The $80 million in investments made by the Corporación del Fondo del Seguro del Estado (CFSE) in The Phoenix Fund (TPF) and PUC Holding, categorized as “investment loans,” were high-risk, according to Johnny Román Flores, the corporation’s auxiliary administrator of Finance and Administration.
Investments totaling $80 million made by Puerto Rico’s State Insurance Fund Corporation (CFSE) in The Phoenix Fund (TPF) and PUC Holding were considered inherently risky, according to a statement from Johnny Román Flores, the corporation’s auxiliary administrator of Finance and Administration. The revelation comes as the CFSE pursues legal action to recover nearly $100 million in defaulted loans.
The CFSE filed a lawsuit on February 23, 2026, seeking no less than $99.5 million from The Phoenix Fund LLC and PUC Holdings LLC, related to two loans extended in 2019 and 2021. The corporation alleges these loans remain unpaid and in default, according to court filings.
The initial loan, for $40 million, was issued to The Phoenix Fund on December 27, 2019, carrying a 7% annual interest rate with quarterly payments and a 1% penalty for late payment. Whereas interest payments were made through the first three quarters of 2023, the fund reportedly defaulted in the fourth quarter of that year. As of February 17, 2026, the CFSE claims the outstanding debt on this loan totals approximately $45.6 million, comprised of $40 million in principal and $5.6 million in accrued interest, which continues to accumulate.
A second loan of $40 million was granted to PUC Holdings LLC in May 2021, an entity linked to The Phoenix Fund. This agreement mirrored the terms of the first, with a 7% annual interest rate, periodic payments, and provisions for accelerating the full debt upon default. The Phoenix Fund served as the corporate guarantor for this loan. As of February 17, 2026, the CFSE asserts the debt under this second loan amounts to at least $53.9 million, including $40 million in principal and $13.9 million in accumulated interest.
According to a report from Metro Puerto Rico, the CFSE has stated it has not identified any documentation justifying how nearly $100 million was allocated to the two firms, which lacked a prior track record in investment. The ongoing legal dispute underscores the challenges faced by public investment funds when venturing into higher-risk ventures.
On March 11, 2026, Román Flores characterized the investments as “risky,” as reported by El Nuevo Día. The CFSE’s pursuit of these funds through legal channels signals a firm stance on recovering public assets.
