Jose Murillo del Castillo (July 2, 2003), (4) Fernando Mauricio

Quevedo (August 4, 2003). Internal PFA records dating back to December 11, 2002 show

numerous other individual PFA investors who were solicited to invest, and did invest, believing

their funds were going to be held by Merrill Lynch.

119. As early as September 2002, if not earlier, Merrill Lynch was fully aware that it s

name was being used to solicit investors with false promises of "guaranteed" rates of return and

false representations concerning its role as trustee for investments which were purportedly

"guaranteed by Merrill Lynch" . Merrill Lynch had a duty to disclose to investors that the

representations made in solicitation and marketing materials were materially false an d

misleading .

120. With Merrill Lynch's knowledge , PFA issued to investors , including IGSS ,

certificates with the heading "Merrill Lynch as Custodian (Member SIPC)" acknowledging th e


Kozyak Tropin & Throckmorton, P,A . .

2525 Ponce de Leon, 9th Floor, Miami, Florida 33134 1 Phone 305 .372 .1800 1 Fax 305 .372 .3508 1 kttaw.com

amount of the investment, confirming Merrill Lynch's receipt of certain investment document s

and confirming that such investments would be held in trust.

121 . By permi tt ing investor funds to be deposited in accounts controlled by PFA' s

insiders, Merrill Lynch facilitated the looting of the investor funds by processing millions o f

dollars in wire transfers out of the investor 's account to other accounts maintained by PFA' s

insiders . All the while, Merrill Lynch knew that its actions were contrary to representations

made to investors , yet remained silent . Merrill Lynch knew that PFA's offering and solicitatio n

fraud was on-going, but did nothing to ensure that PFA did not continue victimizing othe r

investors using Merrill Lynch's name and corporate reputation .

The Role of Raymond James and OIG

122. Following SunTrust's termination of its relationship with PFA, Raymond Jame s

and OIG, as Raymond James ' exclusive agent in Miami , agreed to serve as a post-investment

trustee and/or custodian of the funds placed through PFA .

123 . On or about March 3, 2003, Raymond James opened a new account under th e

name of PFA Assurance Group . The Raymond James New Account Form identified PFA as a

"non-resident alien" with a corporate address in Miami, Florida .

124 . Like SunTrust and the other Defendants, Raymond James and OIG agreed t o

ensure the safe handling of investor funds . In addition to providing PFA certain banking

services , Raymond James and OIG knowingly allowed its corporate name, corporate logos, and -

most importantly - its corporate reputation, to be utilized by PFA to assure investors of the

safety of their investment .




125 . The Guide To Plan Provisions (the "Guide") contains the purported terms

under which the investor would be investing through PFA . In the Guide, which Raymond James

reviewed prior to agreeing to accept investor funds, Raymond James is identified as follows :

"Trustee Bank refers to Raymond James Financial, which shall serve as trustee for th e

Investment Component of the plan and to make investments during the lifetime of the plan ."

The Guide Rather states "Investment Component refers to under this agreement through th e

Trustee Bank that portion of the plan contribution that is used to invest by the Participan t

[investor] . The Guide further represents that "You are being provided with both an insurance

component and investment component . The insurance component includes coverage in case o f

death, total or permanent disability, and accidental death. This protection covers the annual

investment for the first fifteen years . . . ." The investment component includes the purchase of .

mutual funds will be transacted and administrated by the trustee bank . "

126 . Application forms sent to investors and identifying Raymond James as

Custodian, provide that investors were "guaranteed" a minimum payment of 1 .20% of their

principal investment after 15 years if they invested in the Liberty Plan or "guaranteed" 110%

after 10 years if they invested in the Capital Plan . Such representations and guarantees were

knowingly false when made and were made with Raymond James's knowledge and consent .

127. In addition, application forms prepared by PFA represented to investors that

their investments were to be made "directly with RAYMOND JAMES" and directed investors to

pay by check, bank transfer, credit card, insurance company transfer or "other" method of

payment.


Kozyak Tropizn & Throclanorton_, P.A .

2525 Ponce de Leon , 9th Floor, Miami , Florida 33134 1 Phone 305 .372 .18 00 1 Fax 305 .372 .3508 1 kttlaw .com

128, Raymond James knew that such representations were false and misleading i n

that PFA deposited investor funds in a commingled account maintained it the name, and unde r

the unfettered control, of PFA and its insiders .

129. As Raymond James well knew, rather than the funds in trust at the direction o f

the investor, Raymond James deposited commingled funds in a "master" account" maintained i n

the name of PFA and permitting PFA unfettered control over use of the investor funds . Raymond

James knowingly failed to disclose these material facts to investors As Raymond James knew ,

based on representations set forth in solicitation materials, the Guide, and investment contract ,

investors were specifically relying on Raymond James to safeguard their investment trust funds .

