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These stories were published Thursday, Jan. 2, 2003, in Vol. 3, No. 1
Jo Stuart
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Villalobos to creditors:
If he's jailed, 'nobody will recover anything'
By the A.M. Costa Rica staff

Embattled and fugitive financier Luis Enrique Villalobos Camacho spoke out in his own defense and to his creditors as the year ended.

In a 10-paragraph e-mail sent to A.M. Costa Rica, Villalobos told his investors "In case I die, or I go to prison, due a behavior which is not a crime . . . nobody will recover anything."

Villalobos, who is the object of an international search, is believed to owe his primarily North American clientele about $1 billion. He ran a private investment firm that paid up to 3 percent per month interest and had done so for many years. Police here raided his office July 4, and Villalobos closed his Mall San Pedro operation Oct. 14, saying later that he feared another police raid.

Text of Villalobos statement

Another letter on topic

He had not issued a public statement since mid-October when he answered written questions sent to him by this newspaper. No word has come since Oct. 31 when someone who identified himself as a lawyer sent a brief e-mail message from a known Villalobos e-mail account saying that Villalobos was in a business meeting and would reply shortly.

The Tuesday E-mail message came from a man who identified himself as Mauricio Fonseca Alvarez, who identified himself in a later telephone call as a confidential assistant to Villalobos’ brother Oswaldo. Fonseca said that he obtained the statement from lawyers for Villalobos. Fonseca was the man who physically placed an ad on behalf of Villalobos in La Nación and other newspapers in October.

The e-mail message is consistent with the continuing position of Villalobos supporters: that he has done nothing wrong and that the situation has been created by prosecutors who pressure the courts.

The new e-mail’s style compares favorably with an e-mail and a fax message known to have come from Villalobos. There are similar small grammatical and spelling errors that appear in both documents. These unique aspects and the assurance from Fonseca convinced reporters that the e-mail indeed was from Villalobos.

Fonseca said that he did not know where Enrique Villalobos was but he assured a reporter that the words were those of the financier rather than those of lawyers.

In the nine-point statement, Villalobos says:

-There is no Costa Rica law against borrowing money and he always has paid interest required of him.

— He denied that he and his brother Oswaldo are linked to illicit activities of money laundering or narcotrafficking.

— The legal process arraigned against him and Oswaldo is full of anomalies and extremely unfair.

— Major banks in San José also maintained accounts for suspected Canadian drug smugglers and these banks have not suffered any police intrusions. The Canadian connection triggered the initial investigation.

— Credit card companies in Costa Rica routinely and legally collect nearly 50 percent interest a year, so no one should be surprised that he can pay 2.8 percent a month to investors.

— If he were running a pyramid scheme as some claim, the pyramid would have collapsed long ago.

— The reported number of investors and amounts invested are without any foundation in reality, and the number of corporations he maintained (investigators have counted at 

Luis Enrique Villalobos Camacho

least 50) are normal for a businessman who handles a lot of money.

— He is engaged with his creditors, he is grateful to those who trust him and he understands that some creditors have been "surprised" by lawyers who litigate through the press.

— He asks strength from God and said he always had complied with his obligations until police forced him not to do so.

The key paragraph for investors is this one, No. 8 in the e-mail:

"I am engaged with my creditors, and I will try to resolve their problem, always when it is possible. In case I die, or I go to prison, due a behavior which is not a crime, as I have indicated to the Superintendent of Financial Entities, nobody will recover anything. I have the desire and the courage to attend the situation of the creditors if there exist the conditions to do it, and always when it depend upon me. To whom have trusted me, amidst adversity, I renew my gratefulness. I simply understand those who have been surprised by any lawyers which offer and litigate through the press, to establish juditial actions against me."

Villalobos made no mention of the Keith Nash case, that of a Canadian who is suing the financier to get his money back. Nor did he provide any indication of where he might be keeping the money, if it still exists. Costa Rican officials have frozen only about $6-$7 million.

Villalobos also did not explain why he simply did not make interest payments to his investors from accounts outside Costa Rica.

These all are burning questions for investors. 

