In many ways, the problems of Latin Investment Corp., the D.C. firm that closed its doors last week, shutting off access to accounts in which thousands of Spanish-speaking immigrants had their savings, have their roots in a small village in eastern El Salvador called Intipuca.

Situated in a region hit particularly hard by El Salvador's decade-old civil war, Intipuca, a village that now has a little more than 5,000 inhabitants, is the birthplace of Fernando Leonzo, president of Latin Investment.

Since Latin Investment closed amid rumors of financial difficulties, Leonzo has not returned repeated telephone calls by The Washington Post. But interviews with 18 former business partners, lawyers, friends and employees paint a portrait of Leonzo as a highly regarded man in the Hispanic community who had enough savvy to build a thriving business but not enough training to run one.

Nearly 15,000 Intipuca residents fled the civil war in the early 1980s and flocked to the Washington area. Most of those immigrants sent money home, making Intipuca among the wealthiest villages in the country.

Leonzo, who at age 18 in 1969 was one of the first in his village to come to the District, built a financial system worth millions by creating a money transfer pipeline for immigrants that flowed from Washington to El Salvador.

Using friends and family in El Salvador, Leonzo developed a wire transfer service in which money orders were taken by courier from Latin Investment to San Miguel, the nearest large town to Intipuca.

"People would send checks drawn on U.S. banks and wouldn't understand they couldn't cash it {in El Salvador}," said Samuel McTyre, an immigration lawyer in Virginia who once represented Leonzo. "The same people would send cash by mail" and it disappeared before reaching their families at home, he said.

Under Leonzo's system, a radio station in El Salvador would greet listeners with news that a package was waiting for a customer in one of Leonzo's branch offices. And to ensure that the money orders could be cashed easily, Leonzo's sister turned her living room into an international monetary exchange, according to accounts by Leonzo.

"He was a brilliant businessman who did it on instinct and common sense," said Jose Sueiro, a former business associate of Leonzo's.

His business boomed. One associate, familiar with Leonzo's operations, said that within two years Leonzo had built up three accounts totaling more than $400,000 at Perpetual Savings Bank and a business account at Riggs National Bank with an estimated $2 million in liquid assets.

When he moved to Washington, Leonzo had $150 and a job as a dishwasher.

"He saw an opportunity," said Adelina Callahan, owner of La Fonda restaurant and a friend who saw Leonzo almost daily for the past several years. "He knew how to speak to the people and he was providing a service that they didn't have."

Ever the innovator, Leonzo noticed that his customers often needed to cash checks before they could buy his money orders, so he established that service.

Finally, he began opening savings accounts with his customers. Many had entered this country illegally and could not open a bank account.

"The teller did everything for them," said one Latin Investment employee. "They didn't know how to read or write, so the teller filled out all their paperwork. They trusted the tellers."

This caught the attention of the D.C. Office of Banking and Financial Institutions, as well as six other federal and local agencies. The D.C. banking office told Leonzo in 1988 that he needed a banking charter, but he never got one.

As more people arrived from Intipuca and other parts of Central America, they were told to go to Latin Investment. Loans could be secured on collateral based on land in El Salvador. And customers were allowed to cash the checks of friends and family, giving them incentive to place several people's savings in a single account.

As the cash holdings grew, Leonzo's interests grew into real estate. According to a 1988 balance sheet, Latin Investment had cash assets of $1.79 million and local real estate holdings exceeding $4 million. Leonzo also owned real estate in El Salvador, as well as several restaurants and an appliance store.

His stature also grew. He began to do charitable work, and his company bought the majority stock of El Latino, the largest Spanish-language newspaper in Washington.

"His image was very important to him," Callahan said.

So important, others think, that he hesitated to collect on defaulted loans to avoid angering old friends from Intipuca.

"A lot stopped paying," one of Leonzo's employees said.

Another erosion to his empire came in the form of the immigration reform law passed in 1986. As provisions of the law went into effect and immigrants began to receive amnesty from the U.S. government for entering illegally, they began using American banks.

At the same time, Leonzo began a search for cash when Washington's real estate market -- where most of Latin Investment assets were -- took a downturn.

During the last week Latin Investment was open, an employee said, Leonzo began to close early, began to close for lunch, then closed altogether.

"I'm going to close it for a while because of the economic situation," Leonzo told his newspaper in a story published Friday. "The people are excited now and I can't face 1,500 people."


April 1987: Securities and Exchange Commission alerts District's Office of Banking and Financial Institutions, expressing concern that Latin Investment might be involved in banking operations without a charter.

August 1987: Office of the Comptroller of the Currency calls D.C. banking office suggesting possible violations by Latin Investment.

January 1988: Officers of Latin Investment are located by D.C. banking office and told to file for a banking charter.

December 1988: Latin Investment is told that because it still had not obtained a banking charter, enforcement action would be pursued.

December 1988: D.C. banking office alerts Office of the Corporation Counsel.

January 1989: D.C. banking office receives memorandum from Corporation Counsel saying that neither agency has prosecutorial power.

March 1989: Case is referred to U.S. Attorney's Office.

October 1989: D.C. banking office is told case is being forwarded to Internal Revenue Service.

March 1990: IRS calls D.C. banking office and confirms investigation, but provides no details.

Nov. 29, 1990: Fernando Leonzo, president of Latin Investment, closes the firm's doors, promising to reopen Dec. 5.

Nov. 30, 1990: Leonzo pleads with D.C. banking office to close his business. Banking office says it does not have that authority.

Dec. 5, 1990: Thousands of Latin Investment customers learn for the first time the possibility their savings are imperiled.