130. Before agreeing to accept PFA investor funds, Raymond James, through its Vic e

President Jack Maynard, directed OIG's Oliva on April 9, 2003, that they needed "fir m

information on just who these folks are, where they are located, and how they are marketing their

product." Mr. Maynard also advised that "we will need to see whatever proposed agreement

[PFA has]-as that agreement will give us an understanding of exactly what our duties an d

responsibilities would be . "

131 . Nearly two years before Raymond James agreed to act as Trustee Bank,

Raymond James' predecessor Trustee, SunTrust, had instituted suit against PFA in the Circuit

Court of the Eleventh Judicial Circuit in and For Miami Dade County, Florida, Case No . 01-

20718 CA 08 . As previously alleged herein, SunTrust accused PFA of violating Florida lawand

operating in breach of its agreements. The lawsuit stated "[f]rom almost the beginning, SunTrust

has advised PFA that it believed various provisions of the Agreement and/or law were not bein g

adhered to [by PFA] ." (emphasis supplied) . SunTrust further stated in its lawsuit that it had not




obtained required sub-accountings for investor funds, that PFA's accounting system was

inadequate for the business it was seeking to operate and further accused PFA of serious

misconduct in the management and operation of its business .

132. Further, on November 26, 2002, one of PFA's largest investors, IPM, filed suit

against PFA and Defendants Cornide and de La Riva in Miami Dade County Circuit Court, Cas e

No 02-29737 CA 27 . The lawsuit asserted claims against PFA and its insiders for conversion,

unjust enrichment, temporary injunction, constructive trust, breach of contract, fraud, breach of

fiduciary duty, fraud in the inducement, civil conspiracy, violations of Florida Statutes § 517 .12

and §517.301, stemming from PFA's fraudulent conduct and management of the investo r

accounts .

133. Raymond James, directly or through its agent OIG, had knowledge of the publi c

lawsuits filed against PFA. Despite Jack Maynard's directive that Raymond James "have firm

information on just who these folks are, where they are located, and how they are marketing their

product," Raymond James accepted investor funds while knowingly failing to disclose the

existence of the lawsuits, the fact that a predecessor Trustee Bank had accused PFA of serious

misconduct, that a large investor had accused PFA of widespread fraud, or that an investor had

obtained a court order requiring predecessor Trustees/Custodians (Merrill Lynch and Lehman) to

return millions of dollars of investor money, and that a group of fourteen investors had sued

SunTrust, Lehman and PFA alleging breach of fiduciary duty and other serious misconduct

against PFA, SunTrust and Lehman .

134. On April 6, 2004-over a year after Raymond James had opened its account

with PFA Assurance, Alfredo Oliva, in his capacity as agent for Raymond James, wrote abou t


Kozyak Tropin & Throchmorton, P .A .

2525 Ponce de Leon , 9th. Floor , Miami, Florida 331.341 Phone 305 . 372 .1800 1 Fax 305 .372 .3508 1 kttlaw.com

Raymond James failure to have the necessary information about its PFA accounts in order to

comply with the U . S . Patriot Act : Oliva wrote, in part :

Since we accept third party check deposits as well as wires, I needto have a breakdown of who is writing the checks/wire and for whothe beneficial owner is . In other words if the check is made out byan agent or agency, I need to know for whose benefit thatcheck/plan is for . . . .

You carry an operating account at RJ that accepts 3rd partyjournals, as well . As a result for every check written by the firmfrom this account please provide a breakdown on what representsdistributions and to which clients, as well as what is administrative .

Please understand that this is not something required by us or thefirm, rather by legislation and the environment in which we liveand transact business .

135. At no time did PFA provide Raymond James with the information tha t

Raymond James believed necessary to comply with federal law. Raymond James omitted to

advise investors that Raymond James had never obtained, for well over a year, information

concerning the sources of funds being received into its "trust" account and, even more critically,

had never received an accurate breakdown identifying the millions in disbursements which PFA

had siphoned from the Raymond James custodial account. Further, Raymond James omitted to

disclose to investors that its PFA accounts were not in compliance with federal law.

136. Each of the foregoing omissions, taken by themselves and/or collectively, ha d

Raymond James timely disclosed them to investors , would have prompted investors not to

invest, transfer or renew their investment of retirement and other savings "in Trust" wit h

Raymond James .




The Role of HSBC

137 . Following secretive resignations by SunTrust, Lehman, Merrill Lynch an d

Raymond James, the lawsuit instituted by Defendant SunTrust, the allegations of fraud leveled

against PFA by one of its largest investors, and a suit by fourteen (14) investors alleging fraud

against PFA and misconduct by SunTrust and Lehman, HSBC undertook in 2003 to serve as the

principal trustee and "fiduciary" of investor funds placed through PFA . Like the other Financial

Institution Defendants, HSBC agreed to ensure the safe handling of investor funds .

