The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Bahamian investment vehicle allegedly sits at the head of a complex “money laundering web” used to misappropriate some $1.618bn in what has been branded as Brazil’s largest-ever banking scandal.

Eduardo Felix Bianchini, the lead liquidator for Banco Master, is alleging that FAEX Fund Ltd, which was set-up in The Bahamas as a SMART (specific mandate alternative regulatory test) fund on February 20, 2017, played a key role in helping to “divert” billions of dollars in cash and other assets via a scheme he compared to the collapse of Sam Bankman-Fried’s FTX crypto currency exchange.

His July 20, 2026, affidavit, filed with the Supreme Court of The Bahamas as part of a successful bid to appoint joint provisional liquidators for FAEX, claims that the Fund is now operating in breach of Bahamian law and regulations because it has no directors or investment manager, thus leaving it with no governance structure of proper oversight.

Veteran Bahamian forensic accountant, John Bain, now of Grant Thornton (Bahamas), has been appointed as FAEX’s joint provisional liquidator ahead of a Thursday, October 8, 2026, hearing before Sir Ian Winder, the chief justice, over the substantive winding-up petition for the fund. Given the multi-jurisdiction nature of Banco Master’s collapse, Mr Bain is working with co-provisional liquidators, Kevin Hellard of Grant Thornton UK and John Skelton of Grant Thornton BVI.

The Banco Master scandal has not just rocked Brazilian financial services and society, but became a major issue in the country’s recent presidential election campaign that pitted incumbent Luiz Inacio Lua Dd Silva against right-wing challenger Flavio Bolsonaro. Mr Bianchini’s affidavit alleges that, based on information gathered to-date, Banco Master faces an estimated $8.5bn insolvency with $4.5bn in assets dwarfed by liabilities of $13bn.

He claims that FAEX is “directly implicated in the diversion of funds from Banco Master” involving $38m, with the majority of funds - some $36.46m - transferred from the fund’s Bahamas account with Winterbotham Trust Company, which acted as its administrator and, also, its former registered agent.

There is no suggestion that downtown Nassau-based Winterbotham, its officers or directors have has done anything wrong in relation to the Banco Master or FAEX situation. The same applies to Mosaic Financial, which used to be known as Old Fort Financial and is based at Caves Village, which was alleged in Mr Bianchini’s affidavit to be “an asset manager for [Daniel] Vorcaro”, Banco Master’s principal. Again, though, there was no suggestion of wrongdoing.

“In summary, Banco Master alleges that FAEX was used as part of a vertically-stacked, multi-tiered corporate structure through which several billion US dollars' worth of assets or value belonging to Banco Master were wrongfully diverted, held and concealed,” Mr Bianchini alleged.

“The evidence presently available to the liquidator indicates that FAEX. a Bahamian regulated fund with no current directors, has no identifiable legitimate trading business, and no independent source of revenue or capital funding capable of explaining the substantial value received or held within the FAEX structure other than from assets wrongfully diverted from Banco Master.”

Mr Bianchini alleged that FAEX’s directors, on December 17, 2025, agreed to switch the fund’s registered office and agent from Winterbotham to Kensington Corporate Services, based at No.10 Lookout Hill in Winton Heights, although the former was to remain as its administrator. However, in a list of licensed investment funds published by the Securities Commission on June 30, 2026, it was shown as having no registered investment manager.

Two former Brazilian investment managers for FAEX were both headed by principals now under investigation in their home country over Banco Master’s collapse. And two sets of corporate directors for FAEX had resigned on November 4, 2025, and January 19, 2026, respectively. The latter date is also when Winterbotham was told that the directors of FAEX’s 100 percent owner, Gandstone Participation, had resigned with no replacements named.

Mr Bianchini, referring to his Bahamian attorneys, alleged: “Accordingly, since 19 January, 2026., FAEX has had no directors. I am informed by Lennox Paton, and believe, that this is contrary to Bahamian legislation applicable to a licensed investment fund…. I am informed by the estate's Bahamian legal advisors at Lennox Paton that this means that, at present, the sole shareholder of FAEX is disabled from appointing replacement directors of FAEX.

“I consider FAEX's corporate governance position to be of concern. FAEX is a Bahamian regulated investment fund, yet it appears to have had no directors since 19 January, 2026. That position is particularly concerning given the matters set out below, including FAEX s (and its subsidiaries') apparent receipt and holding of several billions of dollars of value apparently diverted from Banco Master.”

