CenTrust Savings Bank

CenTrust Savings Bank was a financial institution based in Miami, owned by David L. Paul.¹

Involvement in BCCI Scandal

BCCI acquired a partnership in CenTrust Savings Bank in July 1987.¹ Paul put CenTrust on a significant growth curve using brokered deposits, which he funneled into high-risk real estate loans, junk bonds, and offbeat investments.² He built a gleaming postmodernist skyscraper for CenTrust, which cost $180 million and featured marble, gold-plated bathroom fixtures, and a $13 million Peter Paul Rubens painting.²

Ghaith R. Pharaon, acting as a front for BCCI, bought $24,668,750 of CenTrust's bonds in 1987. Paul secretly repurchased these bonds less than a year later, and Pharaon received a commission.³ This transaction allowed CenTrust to satisfy regulators and remain open for an additional year, costing U.S. taxpayers an estimated $2 billion when it was finally closed.⁴

CenTrust's financial troubles were exacerbated by a regulatory action that forced it to divest its wildly imprudent investments and Paul's de facto looting of depositors' funds.⁵ The Federal Reserve Board later fined BCCI $200 million for illegally acquiring control of CenTrust Savings Bank, along with First American Bank and National Bank of Georgia.⁶