138. When HSBC began its involvement with PFA it solicited all of PFA' s existing

investors, by letter dated October 27, 2003, to transfer their money to HSBC and sent eac h

investor a version of the Guide to Plan Provisions (discussed below) in an effort to maximize the

amount of funds under management and, in turn, maximize fees .

139 . From the beginning, HSBC sought to receive "first year revenues from all new

monies coming into the program . . . ." As HSBC's First Vice President, Joseph Brennan ,

described the relationship in an internal memo dated July 29, 2003 : "the [investor] has the optio n

of renewing or not renewing annually, and the option of renewing with us or with Lehman, AG

Edwards, or Merrill Lynch . Our continued involvement in the relationship with PFA is going

to be essential to renewals in bulk taking place with HSBC." (emphasis supplied) The

"renewals' referred to by HSBC relate to the Liberty Plait, which called for investors to to mak e

new contributions each year . In this way, HSBC undertook co-sponsorship of a continuin g

offering of investment securities to existing and future PFA investors .

140 . HSBC became a co-sponsor of the unregistered securities fraudulently markete d

and sold by PFA and its agents and perpetrated a fraud on the investors by knowingly allowin g



2525 Ponce de Leon , 9th Floor, Miami , Florida 33134 1 Phone 305 .372 .1800 1 Fax 305 .372 .3508 1 kttlaw.com

its corporate name, corporate logos, and - most importantly - its corporate reputation, to b e

utilized in marketing and solicitation materials which contained material omissions and provide d

false assurances to investors regarding the safety of their investment .

141 . HSBC provided its approval to PFA to jointly market the PFA investment trust s

to investors using materials that contained material omissions with substantial emphasis o n

HSBC's role in safeguarding the investors' funds . In an email from Joseph Brennan to PFA

dated December 1, 2003, discussing PFA/HSBC solicitation materials, Brennan instructs PFA a s

follows : "Back cover- "HSBC BANK USA" should be next to the bowtie logo . "AS TURSTEE"

should be 3/8 below it. We would also prefer to see our logo against a lighter background, i f

white is not possible, perhaps in the part of that page that has the header "Herramientas d e

Mercadeo". In the same e-mail, Brennan further specifically approved the language "For thi s

reason HSBC Bank USA and PFA have created, for you, the Liberty Plan Trust ." Brennan' s

only suggestion with respect to this solicitation language was to change the order of PFA an d

HSBC .

142 . Accordingly, marketing materials reviewed and approved by HSBC and widely

distributed to agents and investors represented:

"THE LIBERTY TRUST PLAN IS MADE JUST FOR YO U

PFA and HSBC Bank USA have created the Liberty Plan Trust .Because with the Liberty Trust plan we have created a trust inwhich: your contributions are in dollars and made directly withHSBC Bank, you obtain higher returns compared with savingsaccounts, receive life insurance benefits, and have the option ofmaking your contributions in a single annual payment or bymonthly payments using your credit card."




143 . The same marketing materials , reviewed and approved by HSBC and distribute d

to investors, state : "HSBC Bank USA is the trustee bank that directly receives your contributio n

into the Liberty Trust Plan and invests them in mutual funds . HSBC Bank USA is part of one of

the largest and most solid financial institutions in the world : HSBC Group . "

144. The same marketing materials contain pictures of HSBC's headquarters and the

HSBC corporate logo . The joint solicitation materials offer "5 reasons why you should invest i n

the Liberty Trust : 1 Total security , because your funds are received directly by HSBC Bank

USA. 2 Total protection, because the Liberty Trust Plan is backed by a legal trust held by the

trustee . 3 Total flexibility, because you can increase contributions 'in accordance with your

means . 4 Total tranquility, because from day one members are provided life insurance . 5 Total

ease, because contributions may be made in a single annual payment or, if preferred, monthly

using your credit card . "

145. HSBC further represented to investors , through so licitation materials , that it

would place investor funds in an account titled in the name of the specific investor . As HSBC

recognized in an internal memo dated July 29, 2003 authored by Joseph Brennan : "[investor]

signs up for insurance policy with investment component with PFA . An account is set up for

each new client. " (emphasis supplied) .

146. In another handwritten notation by Brennan, HSBC recognizes : "Our fiduciary

responsibility for sub-accounting- we cannot delegate this fiduciary responsibility . . . ." Thus ,

HSBC undertook the fiduciary duty to establish for each investor separate sub accounts, titled i n

the name of the investor for the purpose of insuring safe handling of the investor's funds .


Kozya]< Tropin & Thirockmorton ; P .A .

2525 Ponce de Leon , 9th Floor, Miami, Florida 33134 1 Phone 305 .372 .1800 1 Fax 305 .372 . 3508 1 kttlaw .com

147. HSBC failed, however, to establish separate sub-accounts titled in the name of the

investor ; rather HSBC received investor funds directly from PFA and placed the funds in a

commingled "master account " titled in the name , and under the unfettered control of, PFA and

its insiders .

