Click Fraud: The dark side of online advertising (a Case Story from Business Week)

Martin Fleischmann put his faith in online advertising. He used it to build his Atlanta company,, which offers consumers rate quotes and other information on insurance and mortgages. Last year he paid Yahoo! Inc. (YHOO )and Google Inc. (GOOG ) a total of $2 million in advertising fees. The 40-year-old entrepreneur believed the celebrated promise of Internet marketing: You pay only when prospective customers click on your ads.

Google vs. Yahoo

Now, Fleischmann’s faith has been shaken. Over the past three years, he has noticed a growing number of puzzling clicks coming from such places as Botswana, Mongolia, and Syria. This seemed strange, since MostChoice steers customers to insurance and mortgage brokers only in the U.S. Fleischmann, who has an economics degree from Yale University and an MBA from Wharton, has used specially designed software to discover that the MostChoice ads being clicked from distant shores had appeared not on pages of Google or Yahoo but on curious Web sites with names like and He smelled a swindle, and he calculates it has cost his business more than $100,000 since 2003.

Fleischmann is a victim of click fraud: a dizzying collection of scams and deceptions that inflate advertising bills for thousands of companies of all sizes. The spreading scourge poses the single biggest threat to the Internet’s advertising gold mine and is the most nettlesome question facing Google and Yahoo, whose digital empires depend on all that gold.

The growing ranks of businesspeople worried about click fraud typically have no complaint about versions of their ads that appear on actual Google or Yahoo Web pages, often next to search results. The trouble arises when the Internet giants boost their profits by recycling ads to millions of other sites, ranging from the familiar, such as, to dummy Web addresses like, which display lists of ads and little if anything else. When somebody clicks on these recycled ads, marketers such as MostChoice get billed, sometimes even if the clicks appear to come from Mongolia. Google or Yahoo then share the revenue with a daisy chain of Web site hosts and operators. A penny or so even trickles down to the lowly clickers. That means Google and Yahoo at times passively profit from click fraud and, in theory, have an incentive to tolerate it. So do smaller search engines and marketing networks that similarly recycle ads.

Google and Yahoo say they filter out most questionable clicks and either don’t charge for them or reimburse advertisers that have been wrongly billed. Determined to prevent a backlash, the Internet ad titans say the extent of click chicanery has been exaggerated, and they stress that they combat the problem vigorously. “We think click fraud is a serious but manageable issue,” says John Slade, Yahoo’s senior director for global product management. “Google strives to detect every invalid click that passes through its system,” says Shuman Ghosemajumder, the search engine’s manager for trust and safety. “It’s absolutely in our best interest for advertisers to have confidence in this industry.”

That confidence may be slipping. A BusinessWeek investigation has revealed a thriving click-fraud underground populated by swarms of small-time players, making detection difficult. “Paid to read” rings with hundreds or thousands of members each, all of them pressing PC mice over and over in living rooms and dens around the world. In some cases, “clickbot” software generates page hits automatically and anonymously. Participants from Kentucky to China speak of making from $25 to several thousand dollars a month apiece, cash they wouldn’t receive if Google and Yahoo were as successful at blocking fraud as they claim.

Google vs. Yahoo

“It’s not that much different from someone coming up and taking money out of your wallet,” says David Struck. He and his wife, Renee, both 35, say they dabbled in click fraud last year, making more than $5,000 in four months. Employing a common scheme, the McGregor (Minn.) couple set up dummy Web sites filled with nothing but recycled Google and Yahoo advertisements. Then they paid others small amounts to visit the sites, where it was understood they would click away on the ads, says David Struck. It was “way too easy,” he adds. Gradually, he says, he and his wife began to realize they were cheating unwitting advertisers, so they stopped. “Whatever Google and Yahoo are doing [to stop fraud], it’s not having much of an effect,” he says.

Spending on Internet ads is growing faster than any other sector of the advertising industry and is expected to surge from $12.5 billion last year to $29 billion in 2010 in the U.S. alone, according to researcher eMarketer Inc. About half of these dollars are going into deals requiring advertisers to pay by the click. Most other Internet ads are priced according to “impressions,” or how many people view them. Yahoo executives warned on Sept. 19 that weak ad spending by auto and financial-services companies would hurt its third-quarter revenue. Share prices of Yahoo and Google tumbled on the news.

