Ex-Banco Liberal Execs Face Suit

Bank of America Corp., which paid $254 million for Banco Liberal, said in a lawsuit that the sellers inflated the purchase price and then stole $38 million from the Brazilian bank after transferring ownership.

In court papers filed in New York, Bank of America also said it’s now exposed to “significant penalties” because the sellers, who were officers of Banco Liberal, violated Brazilian foreign exchange law.

Bank of America, then known as NationsBank, bought a majority stake in Banco Liberal in 1998 as part of its effort to expand into the Brazilian market. When Bank of America first invested in Banco Liberal, the Brazilian bank was the country’s fourth-largest manager of foreign money.

Bank of America is seeking unspecified compensatory and punitive damages, in addition to $38 million for the alleged embezzlement.

BofA shares rose 65 cents to close at $61.25 on the NYSE.