Adrian Blomfield
Sat, October 3, 2026
The Telegraph
Luiz Inacio Lula da Silva, the Brazilian president, has been a target of voters' anger at a 'rotten system' - AP/Silvia Izquierdo
The man tearing Brazil's establishment apart came dressed as Dracula.
He was ostensibly a devout man. Before becoming the country's most notorious banker he had presented a gospel music show on an evangelical television station. His family had even helped fund, build and lead a 2,000-seat mega church.
But it was at Madame Satã's nightclub, with its crystal chandeliers and velvet chaises longues, that Daniel Vorcaro was alleged to have been in his element.
The guest list had been carefully selected. The women, 120 of them, were all beautiful and all paid. According to a police report leaked to Brazil's Piauí magazine, his instructions were specific: "Only young girls. Half from abroad."
Madame Sata's nightclub was the venue for a party where Brazil's elite mingled with beautiful women flown in from abroad, according to police reports
But it was the men at his São Paulo Halloween party that Mr Vorcaro really cared about. There were just 20 of them, but they represented the cream of Brazil's political, judicial and corporate elite.
From senior senators and supreme court justices to corporate heavyweights, everyone on the guest list held a key to what the arriviste banker wanted most: insider access and protection that gave him the cover to perpetrate what investigators say was the biggest banking fraud in Brazil's history.
Day after day for months, a remorseless drip-feed of allegations has implicated almost every political party and national institution in South America's largest country, shocking a society that has experienced so many scandals it thought itself inured to them.
It is against this backdrop that Brazilian adults, legally required to vote, will troop sullenly to the ballot box on Sunday.
The daily drip feed of scandal has taken the shine off election campaigning - Eduardo Soteras for The Telegraph
There are multiple names on the presidential ballot, but only two matter: Luiz Inácio Lula da Silva, the 80-year-old incumbent known as Lula, and his right-wing challenger Flavio Bolsonaro, whose father Jair ruled Brazil from 2018 to 2022 but now languishes in prison.
Victory for the younger Bolsonaro would cap a near clean sweep for pro-Trump right-wing populists in South America's "blue wave".
Lula's campaign team has accused Mr Trump of meddling in the election to secure victory for his rival, yet most Brazilians care less about outside interference than the scandal that has tarnished both candidates.
Their anger perhaps explains why the raucousness of past elections has vanished. The campaign has been almost invisible, with few posters evident or rallies held, as though Brazil's politicians had slunk away in shame to hide themselves from their people.
As well they might.
Mr Vorcaro's alleged Banco Master fraud enriched an already privileged few, but the price was borne by those at the bottom of society.
The Ponzi scheme Mr Vorcaro is accused of constructing was built, campaigners and investigators say, on the misery of hundreds of thousands of poor pensioners and state employees who watched as money was syphoned from their accounts every month without their permission.
"I am the anarchy of the system," Mr Vorcaro boasted in a leaked WhatsApp message to his former fiancée Martha Graeff, a fitness influencer. In that, if on little else, a divided nation agrees.
A leak from Martha Graeff's WhatsApp revealed her former fiancé Mr Vorcaro boasting he was 'the anarchy of the system' - Getty/Rodrigo Varela
See no evil
The women he hired for his Halloween bash and other parties were allegedly forced to hand over their phones before entering. Mr Vorcaro's messages show he insisted on foreign women, often flown into Brazil on his fleet of private jets, because they could not understand the Portuguese used by the VIPs.
Mr Vorcaro could afford it. Paintings by Picasso and Basquiat hung on the walls of his properties, including a £64m waterfront villa in Miami, according to court documents submitted by Banco Master's liquidators.
Even by the standards of Faria Lima, São Paulo's Wall Street, his lifestyle stood out. His Halloween party at Madame Satã's cost £3.5m, the documents claim – yet that paled beside the £28m party featuring Coldplay, Andrea Bocelli and other A-listers in Taormina, Sicily.
