Ecuador can pursue a lawsuit seeking to recover hundreds of millions of dollars the country claims was fraudulently drained by the owners of Filanbanco SA who later moved to Miami, a Florida appeals court ruled.
Today’s ruling overturns a lower-court decision that sided with William and Roberto Isaias, and returned the case for further proceedings. The lower court erred in granting the Isaias brothers an “extraterritoriality exception” to the practice of U.S. courts respecting government acts pursued by another sovereign nation, the appeals court said.
“The record demonstrates genuine issues of fact regarding the allegedly remaining indebtedness of the Isaiases to the republic,” the appeals court ruled. “The Isaiases did not make a conclusive showing” in the lower court that the actions of Ecuadorian banking authorities were “confiscatory acts strictly based on politics, revolution or regime change.”
Filanbanco experienced a liquidity crisis in 1998 as part of a national financial crisis, according to today’s ruling. Ecuador concluded the Isaiases engaged in “fraudulent misconduct” and issued arrest warrants in 2003 for the brothers, who had moved to Miami, according to the filing. The country said in its 2009 suit in state court in Miami that the brothers had at least $20 million in property in the city, and sought to collect remaining liabilities of as much as $200 million.
The Isaias brothers have received help from U.S. Senator Robert Menendez, a New Jersey Democrat who is chairman of the Foreign Relations Committee, according to an NBC report.
Menendez denied wrongdoing Jan. 24 after NBC 4 New York reported the Justice Department was probing his efforts to help the brothers avoid extradition to Ecuador. Investigators were examining whether Menendez broke laws in trying to help the brothers stay in the U.S., NBC said, citing current and former U.S. officials it didn’t name.
Menendez wrote letters and made phone calls to the State Department and Department of Homeland Security on behalf of the brothers, who are seeking permanent residence in the U.S., NBC reported.
Elliot Kula, a lawyer for the Isaiases, didn’t immediately respond to phone and e-mail messages after regular business hours seeking comment on the ruling.
The case is The Republic of Ecuador v. Isaias Dassum, 3D13-1753, Third District Court of Appeal for the State of Florida (Miami).