Brazil freezes $125M in probe of bank controlled by evangelical leader
by Mar Puig · UPIJune 23 (UPI) -- Brazil's Federal Police launched an operation Tuesday targeting an alleged financial fraud scheme at Banco Digimais and ordered freezing assets equivalent to some $125 million.
Banco Digimais is an institution controlled by evangelical bishop Edir Macedo, founder of the Universal Church of the Kingdom of God and regarded as one of the country's most influential evangelical leaders.
More than 50 federal agents executed nine search-and-seizure warrants authorized by a federal court in São Paulo as part of Operation Mirage. The court order also authorized lifting banking and tax secrecy protections for those under investigation.
According to the Federal Police, the investigation is based on reports prepared by the Central Bank of Brazil, the country's main financial regulator, that identified what authorities described as serious irregularities in the management of the institution.
Investigators suspect that bank executives manipulated financial statements and regulatory records to conceal the institution's true financial condition, project an appearance of solvency to supervisory authorities and facilitate allegedly irregular transactions.
According to the Federal Police, the scheme allegedly involved the systematic manipulation of balance sheets and accounting results to conceal losses, inflate assets and generate artificial revenue worth hundreds of millions of Brazilian reais.
Authorities maintain that these practices allowed the bank to present a more favorable financial position than its actual condition to regulators and investors, facilitating fundraising operations that did not reflect the institution's true financial situation.
BBC News Brasil reported that investigators suspect investment funds were used as part of the scheme to conceal the bank's actual financial condition.
According to ICL Notícias, part of the scheme involved transferring assets into funds managed by companies linked to the financial group associated with Digimais.
Investigators contend these transactions may have allowed assets to be systematically overvalued, artificial revenue to be generated and the institution's financial deterioration to be concealed.
ICL Notícias also reported that the investigation is examining an increase in issuance of bank deposit certificates, known as CDBs -- instruments used by Brazilian banks to raise funds from investors. According to investigators, Digimais offered returns above 110% of the Interbank Deposit Certificate, or CDI, one of the main benchmark rates in Brazil's financial market.
The Federal Police also are investigating alleged irregular financial transactions that may have benefited the bank's parent company, as well as the possible insertion of false or manipulated information into official systems used by regulatory agencies.
Those under investigation could face charges including fraudulent management, the insertion of false data into financial statements and the execution of prohibited credit operations, as established under Brazilian legislation governing crimes against the National Financial System.
BBC News Brasil reported that targets of the search warrants included Digimais executives, among them Bishop João Urbaneja and his son, Thiago Urbaneja, as well as people linked to fund management companies associated with the institution.
According to ICL Notícias, Macedo is among those under investigation because of his status as the bank's controlling shareholder. However, news reports did not indicate that he was a target of Tuesday's searches. BBC reported that the religious leader was not included in the warrants because he currently resides outside Brazil.
The investigation comes two months after investment bank BTG Pactual announced the signing of an agreement to acquire Digimais, according to BBC News Brasil.
Banco Digimais was founded in 1981 under the name Banco Renner in the state of Rio Grande do Sul. The institution was restructured as a digital bank in 2020, adopted the Digimais name and became wholly owned by Macedo.
Macedo, 81, is the founder of the Universal Church of the Kingdom of God and owner of the Record media conglomerate, one of Brazil's largest media groups.