August 28, 2007 / 10:33 PM / 12 years ago

Former exec to pay $165 million in fraud case

MIAMI (Reuters) - A former corporate executive was sentenced on Tuesday to 20 years in prison and ordered to pay $165 million restitution in a massive Florida fraud against Portuguese bank Banco Espirito Santo, prosecutors said.

Eduardo Orlansky, the ex-chairman of now-defunct E.S. Bankest, was convicted last year of 44 felony counts including bank fraud, wire fraud, money laundering and conspiracy, following a trial in Miami.

E.S. Bankest was a factoring company created by Espirito Santo and Bankest Capital Corp. in 1998. Factors buy other firms’ accounts receivable at a discount, then collect the bills and keep the difference.

Prosecutors said Bankest borrowed millions of dollars from Banco Espirito Santo based on fraud and fabricated accounts receivable. The bank eventually absorbed the losses.

Bankest went under after its officers were indicted for fraud in 2003.

The Bankest case led Banco Espirito Santo to sue accounting firm BDO Seidman on allegations that it negligently failed to uncover fraud at Bankest.

A Miami jury found BDO Seidman liable for gross negligence in June and earlier this month the accounting company was ordered to pay Banco Espirito Santo compensatory and punitive damages totaling $522 million.

Eduardo Orlansky was the last of four Bankest corporate officers to be sentenced. His brother, former Bankest president Hector Orlansky, previously was sentenced to 20 years, while ex-treasurer R. Peter Stanham received nine years in prison and former vice-president Ariadna Puerto got seven years.

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