Google and Yahoo are grabbing billions of dollars once collected by traditional print and broadcast outlets, based partly on the assumption that clicks are a reliable, quantifiable measure of consumer interest that the older media simply can’t match. But the huge influx of cash for online ads has attracted armies of con artists whose activities are eroding that crucial assumption and could eat into the optimistic expectations for online advertising. (Advertisers generally don’t grumble about fraudulent clicks coming from the Web sites of traditional media outlets. But there are growing concerns about these media sites exaggerating how many visitors they have — the online version of inflating circulation.)

Most academics and consultants who study online advertising estimate that 10% to 15% of ad clicks are fake, representing roughly $1 billion in annual billings. Usually the search engines divide these proceeds with several players: First, there are intermediaries known as “domain parking” companies, to which the search engines redistribute their ads. Domain parkers host “parked” Web sites, many of which are those dummy sites containing only ads. Cheats who own parked sites obtain search-engine ads from the domain parkers and arrange for the ads to be clicked on, triggering bills to advertisers. In all, $300 million to $500 million a year could be flowing to the click-fraud industry.

Law enforcement has only lately started focusing on the threat. A cybercrime unit led by the FBI and U.S. Postal Inspection Service just last month assigned two analysts to examine whether federal laws are being violated. The FBI acted after noticing suspected cybercriminals discussing click fraud in chat rooms. The staff of the Senate Judiciary Committee has launched its own informal probe.

Many advertisers, meanwhile, are starting to get antsy. Google and Yahoo have each settled a class action filed by marketers. In late September a coalition of such major brands as Expedia Inc.’s travel site and mortgage broker LendingTree is planning to go public with its mounting unease over click fraud, BusinessWeek has learned. The companies intend to form a group to share information and pressure Google and Yahoo to be more forthcoming. “You can’t blame the advertisers for being suspicious,” says Robert Pettee, search marketing manager for LendingTree, based in Charlotte, N.C. “If it’s your money that’s going out the door, you need to be asking questions.” He says that up to 15% of the clicks on his company’s ads are bogus.

In June, researcher Outsell Inc. released a blind survey of 407 advertisers, 37% of which said they had reduced or were planning to reduce their pay-per-click budgets because of fraud concerns. “The click fraud and bad sites are driving people away,” says Fleischmann. He’s trimming his online ad budget by 15% this year.

Google and Yahoo insist there’s no reason to fret. They say they use sophisticated algorithms and intelligence from advertisers to identify the vast majority of fake clicks. But the big search engines won’t disclose the specifics of their methods, saying illicit clickers would exploit the information.

Some people who have worked in the industry say that as long as Google and Yahoo distribute ads to nearly anyone with a rudimentary Web site, fraud will continue. “Advertisers should be concerned,” says a former Yahoo manager who requested anonymity. “A well-executed click-fraud attack is nearly impossible, if not impossible, to detect.”

ALTHOUGH 5 FEET 6 AND 135 POUNDS, Marty Fleischmann is no one to push around. He barked orders at much bigger oarsmen while serving as coxswain on the varsity crew team at Yale in the mid-1980s. His shyness deficit surfaced again when he later played the role of Jerry Seinfeld in the student follies at Wharton. Married and the father of three children, he tends to pepper his conversation with jargon about incentives and efficiencies.

Before he and partner Michael Levy co-founded their financial-information company in 1999, Fleischmann worked in Atlanta at the management consulting firm A.T. Kearney Inc., advising major corporations in the shipping and pharmaceutical industries. One lesson he says he learned is that big companies are loath to cut off any steady source of revenue. Google and Yahoo are no different, he argues.

That cynicism several years ago contributed to MostChoice’s assigning an in-house programmer to design a system for analyzing every click on a company ad: the Web page where the ad appeared, the clicker’s country, the length of the clicker’s visit to MostChoice’s site, and whether the visitor became a customer. Few companies go to such lengths, let alone companies with only 30 employees and revenue last year of just $6.4 million.

To Fleischmann, the validity of his clicks, for which he pays up to $8 apiece, has become an obsession. Every day he pores over fresh spreadsheets of click analysis. “I told Yahoo years ago,” he says, “‘If this was costing you money instead of making you money, you would have stopped this.”‘

Google, he says, does a better job than Yahoo of screening for fraud. But neither adequately protects marketers, he argues. Until March, 2005, Google, based in Mountain View, Calif., charged advertisers twice for “double clicks,” meaning those occasions when a user unnecessarily clicks twice in quick succession on an ad. Confirming this, Google’s Ghosemajumder says that before the company made the change, it felt it had to focus “on issues of malicious behavior,” though now it identifies double clicks and bills for only one.