Oswaldo Villalobos remains in pretrial custody at San Sebastian prison. 

The statement comes at a time when many investors were giving up hope. The statement also seems to be consistent with a legal strategy that would lead to some type of agreement with prosecutors that would allow the Villalobos brothers to avoid a criminal prosecution. Villalobos is facing charges of fraud and money laundering.

The Villalobos investment operation was an open secret in Costa Rica for years. Initially Enrique Villalobos ran a money exchange house. But he told reporters that he divested himself of the company now run by Oswaldo. Investigators raided both Villalobos’ office and the Ofinter S.A. money exchange locations July 4.

Meanwhile, there has been no word from Louis Milanes or the handful of associates who fled with him the weekend of Nov. 22 after he closed his Savings Unlimited investment operation that used to pay monthly interest in the 3 to 4 percent range. Milanes is believed to have defaulted to the tune of about $260 million.

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Holiday death toll climbs up to 32 since Dec. 24
By the A.M. Costa Rica staff

Seven persons died during the 24 hours ending at noon New Year’s Day, according to the Cruz Roja. That brings the holiday death toll since the first minues of Dec. 24 to 32 persons. 

Meanwhile, the number of persons seeking treatment at the Festejos Populares in Zapote rose to 322, although only about a sixth of that number ended up in hospitals.

Of the total holiday deaths 14 died on the highways, either having been involved in accidents or having been hit by a vehicle.

Shootings took three lives, according to the Cruz Roja statistics.

There were no deaths or serious injuries attributed to fireworks. Although police conducted a continual crackdown during the last two weeks and sought out vendors of illegal fireworks, the skies of the Central Valley and elsewhere in the country were filled with rockets and brilliant bursts during the hour of the new year.

The more serious incidents:

Someone gunned down a 20-year-old woman, Carolina Chinchilla Miranda, in Pavas about 9 p.m. Tuesday.

In Batán in Limón police found a dead individual about 3 a.m. Wednesday and handled a fatal rollover accident about 6 a.m. In both cases, victims had not been identified.

In Naranjo, Alajuela, Felipe Antonio Corrales Jiménez died as a result of a bullet wound about 8  a.m., and a second man was taken to the hospital with a bullet wound to his left arm. No report was available on what happened.

About 9 a.m. in Paso Canoas the body of Rafael Rojas Quintero, 71, was found hanging from a tree. 

In a report from the Zapote festival, the Cruz Roja or Red Cross said that a substantial number of the injuries were caused by impact from the many carnival rides that were being operated there. The festival runs until Sunday.

Statement from Luis Enrique Villalobos Camacho
EDITOR’S NOTE: What follows is the full, unedited text of an e-mail message sent to A.M. Costa Rica Tuesday.


FIRST: In Costa Rica there is no any law whatsoever which forbids a person to acquire a debt in the manner he wishes, with whom he wishes, and up to the amounts he wishes. The above is a reason why, I have never denied that I received money, and I payed my creditors an attractive rate of interest, which I performed in a punctual and honest manner during 25 years.

SECOND: With the same honesty with which I admit the above, I deny, and will always deny that my brother Oswaldo and I, are linked to illicit activities of money laundering or narcotraffic, as has been observed with very bad intentions to the public opinion. Due to our christian believes, we are unable to form part of these delictual networks. I challenge the police and judicial authorities to demonstrate above crimes, since I am sure that they will not find anything which could be sustainable.

THIRD: I am concerned about the fact that the judicial process established against me and my brother Oswaldo, employee of the exchange enterprise OFINTER S.A., is so full of anomalies and extremely unfair. For example, it is evident that both of us were already condemned by the press, and by the fiscal with their declarations. The Tribunals of the country, up to today have been absolutely pressured in their decisions by the means, and by the Ministry of Security, up the extreme that they not even resolve the specific points of the injuries presented by my attorneys.

