March 8 (Bloomberg) -- From the sparkling, emerald-green waters of the Atlantic off the east coast of Brazil, Cavala Island looks like a tropical paradise of lush vegetation framed by giant rocks. It’s also where millionaire Antonio Claudio Resende, a founder of Latin America’s largest car-rental company, became a squatter.
There, starting in 2006, he cleared pristine jungle where wild bromeliad flowers grow to make way for a 1,752-square-meter mansion, according to the Rio de Janeiro state environmental agency. The house -- which is built partially underground and hidden by surrounding lush forest -- is visible only from above by aircraft.
Resende, 65, broke the rules that gave him the right to occupy the land on a nature preserve, not to build a large home, Brazilian federal judges found. He has been fighting civil and criminal charges against him for more than four years, filing appeals while defying court orders to demolish the house and leave, Bloomberg Markets magazine reports in its April issue.
Resende is among scores of millionaires who spend weekends and vacation time in homes built in violation of state and federal environmental rules on some of the most beautiful real estate in Brazil, Rio’s state environmental institute, INEA, found in an August 2011 report.
The squatters include movie director Bruno Barreto, who destroyed preserved land on Pico Island in Paraty Bay, prosecutors say.
Others, such as the family that controls multinational construction giant Camargo Correa SA, received government permission to build small houses in a nature preserve -- and instead constructed beachfront compounds.
Heirs to Roberto Marinho, who created Organizacoes Globo, South America’s biggest media group, built a 1,300-square-meter (14,000-square-foot) home, helipad and swimming pool in part of the Atlantic coastal forest that by law is supposed to be untouched because of its ecology.
Hollywood producers chose a Polynesian-style mansion on the Mamangua Inlet as the romantic setting for a sex scene in “The Twilight Saga: Breaking Dawn Part 1,” the fourth movie in the teen vampire series. The house was built by millionaire squatter Icaro Fernandes, an executive in the food distribution industry.
All Brazilian beaches are public by law. Wealthy Brazilians do whatever they want on land that often doesn’t belong to them, says Eduardo Godoy of the Paraty office of the Chico Mendes Institute for Biodiversity Conservation, or ICMBio, which manages federally protected areas.
‘Not What the Law Says’
“They think they are the only ones who deserve to enjoy a piece of paradise because they are rich,” Godoy says. “They say they are the owners of the island or the beach, and everybody believes them. But that’s not what the law says.”
Fernandes declined to comment. Rogerio Zouein, his lawyer, admitted that Fernandes had built a house without a license. Zouein told prosecutors in April 2011 that Fernandes would restore 95 percent of his property to its original condition if he could stay in the home. Prosecutors were evaluating the request as of early March.
That court response is a common way that many of the wealthy squatters use to handle judges’ orders. They typically don’t deny they’ve harmed the environment and instead pledge to undo the damage. After that, they take no action.
Film director Barreto promised in court in January 2008 that he would demolish his house and put the area back to its original state within two years. Four years later, Barreto remains on the property, having left it intact, prosecutors say. Barreto, who is appealing government complaints again him, declined to comment.
As the wealthy in Brazil get richer from the fastest economic growth there in more than two decades, the unlawful use of public land is increasing in nature preserves, says Godoy, whose federal environmental agency in Paraty, a 17th-century colonial town about 250 kilometers (155 miles) south of Rio de Janeiro, faces a bay filled with illegally occupied islands.
Squatters have chosen to reside in the Cairucu, Juatinga and Tamoios conservation areas, in forests and on islands, with rivers, waterfalls and beaches where sea turtles nest. The rich use attorneys to dodge laws, lie to authorities on construction permit requests, illegally destroy preserved land and rivers and privatize beaches by hiring armed security guards to keep out visitors, Godoy says.
Law enforcers and judges pushing to remove squatters from nature preserves have little clout, says Fernando Amorim Lavieri, a federal prosecutor who spent three years in the Paraty area. Rich Brazilians can get away with almost anything, Lavieri says.
“The law is the same for the poor and the rich, but the rich have the best lawyers,” he says. “Lawsuits against them drag on in court for years.”
Brazil’s economy, fueled by a credit surge and booming exports during the past decade, has boosted the value of assets, including real estate, stocks, bonds and commodities, thereby creating 19 new millionaires every day in a country of 190 million people, according to the 2010 World Wealth Report by Capgemini SA and Bank of America Merrill Lynch.
Brazilians have a collective net worth of $890 billion, or 39 percent of all individual assets in South America, according to a November 2011 report by Wealth-X, a Singapore-based research firm.
Squatters take advantage of loopholes in the laws, Lavieri says. Starting in 1983, the federal government enacted laws to preserve the regions of Paraty and nearby Angra dos Reis because rare species at risk of extinction inhabit them. Local statutes allow some people to live there because indigenous fishing families have been in now-preserved areas for generations.
‘Follow the Rules’
Everyone who buys a right to a property in a conservation area must follow strict limits on what they can build, if they’re allowed to build at all.
“If they don’t follow the rules, the government can revoke their right to occupy the land and order them to demolish whatever they built,” says Jose Olimpio Augusto Morelli, an environmental analyst who heads the office of Ibama, Brazil’s federal environmental agency, in Angra dos Reis.
Ibama ordered Resende to tear down the house he was building on Cavala Island.
Federal prosecutors charged Resende, vice chairman and the largest shareholder of Localiza Rent a Car SA, with fraud and environmental crime in November 2007. Resende had filed forged documents in seeking permits to build his mansion on Cavala Island, according to the criminal charges.
In March 2008, federal police, Ibama and state government agents raided Cavala from two speedboats and found the hidden paradise. In that raid, Morelli says, he saw two huge machines that Resende used to excavate more than 2,000 square meters of earth to hide his mansion below the tree line.