Fleischmann’s daily immersion in click statistics fuels his indignation. How, he wants to know, did he receive traffic this summer from PCs in South Korea which are clicking on and The only content on these identical sites — and five other clones with similar names — are lists of Yahoo ads, which occasionally have included MostChoice promotions. Fleischmann’s spreadsheets revealed, not surprisingly, that all of the suspected Korean clickers left his site in a matter of seconds, and none became customers. The two individuals registered as owning the mysterious insurance sites are based in South Korea. They didn’t respond to requests for comment, and most of the sites disappeared in late summer, after MostChoice challenged Yahoo about them.

Fleischmann, like most other advertisers, has agreed to let Google and Yahoo recycle his ads on affiliated sites. The search engines describe these affiliates in glowing terms. A Google “help” page entitled “Where will my ads appear?” mentions such brand names as (TWX ) and the Web site of The New York Times. Left unmentioned are the parked Web sites filled exclusively with ads and sometimes associated with click-fraud rings.

Google and Yahoo defend their practice of recycling advertising to domain-parking firms and then on to parked sites, saying that the lists of ads on the sites help point Internet surfers toward relevant information. Google notes that it allows advertisers to identify sites on which they don’t want their ads to run.

But this Google feature doesn’t apply to many parked sites, and Yahoo doesn’t offer the option at all. In any event, excluding individual sites is difficult for marketers that don’t do the sort of time-consuming research MostChoice does. Whether they know it or not, many other companies are afflicted in similar ways. At BusinessWeek‘s request, Click Forensics Inc., an online auditing firm in San Antonio, analyzed the records of its 170 financial-services clients and found that from March through July of this year, 13 companies had received clicks from Web sites identified as dubious by MostChoice.

Yahoo declined to comment on insurance1472, -060, and other suspect sites in its ad network. The Sunnyvale (Calif.) search giant stressed that in many cases it doesn’t deal directly with parked sites; instead, it distributes its ads by means of domain-parking firms.

BusinessWeek‘s independent analysis of the MostChoice records turned up additional indications of click fraud. Over the past six months, the company received 139 visitors through an advertisement on the parked site, which offers only ads supplied by Yahoo. Most of these visitors were located in Bulgaria, the Czech Republic, Egypt, and Ukraine. Their average stay on was only six seconds, and none of them became a customer. offers a revealing entry point into the click-fraud realm. It is one of several parked sites registered to Roland Kiss of Budapest. Kiss also owns “PTR” refers to “paid to read.” In theory, paid-to-read sites recruit members who agree to read marketing e-mails and Web sites tailored to their interests. PTR site operators pay members for each e-mail and Web site they read, usually a penny or less.

In reality, many PTR sites are click-fraud rings, some with hundreds or thousands of participants paid to click on ads. BestPTRsite says it has 977 members. On Aug. 23 its administrator sent an e-mail to members containing a list of parked sites filled with ads. One of these sites,, which is also registered to Kiss, has been a source of apparently bogus clicks on MostChoice. The e-mail instructed members to click on different links every day, a common means to avoid detection. Members were also told to cut and paste text from the Web pages they click as proof of their activity. “If you send us back always the same link you will get banned and not paid! So take care and visit everyday a new link,” the e-mail said.

Reached by telephone, Kiss says that his registration name is false and declines to reveal the real one. He says he’s the 23-year-old son of computer technicians and has studied finance. He owns about 20 paid-to-read sites, he says, as well as 200 parked sites stuffed with Google and Yahoo advertisements. But he says he will take down to avoid discovery. He claims to take in $70,000 in ad revenue a month, but says that only 10% of that comes from PTRs. The rest, he says, reflects legitimate clicks by real Web surfers. He refrains from more PTR activity, he claims, because “it’s no good for advertisers, no good for Google, no good for Yahoo.” It’s not unusual for people who are involved in PTR activity to profess that they restrict their behavior in some way for the good of advertisers and the big search engines.

After joining several PTR groups, BusinessWeek reporters received a torrent of e-mail showcasing hundreds of parked sites filled with Google and Yahoo ads. The groups urged participants to click aggressively on ads. “People don’t click because they’re interested in the subject,” says Pam Parrish, a medical editor in Indianapolis who has participated in PTR sites. “They’re clicking on ads to get paid.”

