CVM Fines Daniel Vorcaro and Banco Master for Real Estate Fund Fraud

The Brazilian Securities and Exchange Commission (CVM) unanimously condemned former banker Daniel Vorcaro and Banco Master for fraud involving the Brazil Realty real estate investment fund. The CVM imposed fines totaling over 200 million reais on 16 defendants, including seven individuals and nine companies. Daniel Vorcaro and his father, Henrique Vorcaro, were each fined 20 million reais, while Felipe Vorcaro was fined 5 million reais. Banco Master was fined 12.5 million reais, and Viking Participações was fined 10 million reais.

The fraud scheme, which began around 2018, involved the use of falsified or inconsistent appraisal reports to artificially inflate the value of properties used to issue fund shares. In one instance, a medical center valued at 7 million reais was entered into the fund as being worth 70 million reais. The CVM found that these inflated assets provided undue advantages to the group and created artificial liquidity in the secondary market to attract other investors. This resulted in a realized loss of 5.8 million reais for investors, including some linked to public servant pension schemes.

During the proceedings, the defense for Daniel Vorcaro argued that he suffered a personal loss of nearly 7 million reais and that there was no individual proof of illegal conduct. The CVM relator rejected this argument, comparing the claim of personal loss while associated entities profited to a bank robber claiming a loss because he had to pay for a taxi to get to the bank. The defendants may appeal the decision to the National Financial System Resources Council. Some of the individuals involved have been under preventive arrest since May on criminal charges.