FOURTH: It provokes displeasure, for example, the inequality of treatment. To prove the above, it is sufficient only one example: the same canadians which are supposedly linked to the illicit activities, had current and savings accounts in dollars and colones in the Banco Nacional and in Banco Proamerica, and these entities did no suffer any violation of domicile, nor the press has informed about the money they had therein. (see the acts of violation of domicile of July the 4th, of 2002)

FIFTH: It is surprising that there exist officers which are afraid about the fact I payed high monthly rate in dollars, while in Costa Rica there are Banks which charge 3.48% monthly to their 

debtors of credit cards in dollars, or almost 50 nnually in dollars. With the above charges, they could pay the investors in dollars 2.8% monthly, and still they wouldkeep a part of the money. This armed hand assault to the users of the credit cards is supposedly legal, and nobody cares.

SIXTH: It is evident that many of my creditors have already received their capital, in some cases up to three times, and that all of them knew the rules of the game when they loaned me the money. Nobody was surprised. Should the pyramid would have existed, the same would have fallen down since many years ago.

SEVENTH: I wish to make clear that many of the figures which have been reported, about the number of my creditors, names of them, and amounts, are mere suppositions without any fundament in the reality. The important number of enterprises and accounts in the Banks, is normal whwn a businessman or entity handles high amounts of money.

EIGHTH: I am engaged with my creditors, and I will try to resolve their problem, always when it is possible. In case I die, or I go to prision, due a behavior which is not a crime, as I have indicated to the Superintendent of Financial Entities, nobody will recover anything. I have the desire and the courage to attend the situation of the creditors if there exist the conditions to do it, and always when it depend upon me. To whom have trusted me, amidst adversity, I renew my gratefulness. I simply understand those who have been surprised by any lawyers which offer and litigate through the press, to establish juditial actions against me.

NINTH: I beg God to strength me in these difficult moments. I reiterate that I have received loans of the people, and I always accomplish with my obligations. I have understood that to get indebted is not a crime, and to pay is a value, since I was so taugth, and I paracticed it so, up to the moment in which the authorities forced me not to do it.

But...I wonder who will be after all this confabulations?

San Jose, December 2002

Luis Enrique Villalobos Camacho

Responsible Signature Mauricio Fonseca Alvarez 3-325-503

Immigration targets
central Pacific area

By the A.M. Costa Rica staff

Immigration officials and police swept Quepos and Manuel Antonio Monday night and Tuesday morning. Seven persons, including one female U.S. citizen, were detained for not having the proper paperwork.

The sweep included the public streets, the beaches and nightspots, according to officials. In all, 19 foreigners were held, but 12 of these were eventually able to show that they were in the country legally, said officials.

The seven who could not were taken to San José to begin the process of deportation, said the Ministerio de Seguridad Pública. Officials said that in addition to the U.S. citizen who had an expired visa, the group included four Nicaraguan men, a Bellorussian woman, and a Colombian woman.

In addition, police said they found three Italians who were involved in smoking marijuana. The individuals were in the country legally, so the case was turned over to the local prosecutors, said officials

Marco Badilla, director general of Migración y Extranjería, said that similar sweeps would target other communities in the country soon.

The sweep in Quepos and Manual Antonio follows a similar operation last weekend in Jacó and one Dec. 20 in downtown San José. The sweeps target areas where tourists congregate.

Hostage crises
resolved by cops

By the A.M. Costa Rica staff

A convicted armed robber held six family members hostage Tuesday night in Ipís de Goicoechea, but police were able to get the man in custody without injury to anyone.

The man was identified as Manuel Antonio Sepúlveda Guzmán, 37, who was free on conditional liberty after serving four years of a seven-year armed robbery term, said Ministerio de Seguridad Publicá officials.

The situation grew from a judicial protection order that the man not visit his daughter. The hostage situation lasted from about 4:30 p.m. Tuesday until about 1 a.m. Wednesday, said police. The hostages ranged in age from 5 years to 75 years.

Psychologists from ministry and from the Judicial Investigating Organization were able to defuse the conflict. Police confiscated a revolver and a knife.

Sunny, blue skies
also mean chilly

By the A.M. Costa Rica staff

A  cap of dry air over nearly all of Central America will keep the skies clear along the Pacific and the Central Valley for another day and night.