148. HSBC's failure to maintain segregated investor accounts in "Trust" for th e

investors provided PFA's insiders unfettered control over the movement of investor funds .

HSBC knowingly and willfully failed in its duties to disclose to investors that their funds were

being maintained in commingled accounts under the direction and control of PFA's insiders and

that PFA's insiders were diverting investor funds for non-investment purposes .

149 . Marketing materials jointly sponsored by PFA and HSBC touted the "tranquility "

offered to the investor by virtue of having a life insurance component to the investment . HSBC

knew, however, that HSBC never distributed funds to fund the insurance component and made

no effort to determine whether insurance was being purchased by PFA for each investor . HSBC

omitted to disclose to investors that it had not distributed funds to fund the insurance component

or that it had made no effort to determine whether insurance was being purchased by PFA for

each investor .

150. HSBC committed fraud by authoring duplicative and conflicting "Guide to Plan

Provisions," provided to investors, which misrepresented the duties of HSBC, and misled

investors regarding the fees and costs being charged by PFA and HSBC.

151 . In one version of the Guide to Plan Provision, the duties of HSBC include

"determining which funds will constitute part of the Investment Component of each plan ."

HSBC thus undertook the duty to choose for investors which mutual funds would constitute part


Kozyak Tropin & Throckmorton . P.A .

2525 Ponce de Leon, 9th Floor, Miami, Florida 33134 1 Phone 305 .372 .1800 1 Fax 305 .372 .3508 1 kt-tlaw .com

of the Investment Component of each plan. HSBC knew, or was severely reckless in no t

knowing, that funds were being diverted by PFA's insiders for purposes other than investment i n

mutual funds and insurance . HSBC failed to disclose that funds were being diverted by PFA' s

insiders for purposes other than investment in mutual funds and insurance .

152. HSBC committed fraud by re-directing a portion of the investment component o f

PFA's "retirement trusts" into mutual funds of HSBC's choosing and by directing variou s

mutual fund companies, such as AIM, Alliance, Franklin Templeton, and Janus in March 2004 to

re-calculate their front-load fees so as to charge the maximum fee to investors . In a memo dated

March 25, 2004, HSBC's Joseph Brennan wrote : "I spoke with the client, PFA, and they have no

issues in our canceling and rebooking the trades to capture the loads ." The next day, Brennan

wrote that he had contacted the four mutual funds set forth above and "[in] all cases I indicated

that we were looking at Class A shares and charging the maximum allowable front load and that

we were looking to recover loads that had not been charged before 1st quarter statements were

mailed out to clients ." In a memo dated May 19, 2004, Joseph Brennan bemoaned the fact that

earlier "inattention to [maximizing] front loads for months cost us a significant amount already . I

am expecting transfers of an additional $1 .7MM in the near future and I do not want to see a

repeat of this . "

153. HSBC committed fraud by authorizing HSBC personnel, including HSBC' s

Senior Vice President , Joseph Brennan , to travel through Latin Arnerica to meet with PFA' s

sales force and investors, to reassure them falsely of the safe handling of their funds, the security

of their investment,'the integrity of PFA's operations, and HSBC's role in overseeing the safety


Kozyak Tropin & Throclan.orton, P.A .

2525 Ponce de Leon , 9th Floor, Miami , Florida 33134 1 Phone 305 .372 .1800 1 Fax 305 .372 .3508 1 kttlaw.com

of investor retirement trusts as part of the on-going joint offering and solicitation activities o f

PFA and HSBC .

154. The joint PFA/HSBC "road show" included tour stops on the following dates an d

in the following locations : March 1, 2004, Buenos Aires ; September 21, 2004, Caracas ;

September 23, 2004, Maracaibo, VZ ; October 12, 2004, Sao Paolu ; October 14, 2004, Bueno s

Aires; October 25, 2004, Quito ; October 28, 2004, Quayaquil, Ecuador ; November 8, 2004, San

Jose, Costa Rica.

155 . During this joint "road show", investors and agents were given a join t

presentation by HSBC, through HSBC's First Vice President, Joseph Brennan, and PFA . Part of

the presentation included a power point presentation touting PFA and its relationship with

HSBC . For example, one of the power-point slides represent that PFA is "registered in the Stat e

of Florida since 1999" and its business is audited by "KPMG, the Florida Office of Financial

Regulation and the Securities and Exchange Commission (SEC) ." These statements are false

and misleading. HSBC approved and/or ratified these misrepresentations during presentations to

agents and investors in Latin America .

156. In describing the structure of the investment plans, one of the power point slide s

identifies HSBC Bank USA as the "Trustee Bank ." The slide contains a diagram with two

dialogue boxes radiating out of HSBC's name which exclaim: (1)"Investment in Mutual Fund

Component," and ; (2) "Insurance ComponentlPFA Assurance Group Ltd, Life Insurance-Fixe d

Term."