Parrish, 52, says that when she started three years ago, PTR sites drew clickers like herself: potential customers looking to pick up a few spare dollars. At one point, she says she belonged to as many as 50 such sites but earned only about $200 all told. More recently, she says, most PTR sites have dropped the pretense of caring whether members are interested in the sites they visit. Parrish and others active on PTR sites say click fraud became more blatant as Google and Yahoo made their ads more widely available to parked sites.

Google and Yahoo say they filter out most PTR activity. “We manage that very well,” says Google’s Ghosemajumder. “It hasn’t been an issue across our network, but it’s something we take very seriously.” Yahoo adds that PTR sites carrying its ads are in “very serious violation” of its standard distribution agreement. Yahoo says it scans its network for PTR activity, but declines to describe its methods.

PTR impresarios often don’t fit the profile of an illicit kingpin. Michele Ballard runs a 2,200-member network called from her home in the small town of Hartford, Ky. On disability since a 1996 car accident, Ballard, 36, lives with her ailing mother and her cat, Sassy. She says she works day and night running Owl-Post, a five-year-old group named after the postal system in the Harry Potter novels. Sometimes, Ballard says she takes a break at lunchtime to tend her vegetable garden or help her elderly neighbors with theirs.

She sends her members a daily e-mail containing links to parked Web pages, many of them filled with Google ads. Her e-mails, decorated with smiley faces, suggest to members: “If you could just give a click on something on each page.” She owns some of the parked pages, so she gets a share of the revenue when ads on them are clicked. She claims her take amounts to only about $60 a month, noting that if she made more than $85, the government would reduce her $601 monthly disability check.

In August, Google cut off a domain parking firm that hosted some of Ballard’s sites. Showing her resilience, she moved the sites to other domain parkers, although none of those currently distributes Google ads. “Google would prefer you not to send out ads on paid e-mails, because they get too much crappy traffic,” she says in a phone interview. She realizes that advertisers would get angry “if they knew we were just sitting here, clicking and not interested” in their wares. But, she adds, “They haven’t figured that out yet.”

Despite these views, Ballard says she doesn’t think she’s doing anything improper, let alone illegal. While investigations of some Internet criminals have revealed evidence of click fraud, the activity itself hasn’t been the subject of prosecution. Ballard says Owl-Post is “like a huge family” whose members sometimes help out colleagues in financial distress. She says the network includes people who have low incomes and are desperate to earn cash to pay their bills. “A lot of people would be hurt if [the PTR business] crashed,” she says.

Google’s Ghosemajumder says any operation inviting people to click on ads is encouraging fraud, but he expresses skepticism about the overall scale of PTR activity: “People have a great tendency to exaggerate when they say they can attack Google’s service.”

Networks of human clickers aren’t the only source of fake Web traffic. Scores of automated clicking programs, known as clickbots, are available to be downloaded from the Internet and claim to provide protection against detection. “The primary use is to cheat advertising companies,” says Anatoly Smelkov, creator of Clicking Agent, a clickbot he says he has sold to some 5,000 customers worldwide.

The brazen 32-year-old Russian software developer lives in the city of Novosibirsk in western Siberia and says he received a physics degree from the state university there. A fan of the British physicist and author Stephen W. Hawking, Smelkov says Clicking Agent is a sideline that generates about $10,000 a year for him; he also writes software for video sharing and other purposes.

Clickbots are popular among online cheats because they disguise a PC’s unique numerical identification, or IP address, and can space clicks minutes apart to make them less conspicuous. Smelkov shrugs off his role in facilitating deception. He points out that the first four letters of the name of his company, LoteSoft Co., stand for “living on the edge.” Teasing, he asks: “You aren’t going to send the FBI to me, are you?”

Google and Yahoo say they can identify automated click fraud and discount advertisers’ bills accordingly. Jianhui Shi, a Smelkov customer who goes by the name Johnny, says that for this very reason he steers away from Google and Yahoo ads. An unemployed resident of the booming southern Chinese city of Shenzhen, Jianhui says he has used Clicking Agent to click all sorts of ads on sites he controls, making about $20,000 a year from this activity. While he doesn’t click on Google and Yahoo ads, he says that more skilled Chinese programmers modify Clicking Agent to outwit the American search engines. “Many in China use this tool to make money,” he wrote in an e-mail to BusinessWeek.