The Caribbean coast and the northern zone will see some additional cloudiness and perhaps sprinkles, said the Instituto Meteorológico Nacional.

The days have been clear, but Costa Ricans are beginning to complain about the chilly nights where temperatures may be as low as 16 degrees on the Celsius scale, some 61 degrees Fahrenheit, still shirt sleeve weather for North Americas.

Unified South America
is goal of Brazil’s da Silva

By the A.M. Costa Rica wire services

BRASILIA, Brazil — In his first speech as president of Brazil, Luiz Inacio Lula da Silva said his top priorities will be fighting hunger, creating jobs, and uniting the countries of South America for common goals. Lula was sworn in Wednesday after being elected in a landslide vote in October. 

The man known universally as Lula, a former metalworker and founder of Brazil's Workers Party, held an inauguration suited to his image as a man of the people. Instead of the traditional black tie gala, Brazil's first elected leftist and his advisors planned a less formal occasion. 

Thousands of supporters gathered here to watch his swearing-in and to be entertained by an all-day music festival featuring some of Brazil's biggest entertainers. 

At his swearing-in before the Brazilian Congress, da Silva said the outgoing government of President Fernando Henrique Cardoso brought economic stagnation, hunger and unemployment. He pledged to fight hunger through a new government program, and said job creation will be his "obsession" as president. 

One essential aspect to this policy, he said, will be increasing Brazilian exports, and he strongly criticized developed countries for their trade barriers against Brazilian products.

"We will seek to eliminate the scandalous agricultural subsidies of developed countries, which hurt our producers, depriving them of their competitive advantages," he said. 

And with Cuban President Fidel Castro, Venezuelan President Hugo Chavez and Argentine President Eduardo Duhalde in the audience, da Silva said he will seek to build a stronger relationship among South American countries.

"The top foreign policy priority during my administration will be to build a South America that is politically stable, prosperous and united, based in democratic ideals and social justice," he said, adding that he will begin by trying to revitalize the Mercosur trade block, which disintegrated after Argentina's economy collapsed last December. 

In his inaugural address, da Silva did not allude to the strongest economic challenges facing his government: rising inflation and $230 billion in debt. But he cautioned that it will take time for his administration to produce the desired results. 

Fireworks explosion
claims at least 28

By the A.M. Costa Rica wire services

VERACRUZ. México — Emergency workers are combing through a burned out marketplace in search of victims of a fireworks explosion and fire that left at least 28 people dead. At least 41 people were injured and scores more are missing.

Local officials say the New Year's Eve incident happened when a spark set off boxes of fireworks being sold illegally at the Hidalgo market. The blast triggered a fast-moving fire that spread to neighboring businesses. 

City officials say they tried to shut down the illegal fireworks stands last week, but were forced away by vendors ahead of the New Year's Day holiday. 

Fireworks are popular in Mexico, especially on major holidays and at religious festivals, but accidents are common. In September, 1999, an explosion in an illegal fireworks factory in the central town of Celaya killed at least 56 people. 

Demostrations go on
in Venezuelan standoff

By the A.M. Costa Rica wire services

CARACAS, Venezuela — Rival political demonstrators have begun the new year with pro- and anti-government rallies amid a crippling, five-week general strike.

Tens of thousands of opponents of President Hugo Chavez filled a stretch of highway here Tuesday for New Year's celebrations and protests calling for the president to resign.  Meanwhile, Chavez supporters staged pro-government rallies a few kilometers away. 

In a televised speech Tuesday, Chavez said the government was triumphing over what he called the opposition's efforts to ruin Venezuela. 

Venezuela is the world's fifth-largest oil exporter and the strike has cut production by about 90 percent and forced the country to import fuel and other supplies. The work stoppage has also put upward pressure on world oil prices.

A key strike leader, Carlos Ortega, says the work stoppage will continue with greater strength. He also repeated an opposition call for Venezuelans to stop paying taxes as part of the effort to force President Chavez from power.

Opponents of President Chavez began the strike Dec. 2 in a bid to force him to resign and call early elections. 

