São Paulo — Ivety Ferrentini, 87, the Brazilian widow of a media entrepreneur, is fighting a million-dollar legal dispute with Itaú Unibanco and the bank’s brokerage company for allegedly having failed to release savings accumulated over half a century in what she calls a fraudulent operation carried out by her own grandchildren.
The case dates from 2012 and, since then, the evaporation of a fortune that at the time was valued at 62 million reais ($30.3 million) in shares of Itaú Unibanco (ITUB4) and holding company Itaúsa (ITS4) has given rise to a war in the courts.
In 2019, a judge in São Paulo ruled in favor of the octogenarian, but the following year, the bank and the brokerage firm, which deny having made any mistake in the sale of the shares, won a victory in the São Paulo Court of Justice. The case subsequently moved on to the Supreme Court.
Dissatisfied with the result, Ivety Ferrentini recorded a video accusing Itaú of not having taken due care to avoid the loss of her wealth. The bank denies her allegations.
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The couple’s fortune derives from media and real estate businesses. Nello Ferrentini was one of the owners of the former Diário de São Paulo, a newspaper published between 1884 and 2001. Ferrentini ran the newspaper until 1982. Having run into difficulties in the 1980s, after Ferrentini’s departure, the paper re-emerged under the Orestes Quércia government (1987-1991), during which time it was the recipient of 11% of the entire advertising budget of the state of São Paulo.
At the time it was rumored that Quércia was the real owner of the company, which he always denied. After he left the São Paulo state government, Quércia became a shareholder in the newspaper, before his death in 2010.
Nello Ferrentini started out as a typesetter before becoming an entrepreneur and economist. Over a period of 50 years he invested in good dividend-paying stocks and reinvested the money. According to his family, he never sold a single stock. By the end of his life, he had two significant portfolios: one with Bradesco, which yielded annual dividends of about 650,000 reais ($117,900), and another with Itaú, which made him around 2.25 million reais ($408,000) per year.
To facilitate the transfer of his fortune to his three children, Nello Ferrentini created a holding company, IF3, into which all the family’s investments were transferred. In this inheritance model, something that is recommended by lawyers for individuals who have accumulated considerable wealth, IF3 would have three legal entities as shareholders, created in the name of each of Nello’s three children.
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Under the arrangement, Nello and Ivety continued to have life-long control of all the shares held by IF3, including the non-seizable and prohibition of sale clauses, with the latter clause only expiring with the death of both Nello and Ivety. And according to the shareholders’ agreement, transactions of more than 100,000 reais in IF3′s assets had to be signed jointly by all three children.
But in 2012 the “blow” came, to use the expression used by Nello and Ivety’s lawyers in the records held by the São Paulo Judiciary. The shares belonging to their daughter Magda, who had passed away, were passed on to her three children.
According to the case records, the grandchildren convened an extraordinary general meeting of IF3, where only FGT35 (their own company) voted on the choice of a new board of directors, without the other heirs participating. In order to exclude the legal entities of the grandchildren’s two uncles, the assembly claimed a technicality, that Magda’s brothers would not have signed the instrument of investiture as directors of IF3 within the legal deadline.
According to Ivety Ferrentini’s defense, this is how Magda’s three sons took control of IF3, despite the existence of a shareholders’ agreement establishing that the company should have representation from the other two heirs. After notifying the bank of the changes in IF3, the brothers gave the order to sell all the shares. The assets were sold for 62 million reais ($11.2 million) in May 2012.
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And that is when Nello and Ivety’s legal saga began. Two lawsuits were filed by the couple: one against their grandchildren for the recovery of the 62 million reais, and another against Itaú, alleging that the bank sold the assets that the couple had lifetime control over, without the issuing of a document called a share transfer order with a specific power of attorney.
Nello Ferrentini died in 2016, without seeing the outcome of the case.
The Fight in the Courts
On the first front, the stock money was recovered after an agreement between grandmother and grandchildren. In technical terms, it was a transaction, a legal deal whereby the subjects of an obligation decide to terminate it through reciprocal concessions.
But on the second front, the fight with Itaú is ongoing.
Ivety’s defense is suing the bank for 166.8 million reais ($30.3 million) for material damages. According to her lawyers’ calculations, if the stock portfolio had been kept intact, with bonuses and dividends for the period, it would have a present value of 229 million reais ($41.6 million), calculated by discounting the 62 million reais raised by her grandchildren’s sale of the shares in 2012.
“The fact that the fraudsters [the three grandchildren] bear responsibility for what they did, does not mean to say that Banco Itaú and Corretora are exempt from being held accountable for what happened,” the defense states in its case.
Itaú defended itself by saying that it became embroiled in the case as a third party in good faith and denies that it failed to honor the original agreement. The bank first tried to interrupt the course of the lawsuit when the litigation with the grandchildren was still not resolved, with the bank claiming that the two lawsuits were related and that if both were upheld, Ivety could end up being compensated twice for the same case, which is forbidden by law.
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In its defense, the bank also stated that the shares of Itaú Unibanco and Itaúsa had been transferred from Nello and Ivety Ferrentini to IF3 back in 2011, claiming that only one legal act remained, the communication of the transfer to the bookkeeping agent of the shares, which was done by one of IF3′s shareholders, the grandchildren, in March 2012.
According to the bank, the corporate act was signed, filed and certified at the Board of Trade of the State of São Paulo.
However, the bank’s arguments did not convince judge Mario Chiuvite Júnior, who acknowledged that Ivety was entitled to be compensated by the bank for equity losses from the operation.
“The defendant [Itaú], therefore, should have adopted greater caution regarding the verification of the legitimacy of the plaintiffs about the request for the transfer of the shares, confirming with the plaintiffs the pertinent information as a measure of absolute caution necessary for the carrying out of a business of such magnitude,” the judge wrote in the March 2019 ruling.
As a result of the ruling, the magistrate ordered the bank to compensate Ivety for the bonuses and dividends she would have been entitled to had the portfolio been kept intact since May 2012.
The Case Goes to the Supreme Court
Itaú filed an appeal with the São Paulo Court of Justice, claiming that the bank had no responsibility for the fraud in IF3′s corporate composition, but was only obeying orders from a client - the holding company of Ivety’s grandchildren - who formally presented all the documents that proved, at the time, its legitimate right to sell the shares.
The fact that there was an agreement that resulted in the transaction between Ivety and her grandchildren weighed in favor of the bank. In a close decision, by three votes to two, the judges of the 17th Chamber of Private Law of the São Paulo Court of Justice decided that the bank should not indemnify Ivety Ferrentini.
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“We cannot fail to note that the action now under consideration causes is a little strange, in that the reported fraud was not engineered and executed by unknown third parties, but by direct relatives of the plaintiffs Nello and Ivety,” wrote associate judge Irineu Fava said in reporting the decision, which was followed by the majority decision in favor of the bank.
“Another point that merits attention is the fact that the amounts unduly obtained by the fraudsters were recovered in an indemnity action filed against them,” Fava said.
When questioned regarding the ruling, Unibanco issued the following note: “Itaú Unibanco received with satisfaction the second instance decision in relation to the process in question, which is in line with the bank’s clarification that no contractual or legal mistakes were committed by the conglomerate”.
Ivety Ferrentini’s defense has a different view, however: “Itaú and the brokerage transferred the stock portfolio of the couple to third parties without the authorization of the owners, without a share transfer order, without the consent of the share owners, and without even checking the legitimacy and veracity of this operation.
The case will now be handled by the Supreme Court.