Ex-Billionaire Batista’s Bank Accounts Frozen

A federal judge in Rio de Janeiro ordered the freezing of the personal bank accounts of Brazilian businessman Eike Batista to the extent of $640 million as a preventive measure after he was accused of financial-market crimes.

Batista’s commodities empire collapsed last year, led by flagship Oleo e Gas Participacoes SA (BVMF:OGXP3) (OTCMKTS:OGXPY), formerly known as OGX.

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Eike Batista accused of insider trading

Federal prosecutors filed charges against Eike Batista, who was once the world’s eighth-richest person, according to the Bloomberg Billionaires Index. The prosecution claims that Batista profited from insider trading, as repoted by Dan Horch of DealBook, when he sold shares in his now bankrupt petroleum company, OGX, and that he manipulated its stock market price by first promising to buy $1 billion in OGX stock, but later refusing to honor that commitment.

However, for now, the court has instructed Batista to present a preliminary defense, after which a trial is likely. In the event Batista is convicted, he could face up to eight years in prison for market manipulation and an additional five years for insider trading. Interestingly, no one in the history of Brazil has ever gone to jail for either crime.

The federal Judge Flávio Roberto de Souza decided Monday to freeze only the billionaire’s personal bank accounts, but left other assets untouched.

More assets might be frozen

The federal judge ordered the freezing of financial assets belonging to the billionaire, and the court is now awaiting Brazil’s Central Bank on how much money has been blocked, a process that may normally takes about 24 hours. However, the judge clarified that if banks confirm that Batista has less than 1.5 billion reais ($640 million) in the blocked accounts, the court will then order the freezing of more assets, possibly including real estate the mogul recently gave to family members.

As reported earlier, Batista lost around 99% of his $34 billion fortune within the space of a year. Last year’s bankruptcy of OGX proved to be the billionaire’s impressive fall from grace, signifying Latin America’s biggest corporate bankruptcy to date.

Apart from OGX, Batista’s shipbuilding company OSX Brasil SA, have also entered Brazil’s judicial-recovery process. After the federal court’s recent verdict, his lawyer Sergio Bermudes said: “I can guarantee we don’t have 1.5 billion reais in accounts”. He further indicated that at least one account has as little as “1 real left”, without elaborating further.