Read full story here. Originally published in VICE, print edition, September 2014.
(Also available in Dutch, if that’s more your speed.)DOING BUSINESS WITH THE WORLD’S FOREMOST VENDOR OF NONEXISTENT OIL
Arturo Díaz Jr. needed a buyer. He had turned 1,000 acres of his family’s Puerto Rico waterfront into a luxury housing development called Coco Beach, but the real estate bubble had burst and the banks were on his case. At 91, having led a successful career in construction, he was ready to be rid of his share of the $200 million white elephant. So when a friend named Miguel Lausell said he was working with a billionaire who might want to buy, Díaz was ready to talk.
Lausell was an old acquaintance, and his reputation was solid: Harvard Law, a former phone company president, a Democratic Party fundraiser. He was working for an oil-trading start-up, Madasi Oil, representing a much larger Aruban oil company called Arevenca. So Lausell and his partner, Marcos Da Silva, the CEO of Madasi, met with Díaz. They said the president of Arevenca, a billionaire named Francisco Javier González Álvarez, was interested in the property. Díaz called for his helicopter and gave the Madasi partners a tour.
While Díaz was focused on real estate, Lausell was pushing another offer. Díaz’s main business was Betteroads Asphalt, a paving contractor. Lausell wanted to know whether Betteroads wanted 100,000 barrels of asphalt from Arevenca. At $88 a barrel—well below the market price of about $100—it was a steal. While he waited to work out the details of the property sale, Díaz bargained down the price and prepared to pony up $7.8 million for a tanker of Trinidadian tar.
Díaz liked the idea of building a relationship with someone who could pay $300 million for his share of Coco Beach, so he ignored the various warning signs surrounding the asphalt deal—the fact, for example, that Arevenca wanted the money wired in cash to a numbered Swiss bank account, a practice more common once a relationship is already established. Another warning sign: Arevenca wasn’t a familiar name. But Díaz didn’t imagine Lausell would steer him wrong.
In July, Díaz’s company, Betteroads, wired $2 million. An additional $5.8 million followed in August.
The tanker never arrived.
By September, Díaz knew something was seriously wrong. Betteroads went to the law, but no one was arrested. After a year of discussions, Betteroads sued Madasi and Arevenca in Puerto Rico. This year, Betteroads has pursued criminal charges in Spain. But the Díaz family has yet to recover a cent, and likely never will. (Madasi is also suing Arevenca in US court.)