As Mr Vorcaro splashed out, Banco Master's assets soared 23-fold to nearly £13bn in the six years after he bought it in 2019. Despite red flags raised by auditors and junior staff, no one in authority at Brazil's central bank, its security regulator or its state-backed deposit insurance fund – which has now paid out more than £8bn in compensation since the bank's collapse last year – asked any questions.
The collapse of Daniel Volcaro's bank has led to £8bn in compensation payments
In fact, the only people doing any real probing were Brazilian journalists, most notably Piauí's Consuelo Dieguez, who was tipped off in late 2024 about severe anomalies on Banco Master's balance sheet. Inspecting the bank's documents, she concluded it was completely insolvent, and that the deposit insurance fund faced losing a third of its holdings bailing it out.
"When I saw the documents, I said, 'my God, how can the central bank see this and not liquidate the bank?' It was obviously a risk to the system."
The more she dug, the more she realised the problem was more than just complacency. Police investigators later alleged central bank officials had turned a blind eye after receiving payments, gifts and holidays. The officials, who have since been suspended and remain under investigation, deny wrongdoing.
Yet Mr Vorcaro's influence-peddling net was cast far wider. Allegedly luring judges and politicians with lavish parties, monthly kickbacks and hefty contracts with family firms, he is claimed to have woven layers of official protection around his bank.
Even as he conjured up fantastical returns out of nothing for those duped into buying its instruments, no one in Brazil's establishment said anything.
Bolsonaro and the banker
As the scandal gathered momentum in the wake of Banco Master's closure in November, it was the Bolsonaro campaign that suffered most.
The alleged fraud took root when Jair Bolsonaro was president. Fabiano Zettel, Mr Vorcaro's brother-in-law and the man accused by police of being Banco Master's primary off-the-books financial operator, had been the single largest private donor to the senior Bolsonaro's failed re-election campaign in 2022. He denies the accusations.
More embarrassing disclosures were to come. In May, it emerged that Flavio Bolsonaro had sought and secured £8m from Mr Vorcaro to make a film portraying his father, serving a 27-year prison sentence for attempting to mount a coup after his 2022 defeat, as a persecuted hero.
Flavio Bolsonaro's campaign suffered most from the allegations at first, but disillusionment spread - Reuters/Alexandre Meneghini
Even after the Banco Master scandal broke, Flavio sent the disgraced banker messages of support, according to phone records unsealed by Brazil's supreme court.
He wrote: "Brother, I am and will always be with you." Until the messages were published, he had always denied personal links with Vorcaro. With months to go before the election, Lula opened up a commanding lead in the opinion polls.
However, it soon became clear that the rot was not confined to the right.
By June, Operation Compliance Zero, the police investigation into the scandal, had turned its attention to some of Lula's key allies, including Jaques Wagner, government leader in Brazil's senate, and Rui Costa, the president's chief of staff. Both men deny the allegations and Lula himself has not been implicated.
Blind justice
As the election has neared, the allegations have grown more damaging.
Brazil's supreme court had already been implicated in the scandal. Dias Toffoli, the justice overseeing the judicial side of the investigation, was forced to recuse himself after police alleged that funds linked to Banco Master had bought shares in a luxury resort owned by his brothers.
At least three of the court's 11 judges have been implicated in one way or another, all of whom deny the allegations, but the most startling revelations have centred on Alexandre de Moraes, who oversaw the case that led to Jair's conviction.
Alexandre de Moraes (centre) is one of three supreme court justices implicated in the case - Shutterstock/Andre Borges
Mr Moraes is revered on the Brazilian Left as the single most indispensable champion of the country's democracy. That Mr Trump imposed sanctions on him last year over the Bolsonaro trial only bolstered his reputation.
Yet documents unsealed last month by André Mendonça, the judge now overseeing the investigation, suggest an uncomfortably close relationship between Mr Vorcaro and Mr Moraes.
His wife, a lawyer, had a vague but expensive contract to represent Banco Master, a deal that included access to Mr Vorcaro's private jets and helicopters. She denies wrongdoing.
The judge kept up regular WhatsApp correspondence with the banker, the frequency of which increased shortly before Mr Vorcaro was arrested trying to flee the country in November, raising fears about what kind of advice Mr Moraes was giving.
