STF Schedules Confrontation Hearing in Master Bank Fraud Case

Supreme Court Justice Dias Toffoli has scheduled a confrontation hearing for the upcoming Tuesday, December 30, bringing together key figures in the Master Bank investigation. The hearing will include Daniel Vorcaro, owner of Master Bank, and Paulo Henrique Costa, former president of Banco de Brasília (BRB), along with Central Bank Director of Supervision Ailton de Aquino.

The confrontation hearing represents a critical procedural step in the investigation. According to judicial definitions, a confrontation hearing is a legal procedure where individuals with contradictory testimonies - including defendants, witnesses, and victims - are brought face-to-face to clarify discrepancies regarding important facts in the case. Justice Toffoli serves as the rapporteur for the Master Bank case at the Supreme Court, which is currently proceeding under seal.

The Federal Police confirmed that Vorcaro and Costa are under investigation for fraud involving securities sold by Master Bank to BRB. The hearing aims to resolve divergences in the investigators' accounts and clarify the circumstances surrounding the fraud that involves both financial institutions.

The Federal Police allege that Master Bank issued Certificates of Deposit (CDBs) promising returns up to 40% above the basic market rate. However, authorities state these returns were unrealistic. The Federal Police estimate the scheme may have moved approximately R$ 12 billion, with evidence suggesting BRB executives may have participated in the operation.

Investigations reveal that Master Bank issued approximately R$ 50 billion in CDBs without sufficient liquid resources to guarantee future payments. Additionally, authorities are examining suspicious operations involving credits allegedly acquired from Tirreno company. These assets were reportedly resold to BRB for R$ 12.2 billion without necessary documentation, coinciding with negotiations for Master Bank's acquisition.

The Federal Police began investigating Master Bank in 2024, identifying indications that the institution artificially created credit portfolios and recorded low-quality or non-existent assets as solid, distorting the bank's true financial situation. The probe also uncovered that Master Bank had created artificial credit portfolios and registered assets of low or non-existent quality as if they were solid, thereby distorting the bank's real financial condition.

Founded in 1974 as Máxima Corretora de Valores, Master Bank underwent numerous corporate reorganizations over nearly five decades. The pace accelerated significantly in 2019 when Daniel Vorcaro assumed control and implemented an aggressive growth strategy. By 2022, market analysts and investors began identifying warning signs in the bank's operational model.

The institution increasingly raised funds at progressively higher costs and directed these resources toward riskier investments, creating concerns about long-term financial stability. The bank offered CDBs with remuneration reaching up to 140% of CDI - levels far above what financially sound institutions typically offered. Experts viewed these elevated offers as warning signals, indicating Master Bank was unable to secure funding through traditional wholesale channels and was increasingly dependent on retail investors.

In March, negotiations advanced to sell 58% of capital to Banco de Brasília (BRB) in an operation estimated at approximately R$ 2 billion. However, the Central Bank blocked this transaction. The Federal Police arrested Vorcaro in November, though he was released days later by decision of the Federal Regional Court of the 1st Region. On November 18, Paulo Henrique Costa was removed from his position as BRB president.

Following the investigation findings, the Central Bank decreed extrajudicial liquidation of Master Bank in November. This measure immediately interrupted all activities, removed the board of directors, and activated the Credit Guarantee Fund (FGC) to compensate account holders and investors within the legal limit of up to R$ 250,000 per CPF or CNPJ.

The judicial system also determined asset blocks on the bank's controlling owners and former executives. Investigations continue in both civil and criminal spheres to determine responsibility. The confrontation hearing scheduled for December 30 represents a crucial step in clarifying the facts and establishing accountability for the massive fraud scheme that affected both institutions.

The case highlights the importance of regulatory oversight in the banking sector and demonstrates how aggressive growth strategies combined with unsustainable funding models can lead to systemic risks. The investigation continues to unfold as authorities work to piece together the full scope of the fraud and its impact on the financial system.