Back at the bare-bones MostChoice offices in north Atlanta, Marty Fleischmann continues to demand recompense. He says he has received refunds from Google and Yahoo totaling only about $35,000 out of the $100,000 he feels he is owed. In one exchange, MostChoice e-mailed Google to point out 316 clicks it received in June from, a little-known search site. MostChoice paid an average of $4.56 a click, or roughly $1,500 for the batch. Only one converted into a customer. Google initially responded that “after a thorough manual review” some bad clicks were filtered out before MostChoice was charged. Refund request: denied.

But as clicks from ZapMeta kept arriving, Fleischmann demanded in an Aug. 7 e-mail to Google: “You should be trusting us and doing something about [ZapMeta] as a partner, instead of finding more ways to refute our data or requests.” (BusinessWeek‘s e-mail to ZapMeta’s site and its registered owner, Kevin H. Nguyen, elicited no response.)

Finally, on Aug. 8, Google admitted that clicks from ZapMeta “seem to be coming through sophisticated means.” A Google employee who identified himself only as “Jason” added in an e-mail: “We are working with our engineers to prevent these clicks from continuing.” MostChoice received a $2,527.93 refund that included reimbursement for suspect clicks from an additional site as well.

Google says it has refunded MostChoice for all invalid clicks and won’t charge for any additional ZapMeta clicks until the situation is resolved. But Google also says it doesn’t believe ZapMeta has done anything improper. As of late September, ZapMeta continued to carry ads that had been recycled from Google, although not MostChoice ads.

Randall S. Hansen, a professor of marketing at Stetson University in Deland, Fla., sees a larger lesson in tales of this sort. “We are just beginning to see more and more mainstream advertisers make the Internet a bigger part of their ad budget, and move dollars from print and TV,” says Hansen, who has held marketing jobs at The New Yorker and People magazines. “But if we can’t fix this click-fraud problem, then it is going to scare away the further development of the Internet as an advertising medium. If there is an undercurrent of fraud, then why should a large advertiser be losing $1 million, or maybe not know how much it is losing?”

By Brian Grow and Ben Elgin, with Moira Herbst

OCTOBER 2, 2006


Banking and Politics in Fraud – Fall of the Giant: Banco Intercontinental (or BANINTER

This is an interesting piece of Fraud case listed on Wikipedia that catches our attention upon how the econo-political environment of a country can damage giant business entitites

Banco Intercontinental (or BANINTER) was the second largest privately held commercial bank in the Dominican Republic before collapsing in 2003 in a spectacular fraud tied to political corruption. The resulting deficit of more than US$2.2 billion was equal to 12% to 15% of the Dominican national gross domestic product.[1] The size of the bank meltdown and the mishandling of it by the administration of former President Hipólito Mejía contributed materially to the Dominican economy entering a prolonged steep decline. However, the underlying fraudulent bookeeping and political influence peddling had been ongoing for many years and through the administrations of all major Dominican political parties. Current President Leonel Fernández had previously been hired as an outside counsel for the bank.[citation needed]

Ramón Báez Figueroa and expansion of BANINTER

Banco Intercontinental was created in 1986 by Ramón Báez Romano, a businessman and former Industry Minister. His oldest son, Ramón Báez Figueroa, took over the small bank and helped build it into the country’s number two private commercial bank. BANINTER grew quickly into a typical family-run conglomerate, buying up companies or controlling interests in firms that touched on nearly every aspect of Dominican life.

In the process, Báez Figueroa amassed an empire of varied businesses. Through BANINTER Group, he managed to control the country’s largest media group, including Listín Diario, the oldest and leading newspaper; four television stations, a cable television company, and more than 70 radio stations.

Báez Figueroa became a man of great influence and power. At his lavish wedding, former Presidents Joaquín Balaguer and Leonel Fernandez signed the marriage document as witnesses. In late 2000, Báez even proposed a “national economic program”, which earned him much praise from President Mejía.

“Risk, and I’m talking about calculated risk, is proper of all business and of any human activity. “Whoever doesn’t understand this can’t triumph” Báez said in a 2001 interview in a Dominican business magazine Mercado.[2].