Mr Moraes denies wrongdoing. His allies on the bench accuse Mr Mendonça, a right-wing evangelical appointed to the court by Jair, of pursuing a political vendetta against his fellow judges in order to sway the election.
"Mendonça's report about Moraes reads like a political pamphlet – like he is pursuing a political mission," Gilmar Mendes, a supreme court justice seen as close to Mr Moraes, told The Telegraph.
"His directions seem driven by the electoral process. The result is a very divided court, with consequences for its legitimacy. I have been here for 24 years and I have never seen anything like this."
A plague on all your houses
Whatever the truth, Brazilian anger against the Bolsonaro campaign is now equally directed at the president, whose lead in the polls has evaporated. With recent surveys showing a statistical dead heat, the momentum, if anything, is with Flavio.
"There's only one candidate clearly involved with the scandal, which is Flavio Bolsonaro, yet ironically the scandal is damaging Lula more," said Thiago Amâncio, an associate director at Control Risks, a consultancy. "In the eyes of voters, the system as a whole is rotten and so they want change."
Protesters at the Banco Master headquarters demand prison for Daniel Vorcaro, the banker at the heart of the scandal - ZUMA Press/Alamy/Oslaim Brito
Yet the election, whatever its outcome, is unlikely to be the end of the saga. While the headlines have focused on extravagant parties, establishment corruption and the behaviour of the political and judicial elite, the foundations of the alleged Ponzi scheme were built on money syphoned from the accounts of low-paid state workers and pensioners.
Exploiting regulatory loopholes and buying leaked databases of public workers, Banco Master is accused of generating unauthorised contracts with workers and pensioners holding so-called payroll loans, an instrument that allows banks to lend money to low-income earners and deduct payments directly from their wages.
Often without their knowledge, victims found that Banco Master, acting through intermediaries, had switched their existing loans into credit instruments carrying exorbitant interest rates with no fixed end-date, campaigners and investigators say.
Rob the poor, feed the rich
The human cost of this systemic drain is embodied by victims such as Suzana Rodrigues, a 65-year-old São Paulo pensioner. In 2024, while attempting to resolve a minor dispute over a loan with another bank, rogue brokers intercepted her data and fraudulently registered an unauthorised Banco Master contract in her name, she says.
Suddenly, her monthly repayments soared to £150, more than a sixth of her pension. At almost the same time, she was diagnosed with severe intestinal cancer. Drained of money for food and medication while enduring severe physical pain, she spent eight months fruitlessly appealing to police and consumer bodies before a lawyer secured a court injunction to halt the payments.
"I had to cut back on food just to survive," she said. "And in all that time, no one showed an ounce of mercy."
Ms Rodrigues is more fortunate than most. While richer Brazilians who bought Banco Master's high-interest instruments have largely been compensated by the deposit insurance fund, that has not been the case for those with payroll loans from the bank.
Many still continue to pay the instalments to its administrators, trapped in a cycle of debt not of their own making.
Suzana Rodrigues spent eight months fighting for compensation before a lawyer halted the payments draining her pension - Eduardo Soteras for The Telegraph
Worse may yet emerge. Both Susanne Schaefer, the lawyer representing Ms Rodrigues and 500 other victims, and Maria Paula Bertran, an academic at the University of São Paulo who has been investigating payroll scams, say illegal schemes were perpetrated by many other financial institutions, not just Banco Master.
That scandal is brewing but has yet to come fully to light. If the allegations prove true, Banco Master and other banks have systematically robbed many of Brazil's poorest people in order to benefit its richest.
It is a conclusion that sits at odds with Mr Vorcaro's loudly proclaimed Christian beliefs. Christ generally favoured giving succour to the poor rather than fleecing them.
Mr Vorcaro, who remains in custody with Mr Zettel and nine others linked to the bank, faces a slate of charges, all of which he denies, claiming he has been set up by competitors. There may be some truth in this, campaigners say, although so far there has been little appetite from authorities to investigate.
"Banco Master is only the most exuberant face of a more widespread problem," said Prof Bertran. "It's only the visible part of a much bigger iceberg."
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