157. In yet another slide, HSBC's headquarters is shown with the HSBC corporate

logo prominently displayed on the headquarters building and separately at the lower left side of


Kozyak Tropin & Throckmorton . P.A .2525 Ponce de Leon, 9th Floor, Miami , Florida 33134 1 Phone 305 . 372 .1800 1 Fax 305 .372 .3508 1 kttlaw .com

the picture. The information touts HSBC Holdings as the second largest and one of the mos t

solid financial institutions in the world, with a market value of $173 .97 million. The plastering

of HSBC's logo throughout the marketing materials along with authoritative descriptions o f

HSBC's role as guardian and "fiduciary" cemented HSBC's role as co-sponsor and promoter o f

the unregistered investment trusts .

158 . As part of the joint "road show by PFA and HSBC , agents and investors were

shown slides which stated that under the Liberty Plan, payments are made directly to HSB C

Bank USA. For the Capital Trust Plan, HSBC and PFA repeated that payments are made directl y

to HSBC Bank USA and their plan contribution included "life insurance for 30% of the pla n

contributions for the first 4 years . "

159. HSBC knowingly failed to disclose, however, that up to 90% of the investor' s

initial investment would be immediately diverted upon receipt by PFA for non-investment and

non-insurance purposes .

160. HSBC authored a letter, which PFA sent in September 2004, seeking to assuage

investor concerns regarding the accuracy of account statement information. The letter described

HSBC's role in preparing the account statement information and vouched for the integrity of the

fraudulent retirement trust balances disclosed to investors . HSBC told investors "HSBC is

reconciling our operations and systems with those of PFA." We are "reviewing every account

individually" to ensure the "integrity of the information supplied to PFA clients ." PFA and

HSBC used this letter to solicit additional PFA investors . Moreover, HSBC failed to disclose that

that none of the investors had actual "balances" because HSBC had never established separat e


Kozyak Tropin & Throckmorton, P .A.


sub accounts, and further that the figures attributed to each investor were inflated by as much a s

90% .

161 . HSBC knowingly assisted PFA in circumventing foreign currency, banking, an d

insurance regulations governing PFA's activities in Latin America, intended to protect investor s

in those countries from fraudulent and illegal business practices . HSBC failed, however, to

disclose to investors that PFA was circumventing such regulations or that HSBC was activel y

assisting PFA in its efforts to circumvent regulations .

162. HSBC was also fully aware of the lawsuits instituted by SunTrust against PFA,

the lawsuit instituted by the IPM against PFA and the lawsuit instituted by fourteen (14)

investors against PFA, Lehman and SunTrust all as previously alleged above . Notwithstanding

its knowledge, HSBC failed to disclose the existence of the lawsuits or the serious allegations of

fraud, illegality and other serious misconduct brought against PFA, its insiders and predecessor

"Trustees . "

163 . Each of the foregoing omissions, taken individually and/or collectively, ha d

HSBC disclosed them to investors, would have prompted investors not to invest, transfer, o r

renew their investment of retirement and other savings "in Trust" with HSBC .

PFA's Fraud is Expose d

164 . On March 28, 2005, the SEC commenced an action in United States Distric t

Court for the Southern District of Florida, Case No . 05-20863- CIV-Moore by filing a Complaint

for Injunctive and Other Relief. The SEC's complaint alleges that PFA, its principals and


Kozyak Tropin & Throckmortoo, F.A .


affiliated companies , engaged in a massive investment fraud in violation of multiple provisions

of the federal securities laws .

165 . That. same day, the Court in the SEC action entered a Temporary Restraining

Order and Other Emergency Relief ("TRO") . The TRO provides that the SEC "has made a

sufficient and proper showing in support of the relief granted herein by presenting a prima faci e

case of securities laws violations by [PFA], and by showing a reasonable likelihood that th e

Defendants will harm the investing public by continuing to violate the federal securities laws i f

they are not enjoined ." The TRO also enjoins the PFA and its principals from continuing to

violate federal securities laws and freezes their assets .

CLASS ACTION ALLEGATION S

166. Plaintiff brings this action as a class action against all Defendants pursuant t o

Rule 23(a) and (b)(3) of the Federal Rules of Civil Procedure on behalf of a class (the "Class")

consisting of.

All persons who purchased, sold, held and/or retained investmentsin retirement trust plans offered by PFA, or its affiliatedcompanies, during the period commencing January 1999 throughthe present ("Class Period"). Excluded from the Class areDefendants, PFA, PFA Assurance, PFA International, Claren TPA,Luis Cornide, Robert de la Riva and all of the Defendants' alter-ego entities, all employees or agents of Defendants and agents of ,the Defendants' alter ego entities, all subsidiaries and affiliates ofthe Defendants, the Defendants' officers, agents, and employees,any agents or brokers (and their immediate family members) whosold or solicited the sale of investments in PFA or PFA Assurance .