His more than generous gifts to friends, business partners, journalists, commentators, models, beauty queens, military personnel, judges, and politicians over the years became legendary, as were his patronage for many events.[citation needed] former president Mejía got a bulletproof Lexus sports utility vehicle; so did his successor, Leonel Fernández. Colonel Pedro Julio Goico Guerrero (a.k.a. Pepe Goico), who served as Mejía’s Head of Security and who guarded former U.S. president Bill Clinton on visits to the United States, got ten solid-gold President Rolex watches worth US$15,000 each and use of a credit card that the bank would pay off.[citation needed]

Later on, Báez himself would denounce that he called a US$2.4 million credit-card fraud on the part of Colonel Pepe Goico. Although the credit card was issued in Goico’s name, it was meant solely to finance presidential trips. Instead, Báez charged, Goico and his cronies used the card for personal purchases, including planes and helicopters, luxury housing and jewelry. The “Pepe-Gate” may have been the spark, but a mountain of kindling had been piling up for years around BANINTER.

Bank crisis

BANINTER’s octopus-like acquisitiveness raised some eyebrows, as did Báez’s luxurious tastes. In 2002 he bought a US$14,600,000 yacht, the Patricia.[3][4] Moreover, Báez had personal expenses of more than US$1,000,000 monthly.[citation needed].

Speculation about the source of Báez’s fortune ran wild, but nobody considered the explanation being given nowadays by the Dominican authority, that Báez was robbing his own bank.

Rumors that BANINTER might’ve been in trouble began circulating during the fall of 2002, and depositors started to withdraw their savings. The Dominican Central Bank stepped in to support the bank by providing new lines of credit. Anxious for a permanent solution, the government announced in early 2003 that Banco del Progreso, run by Pedro Castillo Lefeld, the brother of Mejía’s son-in-law, would acquire BANINTER. But Banco del Progreso abruptly withdrew from the deal. Government officials said that two-thirds of the money that customers had deposited in BANINTER was kept off its official books by a custom-designed software system.

On April 7, 2003, the government took control of BANINTER. Báez Figueroa’s family owned more than the 80% of the bank, and soon after, a deeper examination supported by the International Monetary Fund and the Inter-American Development Bank, revealed the scale of the meltdown.

Báez Figueroa was arrested on May 15, 2003 along with BANINTER vice presidents Marcos Báez Cocco and Vivian Lubrano de Castillo, the secretary of the Board of Directors, Jesús M. Troncoso, and wealthy financier Luis Alvarez Renta, on charges of bank fraud, money laundering and concealing information from the government as part of a massive fraud scheme of more than RD$ 55 billion (USD $2.2 billion). This sum would be big anywhere, but it was overwhelming for the Dominican economy, equivalent to two-thirds of its national budget.

The resulting central bank bailout spurred a 30% annual inflation and a large increase in poverty. The government was forced to devalue the peso, triggering the collapse of two other banks, and prompting a US$600 million (euro$420 million) loan package from the International Monetary Fund.[5]

Though required by the country’s Monetary Laws to only guarantee individual deposits of up to RD$500,000 Dominican Pesos (about US$21,000 at the time) placed within the country, the Dominican Central Bank (Banco Central Dominicano) opted to guarantee all $2.2B in unbacked BANINTER deposits, regardless of the amount, or whether deposits were in Dominican Pesos or American Dollars and without apparent knowledge whether the deposits were held in the Dominican Republic or in BANINTER’s branches in the Cayman Islands and Panama. The subsequent fiscal shortfall resulted in massive inflation (42%) and the devaluation of the DOP by over 100%.

Former president Mejía and the Central Bank (Banco Central) stated that the unlimited payouts to depositors were to protect the Dominican banking system from a crisis of confidence and potential chain reaction. However, the overall consequence of the bailout was to reimburse the wealthiest of Domincan depositors, some of whom had received rates of interest as high as 27% annually, at the expense of the majority of poor Dominicans—the latter of whom would be required to pay the cost of the bailout through inflation, currency devaluation, government austerity plans and higher taxes over the coming years.

Aftermath and trial

The banking crisis ignited harsh fights over BANINTER group’s media outlets, including the prominent newspaper Listín Diario, which was temporarily seized and run by the Mejía administration following the bank collapse.[5] In 2003, TV commentator Rafael Acevedo, president of the opinion polling firm Gallup Dominicana, had said that in the BANINTER scandal “there has been much complicity at every level of society: the government, the media, the church, the military.”[2].