The ownership and control of Gandstone, FAEX’s owner, was alleged to have changed hands via a $1.015m deal in September 20, 2025. Mr Bianchini’s affidavit also referred to another Bahamas-domiciled SMART fund allegedly linked the Banco Master affair, Phoenix Multi-Market Fund, whose administrator and investment manager were FundHaven Ltd and Mosaic Financial, respectively, two Bahamian financial services providers.

Describing FAEX as an entity that “sits above a multi-layered, vertically stacked corporate structure involving a chain of several Brazilian investment funds”, Mr Bianchini alleged of Banco Master: “Consistent with public reports, the liquidator understands this to be the largest fraud perpetrated against a Brazilian financial institution, and one of the largest frauds of this nature recorded globally.

“By way of comparison, the fraud on Banco Master appears to be of a scale comparable to, and the losses potentially exceeding, some of the most significant frauds in modern financial history, including the Bernard M. Madoff fraud ($15bn in reported losses in December 2008); the Stanford International Bank fraud ($5.5bn in reported losses in 2009); the IMDB scandal ($4.5 bn in reported losses in 2015; and the FTX fraud by Samuel Bankman-Fried ($8 bn in reported losses in 2022).

“The liquidator’s investigations to date have revealed the existence of a scheme by which funds were misappropriated from Banco Master and tunneled to FAEX and its subsidiaries. That scheme operated under the direction of Mr Vorcaro.” Mr Bianchini alleged that Mr Vorcaro caused Banco Master and its affiliates to enter deals where they exchanged cash and other property of value for assets vastly-inflated in price using related parties.

“The evidence presently available indicates that FAEX did not operate as a genuine commercial entity. Rather, it functioned as the first offshore holding company and transmission vehicle within the wider apparent FAEX money laundering scheme,” Mr Bianchini alleged.

“Although passive in the sense that it had no apparent bona fide commercial operations of its own, FAEX played an active role in the transfer and holding of assets and/or material economic value wrongfully taken away from Banco Master. Based on the liquidator's inquiries. FAEX had no employees, conducted no identifiable legitimate trading activity, and provided no goods or services.

“It apparently had no legitimate or independent means of generating revenue or capital on its own. Notwithstanding the apparent absence of any legitimate business activity, FAEX both sent and received substantial funds through accounts which FAEX maintained” including at Winterbotham where records showed the $36.46m transfer.

Mr Bianchini further alleged that, in other transactions, Banco Master funds were ultimately routed to Mosaic (Bahamas) although there was no suggestion of wrongdoing on the latter’s part. “Evidence further indicates that, through the use of Mosaic and associated entities across multiple jurisdictions, those funds were used to acquire additional high value assets, including luxury real estate, vessels, and artwork for Mr Vorcaro,” the liquidator alleged.

“For example, I refer to the acquisition for Mr Vorcaro's benefit of a residential property and ranch in Aspen, Colorado, for approximately $77m, and the purchase of several luxury residences in Miami including one property for $85.2m. Mr Vorcaro was a purported ‘tenant’ of these luxury properties. However, according to records disclosed by Mosaic (USA), he paid no rent for their use.”

Another Bahamas-based vehicle, Mosaic Short Duration Fund, allegedly “transferred approximately $230m into entities incorporated in Delaware in connection with the acquisition of high-value residential properties associated with Mr Vorcaro, including the Aspen and Florida properties”.

Mr Bianchini branded FAEX’s financial performance as “extraordinary”, with one investment of $9,620 increasing in value to $3.4bn in just one year for a rate of return of 35,232,008.11 percent. “This level of growth, occurring within such a compressed timeframe and in the period immediately preceding the onset of Banco Master's insolvency, is inconsistent with any recognised or sustainable investment performance,” he added, branding it “incapable of reasonable commercial explanation”.

Asserting why FAEX should be wound-up, Mr Bianchini alleged: “FAEX has no employees, no independent business operations, and no ascertainable source of legitimate income capable of explaining the magnitude of funds received by it, or the most recently (May 26, 2026) reported $5.2bn of value held within the FAEX structure.

“The affairs of FAEX have been conducted in a manner lacking transparency, including the absence of proper governance given the rudderless state of the company by reason of the resignations of its two directors on 19 January, 202,6 and no one having been appointed to replace them since that date.

“FAEX has not operated as a bona tide commercial enterprise, but has instead been used ns a holding and transmission vehicle for assets and funds derived from transactions which have operated to the detriment of Banco Master and its creditors.”