Puerto Rico asphalt company sues Arevenca, Madasi, Miguel Lausell for $13.6 million

Arevenca, the fake oil company long documented in these pages for its deceptive web site and involvement in a failed airline in Aruba, is being sued along with several people who allegedly acted as salesmen for a scam in Puerto Rico. The Betteroads Asphalt Corp. alleges in a suit filed Sept. 4 in the US territory that it bought a cargo of asphalt from Arevenca following a sales pitch by prominent Puerto Rico businessman Miguel Lausell on behalf of local Arevenca representative Madasi Oil Co. The suit accuses Arevenca, Madasi and individuals including Lausell of fraud and breach of contract and demands a refund of $7.8 million that Betteroads spent on asphalt and another $5.8 million in other damages.

Betteroads, according to the complaint and a series of e-mails filed with the court, thought that the $7.8 million it sent to the Swiss bank account of Arevenca would entitle it to a tanker of asphalt, and was disappointed to find that tanker-loads of excuses, lies and delays were wholly inadequate for the task of resurfacing highways and parking lots even in the magical realm of the Spanish-speaking Caribbean. After months spent arguing with various representatives of Arevenca, including company president Francisco Javier González Álvarez, Lausell, and others, Betteroads has turned to the court systems of the United States, which seems to be the end-point of many conflicts involving shady Caribbean and Venezuelan operators.

The paperwork in the case shows why suing “joker brokers” like Arevenca is a hassle. The case itself is in Spanish, but much of the documentation is in English and Dutch. There are a host of mystery defendants who as yet haven’t been identified. The main defendant, Arevenca, is identified as an international bundle of companies: Arevenca is a corporation under Venezuelan law but is headquartered in Aruba; Arevenca AKTM is a British Virgin Islands company; Arevenca SL is in Spain; and Arevenca Aruba Holding NV and others are Aruba entities. The suit goes after several people involved in the company, including González, Octavio Alicandro, Paul Bursak and Roger Laurent.

Perhaps the most interesting part of the case is its pursuit of Madasi Oil Corp., which used to brag of being Arevenca’s sole representative in Puerto Rico. The case names Lausell and his colleague Marcos DaSilva as defendants. DaSilva, who has appeared on these pages before, is apparently a bit of a sad sack broker with the bad luck to get mixed up with not only Arevenca but another underperformer called Gatrex.

“You have no idea what you’re messing with,” DaSilva said in a phone interview. He accused this website of repeatedly defaming him, while declining to describe specific statements that he considered defamatory. If this site continues defaming him, he will sue, take away the blog and “te voy a partir en cuatro,” he said, using an expression that can be translated literally as “slice you in four” but I think means something more like “screw you.”

DaSilva said that Madasi was a victim along with Betteroads, and that he had represented Arevenca in hopes of earning a commission. However, all the contracts were between Betteroads and Arevenca, he said. He declined to comment on the content of the case, saying he had yet to see it.

Lausell is in a whole different league. He is a bigwig. To quote his bio from the web page of investment company* Talos Partners, which lists him as a member of the board of directors:

Lausell and DaSilva in happier times, click for original

Miguel D. Lausell … served as president and chairman of the board of directors of Ponce Bank, a $1 billion plus institution, from 1990-1998. …he served as president and chief executive officer of the Puerto Rico Telephone Company … vice chairman of Cap Cana, a $2 billion plus tourist development in the Dominican Republic. … chairman of FransGlobal, which owns Angel’s, Camille’s, Taco Maker and Jack’s franchises… national finance board of the Gore 2000 Committee… partner of the Democratic National Committee’s Leadership 2000 Board, and he was a partner of the DNC in 2004…. senior political advisor to U.S. Sen. Hillary Clinton’s presidential campaign…master of laws degree from Harvard Law School…

So to be clear: Harvard Law, president of a bank, president of a phone company, and then representative for Arevenca? An odd career path, and one I really, really want to understand better. How did he end up wrapped up in Arevenca?

I called Lausell to ask about his relationship with Arevenca a couple months ago and he declined to comment, saying the situation was “under investigation.” He declined to elaborate on what sort of investigation he was referring to.

The person who answered his personal mobile phone today hung up on two calls from different numbers. Lausell didn’t immediately respond to an e-mailed request for comment today.

According to the complaint, Lausell introduced Arevenca to Betteroads. He and Arturo Díaz Jr. were once neighbors. Díaz is the 90-something patriarch of the family that runs Betteroads. Lausell allegedly visited with the elder Díaz June 25 of last year to offer real estate services for a beach development that Díaz was building. Madasi got a contract to “facilitate the sale of Coco Beach,” according to the complaint.

Two weeks later, on July 11, Lausell, DaSilva and three members of the Díaz family met again about real estate, and the Madasi guys pitched Díaz on a tanker of asphalt at $88 a barrel. July 14, they cut the price to $80 — that’s $8 million for 100,000 barrels. Díaz went for it. July 15, Betteroads transferred its first $2 million to a Swiss bank account for Arevenca.

(I’m not sure quite what asphalt was going for at the time, but I calculate that it was around $100 a barrel based on midwest prices and EIA formulas.)

Betteroads’ bank had the good idea to request references before transferring the next $5.8 million out of the company’s line of credit. E-mails filed as part of the case show Lausell vouched for Arevenca’s credibility. He forwarded a letter sent to Arevenca by a minister in Aruba, bank references from around the world, and even a page copied out of the Fall 2007 OPIS/Stalsby Petroleum suppliers catalog, which included Arevenca.

Come mid-August of last year, and Betteroads asks for an asphalt sample and shipping information. Madasi says, you need to pay the rest of the invoice before we give you shipping info. Betteroads gets the price cut once more — this time to $78 a barrel. And on August 18, they send the $5.8 million balance to Arevenca.

From there, the e-mails stretch into oblivion as Lausell, DaSilva, and González himself send notes begging for time, apologizing, and occasionally growing indignant, accusing Betteroads of having screwed everything up.

Meanwhile, as we now know, Arevenca was busy leasing an Airbus jet and trying to start a new airline.

The same month, Arevenca produced this bizarre press conference in Spain to announce the signing of the biggest oil deal ever, a $2 trillion deal with a small Chinese aircraft maker.

September saw volley after volley of e-mails between Betteroads and Arevenca, but no asphalt arrived. Same with October. And November. Yes, even at the end of November, Arevenca and Madasi continued to insist that the asphalt was in the mail.

I have to say I doubt that Betteroads is going to recover much money. And of course the case has just been filed; we have yet to see any of what the defendants have to say. You never know what surprises may lie in store. But I’m glad to see a US suit against a joker broker, as it shines light onto a kind of scam that thrives in darkness. Kudos to Betteroads for being willing to take on those who allegedly robbed them — it’s a favor to all of us.

*Update: According to the Financial Industry Regulatory Authority Inc., Talos is currently inactive. It last filed a disclosure form in 2009, when it had six accounts with a total of $2.3 million in assets under management. The company’s chairman, CEO and managing partner was/is Robert V. Brazell, who started Overstock.com but resigned.