Mixing bankruptcy, sex and extortion

When Gerardo Díaz Ferrán was forced to liquidate his Viajes Marsans travel agency and affiliated businesses in 2010 after declaring bankruptcy the year before, prosecutors say he called on Ángel de Cabo to help him stash away his assets so his creditors or laid-off workers could not reach them.

If it hadn't been for a sworn statement given by Ángel Sutil, one of De Cabo's office workers, investigators may have had a difficult time determining how the pair were able to conceal millions of euros abroad.

Sutil told High Court Judge Pablo Ruz how schemes were hatched at De Cabo's Valencia offices to help keep big firms on the verge of collapse from having to give up all their assets.

In some instances, De Cabo and his associates would set up judicial officers in sexual situations and later blackmail them, according to two witnesses.

De Cabo helped a lot of broken companies and firms. Besides Viajes Marsans, the Nueva Rumasa conglomerate, which belongs to the Ruiz-Mateos family, and Teconsa, implicated in the massive Gürtel contracts-for-kickback schemes, also passed through De Cabo's hands.

De Cabo was the type of guy who could help you with anything, according to Sutil. Sometimes he would purchase a company, mainly for a symbolic fee, as he did with many of Nueva Rumasa's subsidiaries.

It was a nest of corruption where crimes were committed daily"

Joaquín Yvancos, who for 28 years was José María Ruiz-Mateos' lawyer and is also cooperating with an investigation into Nueva Rumasa, has also described De Cabo's tactics.

On Wednesday, High Court Judge Eloy Velasco sent De Cabo to jail in lieu of 50 million euros bail - the highest ever imposed on a suspect. Díaz Ferrán is also sitting inside Madrid's Soto del Real prison in need of 30 million euros for his own bail.

According to Sutil, De Cabo's main objective was to ransack the companies and remove them from bankruptcy proceedings as quickly as possible, before they could be put up for auction. All the properties they were able "to save" were later sold, with the profits split between De Cabo and the owners of the bankrupt firm.

According to the police's Economic Crimes and Tax Fraud Unit (UDEF), De Cabo and his men used "legal and illegal" maneuvers in their operations. The main task in De Cabo's office was to create "false legal standings" and put these operations through "rigorous legal tests," Sutil told the judge.

If one firm was already headed for the auction block, the strategy was to come up with paperwork showing false loans, with De Cabo as the beneficiary. The documents would be presented at the auction, and they would try to get the best price for the company ahead of the other bidders. "One of the common practices in the office was to draft rental contracts that were costly" on the firms that were being auctioned to scare away bidders, UDEF discovered.

To create these false contracts and loans, De Cabo organized ghost companies that had "little or no activity" with false accounting records, according to the court case file. Because they needed to appear authentic, they were formed weeks or months before troubled companies were actually put out to bid.

One time, De Cabo admitted to Yvancos that he got the idea of "re-launching" troubled companies from Richard Gere's role in the movie Pretty Woman.

De Cabo never came forward when thousands of people who trusted José María Ruiz-Mateos with their investments after being promised juicy interests lost their money. The Ruiz-Mateos clan had appeared in television ads promising their investors they would return every cent they put into Nueva Rumasa. What they didn't tell them was that they were already in contact with De Cabo. According to the Nueva Rumasa court case summary, the Ruiz-Mateos family wanted to save what they could from their vast empire and keep what they could from falling into creditors' hands.

In a recent interview with EL PAÍS, Yvancos, who is cooperating with the authorities, said the family made out a list of the companies and properties that De Cabo had to protect at all costs.

Sutil later explained to the High Court that different strategies were used to save companies from slipping out of the hands of their bankrupt owners. These included investigating the sexual practices of judges and judicial administrators and later blackmailing them.

Yvancos' statement before Judge Ruz is the most striking: "It was a nest of corruption, where crimes were committed on a daily basis. To get embargoed properties released, private detectives were hired. They would set up a trap for a court administrator or a Commercial Court judge, with a girl or a boy - whichever they liked - videotape it, and from that moment they had them in their pocket."

When De Cabo was arrested on Monday, police found 400,000 euros in cash at his home plus another one million at the home of his secretary. A nearby warehouse was also searched and 11 luxury vehicles belonging to the businessman were impounded.