Numerosity



2525 Ponce de Leon, 9th Floor, Miaini , Florida 33134 1 Phone 305 .372 .1800 1 Fax 305 .372 .3508 1 kttlaw.com

167. The individual Class members are so numerous that joinder of all members is

impracticable. Upon information and belief, the Class includes approximately 3,400 investors

residing throughout the world . While many members of the Class reside in Florida, members of

the Class are so numerous and geographically dispersed throughout the United States and abroad

that joinder of all Class members is not feasible . Plaintiffs do not anticipate any difficulties in

the management of this consolidated action as a class action.

Commonality

168 . There are questions of law and fact that are common to the claims of Plaintiff s

and entire Class. Among these common questions are the following :

a. Whether the Defendants were all part of the fraudulent scheme ;

b. Whether the Defendants knowingly made material misrepresentations andomissions ;

c. Whether the Defendants were reckless in not knowing of the materialomissions

d. Whether the Plaintiffs were damaged by the Defendants' course ofconduct.

Typicality

169 . Plaintiffs' claims are typical of the claims of the Class members and all Clas s

members sustained damages arising out of the Defendants' wrongful conduct in violation o f

federal securities laws complained of herein .

170. Upon information and belief, there has never been a prior lawsuit certified as a

class on behalf of Plaintiffs or the Class .

Adequacy of Representation

Second Amended Class Action. Complaint 5 3


2525 Ponce de Leon , 9th Floor , Nliami, Florida 33134 1 Phone 305 .372 .1800 1 Fax 305.372 .3508 1 kttlaw.com

171 . Plaintiffs are adequate representatives of the Class and will .fairly and adequately

protect the interests of the Class . Plaintiffs are committed to the vigorous prosecution of this

action and have retained competent counsel, experienced in litigation of this nature, to represen t

them. There is no hostility between Plaintiffs and the unnamed Class members . Plaintiffs do not

anticipate any difficulty in the management of this litigation as a class action .

172. To prosecute this case, Plaintiffs have chosen the law firms of Kozyak, Tropin &

Throckmorton, P .A. and Podhurst Orseck, P.A. - law firms experienced in class action litigation ,

including specifically class actions dealing with securities fraud and professional misconduct .

The law firms have the financial and legal resources to meet the substantial costs and legal issue s

associated with this type of litigation.

Requirements of Fed. R. Civ. P. 23(b)(3 )

i. Predominance

173 . The questions of law or fact common to the claims of Plaintiffs and of each Clas s

member predominate over any questions of law or fact affecting only individual members of th e

class . Reliance is presumed or proven on a class wide basis, for three reasons :

(1) All claims by Plaintiffs and the unnamed Class members involve overarching

omissions, affecting the entire Class, including each Defendants' uniform omissions b y

failing to disclose : (a) the commingling of investor funds in accounts maintained by the

Financial Institution Defendants ; (b) PFA's unfettered control over the funds ; (c) the

diversion of the funds for non-investment purposes, and ; (d) PFA's failure to registe r

securities despite the legal obligation to do so .




(2) All claims by Plaintiffs and the unnamed Class members are based on th e

same alleged "across the board" conduct by the Defendants in a common fraudulent

scheme of inducing them to purchase unregistered securities, to handle their retiremen t

investments and to retain their investments at PFA .

(3) The PFA securities were not traded on the open market, and could not have

been offered on the market at any price but for the fraudulent scheme in which th e

Defendants participated .

173 . Common issues predominate when, as here, liability can be determined on a class-

wide basis, even when there will be some individualized damage determinations . As a result,

when determining whether common questions predominate, courts focus on the liability issu e

and if the liability issue is common to the class as in the case at bar, common questions are hel d

to predominate over individual questions .

174. The predominance requirement of Fed. R. Civ. P . 23(b)(3) is satisfied since all

claims by Plaintiffs and the unnamed Class members are based on the same alleged "across th e

board" wrongful conduct of Defendants .

ii. Superiority

175 . A class action is superior to thousands of individual actions in part because of th e

non-exhaustive factors listed below :

a. Joinder of all Class members would create extreme hardship andinconvenience for the affected investors because of their immensegeographical dispersion. Class members reside outside of the state ofFlorida and most reside outside of the United States .


Kozyak Tropir & Throckmorton, P.A .


b. Individual claims by the Class members are impractical because the coststo pursue individual claims far exceed the value of what any one Classmember has at stake . As a result, individual Class members have nointerest in prosecuting and controlling separate actions .

c. There are no known individual Class members who are interested inindividually controlling the prosecution of separate actions .

d. The interests of justice will be well served by resolving the commondisputes of potential Class members in one forum .

e. Individual suits would not be cost effective, especially in light of the factthat all of the Class members are citizens of other states and many areforeign nationals .

f The action is manageable as a class action; individual lawsuits are noteconomically maintainable as individual actions .