“I saw a fireplace big enough to fit a car, and there were huge piles of marble everywhere, waiting to be placed on the floors and walls,” Morelli says.
Prosecutors sued Resende in a civil case in August 2008, saying he had violated environmental rules.
Resende paid 4.8 million reais ($2.8 million) in November 2005 to AC Lobato Engenharia SA, an engineering company based in Angra dos Reis that had previously owned the right to occupy the land, according to a federal police investigation.
Resende has been appealing the civil and criminal accusations. He said in a court-filed response that federal judges shouldn’t rule on the case because the Tamoios conservation area was created by a state decree. Sergio Rosenthal, his lawyer, said in court that Resende doesn’t know anything about fraud or forged documents.
Only Tropical Fjord
On the other side of Paraty Bay, Icaro Fernandes, owner of Rhino Participacoes & Distribuidora de Alimentos Ltda., a Sao Paulo-based wholesale food distributor, bought a 400,000-square--meter piece of land in 2003 on Praia da Costa beach on the Mamangua Inlet.
The property, in the 8,000-hectare (19,800-acre) Juatinga ecological preserve, is protected because it’s home to the only tropical fjord in South America. The spot is flanked by mountains covered with virtually untouched forest where monkeys, anteaters and jaguars live.
Fernandes constructed a two-story, 666-square-meter home on the beach, prosecutors say in a civil court case against him. The 15-room house has wooden shutters and glass-panel windows on the ground floor. A guesthouse and a housekeeper’s chalet sit up a hill.
Federal prosecutors sued Fernandes in November 2004 for not obtaining an environmental license to build. He had cut down parts of the protected forest, filled in a stream and removed coastal vegetation, federal prosecutor Patricia Venancio wrote in a Jan. 3, 2006, report.
A court ordered Fernandes in 2004 to stop construction, and he didn’t. Since then, he’s been appealing judicial demands to tear down the house he completed and restore the land to its original state, according to a September 2011 report by ICMBio.
Paul Pflug, a spokesman for Summit Entertainment Corp., says the company isn’t aware of prosecutor accusations regarding the property where it filmed Breaking Dawn.
Most millionaires register properties in the names of holding companies, allowing them to pay lower taxes and making it more difficult for the government to know who’s responsible for environmental crimes, says Ricardo Martins, a federal prosecutor. Often, the companies are controlled by other companies based in tax havens.
That’s the case with the Marinho media family. The Marinhos broke environmental laws by building a 1,300-square-meter mansion just off Santa Rita beach, near Paraty, says Graziela Moraes Barros, an inspector at ICMBio.
Without permits, the family in 2008 built a modernist home between two wide, independent concrete blocks sheathed in glass, Barros says. The Marinho home has won several architectural honors, including the 2010 Wallpaper Design Award.
The Marinhos added a swimming pool on the public beach and cleared protected jungle to make room for a helipad, says Barros, who participated in a raid of the property as part of the federal prosecutors office’s lawsuit against construction on the land.
“This one house provides examples of some of the most serious environmental crimes we see in the region,” Barros says. “A lot of people say the Marinhos rule Brazil. The beach house shows the family certainly thinks they are above the law.”
Two security guards armed with pistols patrol the land, shooing away anyone who tries to use the public beach, she says. A federal judge in November 2010 ordered the family to tear down the house and all other buildings in the area. The Marinhos were appealing that ruling as of early March.
Their lawyer, Corina Tarcila de Oliveira Resende, who’s not related to Antonio Claudio Resende, declined to comment.
Barreto built his dream house on an island 15 kilometers from the Marinho compound. The film director has no right to use the land, police say. Prosecutors charged Barreto in February 2006 with illegally clearing protected forest in an area that belongs to Brazil’s navy.
A September 2008 inspection by ICMBio found that Barreto had built a 450-square-meter mansion on top of rocks that surround the island -- a crime because the area is protected as a breeding ground for several species, ICMBio’s Godoy says.
Barreto, who was married to actress Amy Irving and who directed “View From the Top” starring Gwyneth Paltrow and “Carried Away” with Dennis Hopper, hasn’t made good on his 2008 court promise to demolish the house. He and his lawyers, Arthur Lavigne and Fernanda Silva Telles, didn’t reply to requests for comment.
The owners of Camargo Correa, Brazil’s largest construction conglomerate, also built on preserved land, Barros says. Agropecuaria & Comercial Conquista Ltda. and Regimar Comercial SA own the land. Fernando de Arruda Botelho is the owner of Agropecuaria.
He’s married to billionaire Rosana Camargo de Arruda Botelho. Regina de Camargo Pires Oliveira Dias, Rosana’s sister, owns Regimar. The family built a luxury compound in the Cairucu nature preserve, according to reports by Ibama. In October 2011, the family illegally built two 700-square-meter houses, adding to the already unauthorized construction, Barros says.
In June 2010, the beach was the venue for the wedding of Fernando Augusto Camargo de Arruda Botelho, Fernando Botelho’s son. About 800 guests attended.
Contradictory and Confusing
Fernando Botelho declined to comment. Regimar executive director Jose Sampaio Correa says the company obtained the required licenses for construction. He says environmental rules in conservation areas are sometimes contradictory and confusing. Brazil’s bureaucracy often makes it difficult to comply with the laws, he says.
“These actions are proof that they completely disregard the law, they take ownership of natural resources and believe their rights are greater than the rights of everybody else,” prosecutor Lavieri says.
As environmental investigator Morelli gets ready in his office for another boat raid one sunny January morning, he admires the beautiful islands and forests he sees from his windows. He says he dreams of a day when rich Brazilians will set the example of how to do things right. Until then, he says, money will continue to be more powerful than the law.
Editors: Jonathan Neumann, Gail Roche
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