The president has responded to the strike by firing dissident executives from the state-owned oil company Petroleos de Venezuela and ordering troops to take over idle tankers. He says the strike amounts to a coup attempt.

Chavez was ousted in a coup in April, but loyalist troops quickly restored him to power.

English-language paper
folds after 50 years

By the A.M. Costa Rica wire services

MEXICO CITY, México — The leading English language newspaper and its associate Spanish language newspaper have closed after more than a half-century in publication. 

The News and Novedades published their last editions Tuesday with the English newspaper headline saying "The News and Novedades say Adios." 

The News printed for more than 50 years, while the Novedades was in publication for more than 65. The papers said they were closing for economic reasons. The rising costs of newsprint, production and distribution have put print publication in a squeeze.

Internet address given

By the A.M. Costa Rica staff

J. Duke Moseley has started a new discussion group on Yahoo about the current investment problems in Costa Rica. It is the Costa Rican Global Discussion Group, and was referenced in an article Tuesday. The Internet address was incorrect.

Information on the group can be found at http://groups.yahoo.com/group/CR_GSG/
Professional Directory
A.M. Costa Rica's professional directory is where business people who wish to reach the English-speaking community may invite responses. If you are interested in being represented here, please contact the editor.


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Learn how to best protect your interests in the Villalobos case. Explore your options at

Also, we invite you to join one of the most active discussion groups on the case.  Find out what people who care are saying. Join at irccr-subscribe@yahoogroups.com


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A report from the New Year's trenches
By Bob Foster and Jean E. Potter 
Special to A.M. Costa Rica

The New York Bar in it's new location near the corner of Calle 9 and Avenida 1 was a friendly place to be on the evening of Dec. 31, 2002! It was evident that Richard Arthur, the long-time owner of this venerable establishment had taken great pains to ensure that it would be a memorable and enjoyable occasion. It turned out to be all of that. 

Since it also served to commemorate Mr. Arthur's 30th year as owner of the New York Bar, he was especially concerned that everything would go well, and he was quite successful in that regard.

The glowing hardwoods and walls filled with memorabilia from days-gone-by in the newly remodeled bar furnished an apt venue for the owner's efforts. His famous upside-down Christmas tree, professionally festooned with intermittently blinking lights and other decorations, hung above the bar as if implanted in the ceiling, a golden Liberty Bell crowning it's tip. 

In addition to the holiday lights and other decorations tastefully placed in the rafters, one large quick-release net was strung across the aft portion of the bar area, with two more placed laterally on either side, each stuffed to overflowing with inflated red, white and blue balloons.

Shortly after 10:30 p.m. the adult children and siblings of Richard and his wife Margarita began to arrive from widespread locations around Costa Rica and congregated in the boothed area at the rear of the bar (where your reporter and wife also managed to find seats). Trays of canapes were 

repeatedly passed for the enjoyment of the clientele, and the arrival of a full-fledged complement of marching Mariachis - baritones, tenors, trumpets and stringed instruments, the works - was an evening highlight as they performed and marched around the circular bar, stopping to serenade various particular groups and areas on several occasions.

As midnight neared, the owners declared "drinks on the house for everyone," and those people designated manned their posts at the quick-release devices for the bulging balloon nets overhead. 

As Richard Arthur led the countdown: "5-4-3-2-Raaay!," the air was filled with red, white and blue spheres, released as simultaneously and precise as a U.S. Marine drill team! Amongst the hugging, cheek-busing, hand-shaking and back-slapping exchanges of Happy New Year greetings in various languages, the loud popping of balloons continued for about 10 minutes as the ladies present deftly employed their canape toothpicks in a symphony of continuous exploding red, white and blue!

Dancing of couples and individuals continued until the normal closing time of  2 a.m. and it was an enjoyable affair for all present. A new experience was witnessed when the most inebriated of a pair of 30ish men visiting from Kerry/Kilarney performed an Irish jig to salsa music! A good time was had by all, and the extra efforts of Richard and Margarita Arthur were not in vain. 

Congratulations to them on the occasion of their celebration of the 30th year as owners of the New York Bar. May there be many more! 