CLAIMS FOR RELIEF

COUNT I

Against Defendants Under Sections 12(1) and 15 of the Securities Ac t

176. Plaintiffs reallege and incorporate by reference the allegations of paragraphs 1-

175 as though fully set forth herein .

177 . Plaintiffs assert this Count against Defendants under Sections 12(1) and 15 of th e

Securities Act, 15, U.S .C. §§ 77(1) and 77(o) .

178. The investment trusts described herein which were offered and sold to Plaintiff s

and class members were securities as that term is defined under the Securities Act. Those

securities were offered for sale and/or sold by PFA and the Financial Institution Defendants .



2525 Ponce de Leon, 9th Floor, Miami, Florida 33134 1 Phone 305 .372 .1800 1 Fax 305.372 .3508 1 kttlaw.com

179 . The securities sold by PFA and the Financial Institution Defendants an d

purchased by the Plaintiffs and class members do not constitute a class of securities exempt fro m

registration by any of the exemptions recognized under the law .

180 . Plaintiffs and class members hereby tender their securities to the Defendants .

181 . Plaintiffs and class members have been damaged by the conduct of the

Defendants as alleged herein.

COUNT TTAgainst Defendants for Violations of Section 10(b) of the Securities Exchange Act of 1934

and Rule 10b-5

182 . Plaintiffs repeat and reallege and incorporate by reference paragraphs 1 throug h

175 as though fully set forth herein .

183 . Between 1999 and March 2005, each and every one of the Defendants, directl y

and indirectly, by use of the means and instrumentality of interstate commerce, and of the mails

in connection with the purchase or sale of securities described herein, have knowingly or

recklessly (a) made untrue statements of material facts and omitted material facts necessary to

make the statements made, in the light of the circumstances under which they were made, not

misleading ; and/or (b) engaged in acts, practices and courses of business which have operated as

a fraud upon the purchasers of such securities .

184 . Each and every Defendant carried out their scheme and made untrue statements o f

material facts and omitted to state material facts with actual knowledge of the materiall y

misleading nature of the scheme and the misrepresentations and omissions, or with reckles s

disregard of the likelihood of misleading the Plaintiffs and the Plaintiff Class .


Kozyak Tropin & Throckmoz-ton, P .A .


185. By reason of the foregoing, Defendants have violated Section 10(b) of the

Exchange Act, 15 U .S.C. § 78j (b), and Rule 10b-5, 17 C.F.R. §240 .1 Ob-5, there under.

186. As a direct and proximate result of the conduct alleged herein, Plaintiffs have

suffered damages in connection with their investments with PFA.

COUNT IIIAgainst Cornide and de la Riva for Violation of Section 20(a) Of the Exchange Act For

Control Persons Liability

187. Plaintiffs repeat and reallege paragraphs 1 through 175 as though fully

incorporated herein .

188. As specifically alleged above, Defendants Cornide and de la Riva were, directl y

or indirectly, control persons of Pension Fund of American for purposes of Section 20(a) of th e

Exchange Act, 15 U.S.C. §78t(a), in that they exercised control over PFA's general affairs ,

including the content of public statements disseminated by PFA.

189 . PFA violated Section 10(b) of the Exchange Act and rule 1 Ob-5 there under .

190. As control persons of PFA, Cornide and de la Riva are jointly and severally liable

with and to the same extent as PFA for their violations of Section 10(b) of the Exchange Act, 1 5

U .S .C. §78(b), and rule 1 Ob-5, 17 C .F.R. § 240 .10b-5, there under .

191 . As a direct and proximate result of the conduct alleged herein, Plaintiffs have

suffered damages in connection with their investments with PFA.

DEMAND FOR JURY TRIAL




192. Plaintiffs request a jury trial on any and all counts for which a trial by jury i s

permitted by law.

RELIEF REQUESTED

WHEREFORE, Plaintiffs, individually and on behalf of the Class, respectfully reques t

that this Court:

a. Certify this action as a class action under Fed. R. Civ. P . 23 ;

b. Award Plaintiffs and the Class their damages, including pre judgmentinterest, under each of the counts of this complaint ;

c . Award Plaintiffs and the Class punitive damages ;

d. Award Plaintiffs and the Class their attorneys fees, costs and expensesunder each of the counts of this complaint ; and

e. Award Plaintiffs and the Class such further relief as is appropriate in theinterests of justice .



