A Miami judge cut off Ecuador’s long reach into the U.S. judicial system, halting the country’s effort to recover assets from two fugitive banker brothers accused of looting one of the country’s biggest banks in the 1990s.

Miami-Dade Circuit Judge John W. Thornton found decisions made in Ecuador to seize the assets of Roberto and William Isaias failed to meet the standards of U.S. constitutional law.

"Courts have been reluctant to give effect to foreign acts of state which offend the U.S. Constitution’s distaste for takings without just compensation," Thornton wrote in his order Thursday granting a motion for summary judgment. Trial was scheduled to start today.

Roberto Isaias served as executive president of Filanbanco S.A. in the 1990s. William Isaias was executive vice president. They fled to Miami in 2003 after arrest warrants were issued for them. They were convicted in absentia and sentenced to eight years in prison.

The brothers have about $20 million in assets in South Florida that Ecuador wants.

"The defendants may have committed the wrongs which Ecuador has alleged," Thornton wrote in an 11-page ruling.

"However, the manner in which Ecuador has attempted to right the defendants’ alleged wrongs is inconsistent with U.S. law and policy."

The case already has had political ramifications in Ecuador, resulting in the resignation of the president of the Central Bank of Ecuador after he lied about his education in a Miami pretrial deposition.

Ecuador accused the siblings of embezzling $661 million from Filanbanco, allegedly causing its collapse during the country’s economic crisis in 1998.

Mandate 13

Authorities in Ecuador seized $400 million in assets from the brothers and their family. The Ecuadorean legislature passed Mandate 13, stating that any judge opening an inquiry into the seizures could be arrested.

The Latin American country in 2009 filed a civil fraud lawsuit in Miami-Dade Circuit Court, seeking to enforce multiple resolutions made by the government to obtain the balance.

Thornton said Mandate 13 "represents a violation of several of the most foundational underpinnings of U.S. law and policy, including due process, judicial review and the independence of the judiciary to act with fairness and impartiality."

The judge cited in his ruling the 1965 federal case, Republic of Iraq v. First National City Bank, noting an appellate court thwarted Iraq’s attempt to have money returned from a New York bank account belonging to assassinated King Faisal II.

The U.S. Court of Appeals for the Second Circuit determined an Iraqi seizure decree was inconsistent with U.S. law and policy, notably the Fifth and Fourteenth amendments, Thornton said.

The Isaias’ attorney, Michael Tein, a partner at Lewis Tein in Miami, said the decision thwarts Ecuador president Rafael Correa’s relentless pursuit of his clients.

"President Correa used the U.S. courts in a gambit to gain international credibility for his obsessive crusade against the Isaias family," Tein said. "He has made them the scapegoat for Ecuador’s financial woes."

Appeal Expected

Ecuador was represented by Miami attorneys Alvin Davis and Digna French, both partners at Squire Sanders in Miami.

Davis said he respects Thornton’s decision but there was "an expectation of an appeal." "We think there is an error in the fundamental premise of the decision," he said.

The order followed the revelation in December that central bank president Pedro Delgado lied about receiving a university degree in economics. The information emerged from a deposition in the Isaias case.

Delgado is a cousin of Correa and the husband of the country’s vice consul in Miami, who also resigned.

Tein said Thornton’s ruling in a case closely watched by Ecuadorean media will be seen as a big defeat for Correa.

"This resounding decision is now a knockout blow to him," Tein said. "It will be extremely humiliating."