In November 2005, Alvarez Renta was found liable by a federal jury in Miami of civil racketeering and illegal money transfers in a conspiracy to loot BANINTER during its final months of existence. Alvarez Renta was ordered to pay $177 Million to the Dominican state. To this date, he still hasn’t paid that sum.

The main executives of BANINTER, Báez Figueroa, his cousin Marcos Báez Cocco, Vivian Lubrano, Jesús Troncoso Ferrúa, as well as the aforementioned Alvarez Renta, were prosecuted by the Dominican state for fraud and money laundering, among other criminal charges. Báez Figueroa’s main attorney is Marino Vinicio Castillo, who at the present time holds the position of President Fernandez’s Drugs Consultant.

With 350 prosecutions and defense witnesses slated to testify, ex- president Hipólito Mejía among them, the criminal proceedings against Báez Figueroa began on April 2, 2006. However, the Court decided to postpone the first hearing for May 19, 2006, accepting a motion by the defense lawyers.[6] It was prompted, as detailed at length in the trial by a scandal involving debt writeoffs and sweetheart loans or other financial deals suspected of having favored leading politicians and others.[7]

What remains most curious was that the fraud went undetected for 14 years by the country’s supposed financial gatekeepers—the Central Bank, the Superintendent of Banks and U. S. accounting company PricewaterhouseCoopers. How Báez Figueroa and his cronies were accused and some convicted of pulling it off provided a glimpse into the gift-giving and favor-swapping common between private business and top government officials in the Dominican Republic.

The first trial ended in September 2007.

Sentence and criticism

On October 21, 2007, Báez Figueroa was sentenced by a three-judge panel to 10 years in prison. Additionally, he was ordered to pay restitution and damages totalling RD$63 billion. The laundering charges were excluded, but the other suspected mastermind of the fraud, Luis Alvarez Renta, was convicted and sentenced to 10 years in prison for money laundering.[8] Marcos Báez Cocco, ex-vicepresident of the Bank, was also found guilty, and sentenced to 8 years.

The accusations against two other defendants, former BANINTER executive Vivian Lubrano, as well as the secretary of BANINTER Board of Directors Jesús M. Troncoso, were dismissed for lack of evidence.

The sentence has been widely criticized for its severe contradictions, but more specially because it’s been alleged that the judges were pressed by “the powers that be”. Noted journalist Miguel Guerrero wrote in his column of the daily El Caribe that the defrauders of BANINTER have been protected “by a dark combination of political, economic, mediatic and ecclesiastical powers” and that the sentence was a mamotreto“.[9] In fact, Guerrero went to the extent of saying that everything was fixed beforehand, and the defendants and their lawyers knew it, as did those representing the Central Bank.

Court of Appeals and Supreme Court decisions

In February 2008, the case went to the Court of Appeals of Santo Domingo and the Court upheld the sentence against Báez Figueroa, Báez Cocco and Alvarez Renta. The decision that had favored Vivian Lubrano was reverted, and she was sentenced to five years in prison and RD$18 billion in damages. Charges against Troncoso Ferrua were definitely dropped.

In July 2008, the Dominican Supreme Court confirmed the decision against the defendants.[10]

Nevertheless, Lubrano allegedly fell into a “deep depression” and suffered from “panic attacks”, and she never went to prison. After much debate, President Leonel Fernández gave her full pardon, on December 22, 2008.[11]


  1. ^ DOMINICAN REPUBLIC ECONOMY THREATENED BY MASSIVE BANK FRAUD. | Company Activities & Management > Company Structures & Ownership from
  2. ^ a b Hurricane Ramoncito: how Ramon Baez and his cronies broke the Dominican Republic’s largest bank—and almost brought down the country – Top 100 Banks | Latin Trade | Find Articles at
  3. ^ Dominican Government seeks failed bank’s assets in Grand Cayman –
  4. ^ Yacht Patricia
  5. ^ a b
  6. ^ Dominicant Today, April 3, 2006
  7. ^
  8. ^ Business finance news – currency market news – online UK currency markets – financial news – Interactive Investor
  9. ^ El Caribe, October 23, 2007.
  10. ^ Hoy
  11. ^ Diario Libre

External links

  • BANINTER promotion.

Inadequate bosses ‘turn into bullies’

Bosses who feel inadequate are more likely to bully subordinates, says a new study

Inadequate bosses ‘turn into bullies’

Inadequate bosses ‘turn into bullies’

Published in the journal Psychological Science , the study says it is so because feelings of inadequacy trigger them to lash out at those around them.