2525 Ponce de Leon, 9th Floor , Miami, Florida 33134 1 Phone 305 .372 .1800 1 Fax 305 .372 .3508 1 kttlaw.com

Respectfully submitted ,

PODHURST, ORSECK, P.A.25 W. Flagler Street, Suite 800Miami, Florida 3 3130(305) 358-2800(305) 358-2382 -fax

By :Victor M. Di z, Jr ., FISN :"56306Aaron S . Podhurst, FBN: 063606

KOZYAK TROPIN & THROCKMORTON, P .A.2525 Ponce de Leon9th Floo rCoral Gables, Florida 33134Telephone: (305) 372-1800Fax : (30 - 508

By :Harley S. Tro in, Esq., FBN: 241253David P. Milian, Esq ., FBN: 84442 1Thomas A. Tucker Ronzetti, Esq., FBN: 965723Christopher F . Branch, Esq ., FBN: 94175 1

Counsel for the Plaintiffs and theClass

CARLOS VELASQUEZ, P .A .Carlos Velasquez, Esq .101 N. Pine Island RoadSuite 20 1Plantation, Florida 33324Tel: (954) 382-0533

Additional Plaintiffs' Counsel

CERTIFICATE OF SERVICE

I HEREBY CUTIFY that a true and correct copy of the foregoing was servedby U.S . Mail this /S day of February, 2006 upon the part ies on the attached service

list .

David Milian

3381/101/262638 . 1

Second Amended Class Acff jy&W. jflj]itThrockmo1 on, P.A. 60


SERVICE LISTCASE NO.05-21169-CIV-MOORE

Christian Bartholomew, Esq .Morgan, Lewis & Bockius LLP1111 Pennsylvania Avenue, NWWashington , D .C. 20004cbartliolomew@morgal-ilewis .comAttorneys for Lehman Brothers

Bobby Brochin, Esq.Morgan, Lewis & Bockius LLP5300 Wachovia Financial Ctr.200 S . Biscayne Blvd ., Suite 5300Miami, FL 33131-2339RbrochinQmorganlewis . cornAttorneys for Lehman Brothers

Richard Critchlow, Esq .Harry Schafer, Esq .Kenny Nachwalter, P .A.1100 Miami Cente r201 S . Biscayne BoulevardMiami, Florida 3313 1E-Mail : [email protected] : HRSgkennynachwalter .conAttorneys for Raymond Jame s

Theresa L . Davis, Esq .Jonathan S . Feld, Esq.David H. Kistenbroker, Esq .Katten Muchin Rosenman LLP

Patricia Gorham, Esq .Richard L. Robbins, Esq .Sutherland Asbill & Brennan LLP999 Peachtree Street, NE, Suite 2300Atlanta, Georgia 30309-399 6E-Mail : Patricia . Gorhanx@sablaw, cornE-Mail : Richard. [email protected]. conAttorneys for Merrill Lynch

Dean Bunch, Esq .Sutherland Asbill & Brennan LLP3600 Maclay Blvd ., S ., Suite 202Tallahassee, Florida 32312-1267E-Mail: Dean. Bunch(c sablaw. cornAttorneys for Merrill Lync h

Rudolph Aragon, Esq .White & Case LLPWachovia Financial Center, Suite 4900200 South Biscayne BoulevardMiami Florida 3 3 13 1-2352E-Mail : Rara on e,whitecase_comAttorneys for Merrill Lynch

525 W . Monroe St ., Suite 1900Chicago , Illinois 6066 1E-Mail : theresa [email protected] : ' onathan.feld(c-,kattenlaw.comE-Mail : david . [email protected] for HSBC

Thomas E. Scott, Esq .Cole, Scott & Kissane, P .A.Paci fic National Bank Building1390 Brickell Ave ., Yd FloorMiami, Florida 3313 1E-Mail TESna ,cskl.egal .comAttorneys for HSBC

Jeffrey R. Sonn, Esq.Sonn & Erez100 N.E. Third AvenueSuite 610 .Fort Lauderdale , Florida 33301E-Mail : Jsonn e .investorlaw.usAttorneys for D.IG, Inc.



David M. Levine, Esq .Jeffrey C. Schneider, Esq .Tew Cardenas LLPFour Seasons Tower, 15th Floor1441 Brickell AvenueMiami, Florida 33131E-Mail : [email protected] : [email protected] for Thomas G. Schultz, Receive r

Marty Steinberg, Esq .Samuel A. Danon, Esq .Hunton & Williams LLP1111 Brickell AvenueSuite 2500Miami, Florida 3313 1E-mail: Msteinber hunton .comE-Mail : Sdanon cr,hunton .comAttorneys for Suntrus t

254715 .1 (WP)

Luis S. Konski, Esq .Becker & Poliakoff, P .A .121 Alhambra Plaza ,10 FloorCoral Gables, FL 3 313 4E-Mail : Lkonski becker- oliakoff.comAttorneys for Cornide & De La Riva

A.C. Brooke Clagett, Esq.Morgan, Lewis & Bockius, LLP1111 Pennsylvania Ave, NWWashington, DC 20004-2541Attorneys for Lehman Brothers, Inc .Bclaaett@Morgzailewis .coni



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