By Brazil Stock Guide – Brazil’s Federal Police have indicted Banco Master founder Daniel Vorcaro and former Banco de Brasília President Paulo Henrique Costa over alleged financial crimes linked to R$17.5 billion in credit portfolio transactions between the two lenders, marking a significant development in one of the country’s largest banking scandals.
The indictments follow the conclusion of the first investigation under Operation Compliance Zero. Investigators identified evidence of fraud involving at least R$12 billion in credit assets transferred from privately held Banco Master to state-controlled Banco de Brasília, known as BRB.
The Federal Police submitted their findings to Brazil’s Supreme Federal Court, or STF. Vorcaro faces allegations involving five criminal offenses that carry combined potential prison sentences ranging from 12 to 41 years if convicted.
The findings now await review by Prosecutor General Paulo Gonet, who will determine whether sufficient evidence exists to file formal criminal charges.
Allegations Against Banco Master Executives
Federal investigators accused Vorcaro of fraudulent management, misleading investors in financial transactions, obstructing regulatory oversight through fraudulent conduct, participating in a criminal organization and money laundering.
Authorities also suspect the banker of directing the alleged criminal organization, a factor that could increase his legal exposure.
Costa, who previously headed BRB, was indicted on allegations of fraudulent management and participation in a criminal organization.
Investigators allege Vorcaro personally participated in structuring questionable credit portfolios, securing financing from BRB and preparing documents used to support the transactions.
The inquiry identified potential irregularities in the underlying loans, including questionable documentation and electronic records used to substantiate credit assets sold to the public lender.
Some of the transactions involved payroll-deductible loans allegedly originated through Tirreno, a company connected to Banco Master.
Federal Police investigators also questioned BRB’s internal risk controls, alleging that the institution purchased substantial credit portfolios without adequately verifying loan contracts, borrowers or the authenticity of supporting documentation.
The investigation describes instances in which billion-real transactions were approved using spreadsheet information containing potentially fabricated records.
Transactions Continued After Central Bank Rejection
Banco Master transferred approximately R$17.5 billion in credit portfolios to BRB between July 2024 and October 2025, according to investigators.
The assets included payroll-backed loans, unsecured consumer credit, revolving credit facilities and installment arrangements linked to credit card balances.
The transactions continued even after Brazil’s central bank rejected BRB’s proposed acquisition of Banco Master in September 2025.
Investigators identified additional credit portfolio transfers in October, raising questions about oversight and risk management following the regulator’s decision.
At the time, Banco Master was facing mounting liquidity pressures.
Messages examined by investigators suggest the lender relied heavily on BRB financing to meet its financial obligations.
In a September 2024 exchange, Vorcaro expressed concern about whether BRB would release expected funds, indicating that the bank might otherwise need to return money previously received and draw on liquidity associated with mandatory central bank reserves.
The correspondence was cited by investigators as evidence of Banco Master’s financial dependence on the transactions.
BRB Faces at Least R$2.7 Billion in Losses
Federal Police estimate that BRB suffered losses of at least R$2.7 billion from the transactions under investigation.
The final financial impact could be substantially higher, depending on the recoverability and legitimacy of additional credit assets acquired from Banco Master and related institutions.
According to the investigation, BRB purchased approximately R$26.61 billion in credit portfolios from Banco Master and Will Bank between July 2024 and October 2025.
More than R$12 billion of those assets were classified as problematic or potentially nonexistent.
Approximately R$10 billion in questionable assets were reportedly replaced with other credits, whose quality and recoverability remain subject to scrutiny.
The allegations have intensified uncertainty surrounding BRB’s balance sheet and its ability to absorb losses from the transactions.
The state-controlled lender has sought a R$6.6 billion loan from Brazil’s Credit Guarantee Fund, or FGC, as part of efforts to strengthen its financial position. The proposed financing remains stalled.
BRB had also not published its 2025 financial statements at the time of the investigation’s conclusion.
Additional Executives Implicated
The investigation extends beyond Vorcaro and Costa to several former Banco Master executives and associates.
Among those indicted are Augusto Lima, a former Banco Master shareholder; former Chief Financial Officer Ângelo Ribeiro; former Compliance Director Luiz Antônio Bull; former Financial Superintendent Alberto Félix de Oliveira; and Daniel Monteiro, a lawyer who represented Vorcaro.
Federal Police allege that different members of the group participated in structuring, approving or executing transactions involving questionable credit assets.
The first phase of Operation Compliance Zero was launched in November 2025 to investigate suspected financial misconduct involving Banco Master.
The probe subsequently expanded after investigators examined information recovered from Vorcaro’s mobile phone.
The broader investigation has raised questions about the oversight of privately held financial institutions, the valuation of credit portfolios and the exposure of publicly controlled banks to counterparty risks.
Defendants Deny Financial Damage
Vorcaro and Costa previously denied that the transactions between Banco Master and BRB caused financial losses.
In testimony provided before the investigation was concluded, both maintained that the arrangements were financially beneficial to the institutions involved.
Their legal representatives had not commented on the Federal Police’s final report at the time the investigation’s findings became public.
Banco Master was placed into liquidation by Brazil’s central bank on Nov. 18, 2025, the same day authorities launched the initial phase of Operation Compliance Zero and arrested Vorcaro.
The case now moves to the Prosecutor General’s Office, which must evaluate whether to pursue formal charges based on the evidence submitted by Federal Police.
The indictments themselves do not constitute criminal convictions.
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