In the study, researchers at University of California, Berkeley and University of Southern California found a direct link among supervisors and upper management between self-perceived incompetence and aggression.

The findings are published in the November issue of the journal Psychological Science .

The new study challenges previous assumptions that abusive bosses are solely driven by ambition and the need to hold onto their power.

“By showing when and why power leads to aggression, these findings are highly relevant as abusive supervision is such a pervasive problem in society,” said Nathanael Fast, assistant professor of management and organization at USC and lead author of the study.

During role-playing sessions, study participants who felt their egos were under threat would go so far as to needlessly sabotage an underling’s chances of winning money. In another test, participants who felt inadequate would request that a subordinate who gave a wrong answer to a test be notified by a loud obnoxious horn, even though they had the option of choosing silence or a quiet sound.

Researchers did not rate participants by an objective measure of competency, but by their self-reported level of competency. This allowed them to investigate how feelings of self-worth are tied to workplace behavior.

“Incompetence alone doesn’t lead to aggression,” said Serena Chen, associate professor of psychology at UC Berkeley and co-author of the study.

“It’s the combination of having a high-power role and fearing that one is not up to the task that causes power holders to lash out. And our data suggest it’s ultimately about self-worth,” the expert added.

Alternately, Chen said, participants who got ego boosts by scoring high in a leadership aptitude test or who recalled an incident or principle that made them feel good about themselves did not react with aggression.

Psychic powers that enable people to see auras around others may simply be a quirk of the brain

Supposed psychic powers that enable people to see auras around others may simply be a quirk of the brain, according to a University College London (UCL) study of a rare form of synaesthesia where some people see colourful ‘auras’ around their loved ones.

The case study, reported in the October issue of Cognitive Neuropsychology, shows how some people can experience colours in response to people they know or words that evoke emotions – a condition known as emotion-colour synaesthesia.

Dr Jamie Ward, author of the study, says: “A popular notion is that some people have a magical ability to detect the hidden emotions of others by seeing a colourful ‘aura’ or energy field that they give off. Our study suggests a different interpretation. These colours do not reflect hidden energies being given off by other people, rather they are created entirely in the brain of the beholder.”

In the study, Dr Ward of UCL’s Psychology Department documented a woman known as GW who could see colours like purple and blue in response to people she knew or their names when read to her. Words triggered a colour which spread across her whole field of vision, whilst people themselves appeared to have coloured ‘auras’ projected around them. For example, “James” triggered pink, “Thomas” black and “Hannah” blue.

A similar test using 100 words rated on a scale of 1 to 7 for their emotional impact showed that highly emotive words such as fear or hate also triggered colours. Words associated with positive emotions tended to elicit pink, orange, yellow, and green, whereas words associated with negative emotions triggered brown, grey, and black.

Whilst it is quite common to describe people or emotions metaphorically in terms of colours, GW actually reported vividly seeing them. Indeed, when “James” (a pink word) was written in the wrong colour (e.g. blue), her reaction times were slowed.

Synaesthesia is a condition found in 1 in 2000 people in which stimulation of one sense produces a response in one or more of the other senses. For example, people with synaesthesia may experience shapes with tastes or smells with sounds. It is thought to originate in the brain and some scientists believe it might be caused by a cross-wiring in the brain, for example between centres involved in emotional processing and smell perception. Synaesthesia is known to run in families.

GW, 19-year old with an IQ of 112, became aware of her condition around the age of seven but refrained from telling her family or friends. In GW’s case, people acquired a synaesthetic colour as she got to know them and the colour was then triggered whenever she was presented with the person’s name or face.

In contrast, a case discovered in the 1930s documents a seven year old boy who also associated colours with people, but saw strangers in bright orange with a black outline which faded to a mild blue and finally pink when he got to know them.

Dr Jamie Ward continues: “The ability of some people to see the coloured auras of others has held an important place in folklore and mysticism throughout the ages. Although many people claiming to have such powers could be charlatans, it is also conceivable that others are born with a gift of synaesthesia.

“GW does not believe she has mystical powers and has no interest in the occult, but it is not hard to imagine how, in a different age or culture, such an interpretation could arise.

“Rather than assuming that people give off auras or energy fields that can only be detected by rigged cameras or trained seers, we need only assume that the phenomenon of synaesthesia is taking place.”


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