New book promises to help 'beat the blues'
Special to A.M. Costa Rica

Title: "Illuminati: Healing and Developing the Mind." Author: Rodney St. Michael. ISBN Hardcover 0-595-65472-X  ISBN Paperback 0-595-25966-9

As the wave of investment fallouts spread across the globe, many people are becoming fearful and even paranoid about their future, according to the author of a new book.

Anger, hatred and psychosis is spreading like a disease epidemic after the classical guidelines of moderation, diversification, and true love for the 'self' were forgotten, said the author Rodney St. Michael.  With the prospect of an American-led war looming in the horizon, the cyclical patterns of history are repeating once again, he said.

As evidence, he notes that the 20th century experienced the manic "Roaring 20s," followed by the "Great Depression of the 30s" and the schizophrenic World War II. And although this cycle is repeating once again, it is not the end of the world, he said.

St. Michael' book, titled "Illuminati: Healing and Developing the Mind," gives a diagnosis of an individual's current situation, says the author. Then the book outlines the cause and the prescription for ailments. It gives a straightforward, no-nonsense approach to the resolution of individual's problems and the remedy for world peace in a mad world, according to the author's description.

St. Michael provided this synopsis:

Beat the blues! If you've been searching for the right way to manage any type of psychological difficulty, then this essential guide is just what you need to revitalize your life!

However, this book is also for the five faces of society--the working class, the militants, the shamans, the scholars and the business class. 

Just as the mind is composed of five similar elements, which can be regrouped into the ancient trinity model of the mind, society - from the micro-level of the family to the macro-level of the universe - is also composed of the pentagon or trinity model. 

For instance, the ancient shamans of Mindoro's Hanunoo Mangyans believe that individuals have three "souls." A neutral one on the head, a bad one on their left side and a good one on their right side. In the Hindu culture, this is translated into Vishnu "The Preserver," Siva "The Destroyer" and Brahma "The Creator." 

Plato, in "The Republic," later calls these elements as the rational side (scholars), the desiring side (the business class, militants and working class) and the spirited side (shamans), respectively. But in 1923, Sigmund Freud - the Western Father of Psychoanalysis - calls it the mediating Ego, the desiring Id and the spirited Superego.

And as the ancients say, if the scholarly mediating rational side is in control of the two other irrational sides, then there is health, peace and harmony within the individual. This Middle Way technique may be a bit tricky at first, but with enough practice, it will ensure a happy family, community, country and Universe, the author argues.

Author St. Michael received a degree in business administration, majoring in computer applications, He also lived in California where he pursued undergraduate studies in computer science. The author later worked as an officer in a leading American bank and as the training head for the contact centers of top American Internet service providers. He is also the author of "Little Voices: A True Paranoid Schizophrenic Adventure."

The author maintains this Web site: http://voicewaves.tripod.com. The book also is available in major online bookstores such as Amazon.com and on the Web site. The text also is available as an e-book.

Another letter on Villalobos
If banks do it,
why not Villalobos?

Dear A.M. Costa Rica: 

I am so tired of hearing how "greedy" the investors are who put their money with Villalobos, and everyone questioning how he was able to pay such high interest to his investors.

Allow me to give you a little education on greed. The banking institutions are allowed by law to lend money on a 10 percent reserve. What this amounts to is that if you deposit $10,000 with a bank, it immediately becomes $100,000 for lending purposes. 

In keeping with the 10 percent reserve, this means that the banks are able to loan out $90,000 with the $10,000 you deposited. (Understanding, of course, that all bank loans are paper transactions and bookkeeping entries. No actual cash ever exchanges hands.) Now it doesn't take a mathematician to figure out how this prospers the bank. Even at a low interest rate charge of 6% for loans, which doesn't happen very often, this amounts to a whopping 54 % per year that your bank is making off your $10,000 deposit. 6 (for 6 %) times 9 (for $90,000) equals 54. 

And what do they pay as your share of the interest for the use of your $10,000? A meager 1 to 2% per year in today's market. That is a lesson on greed and why an intelligent, informed person would choose to put their money elsewhere.

So, with that in mind, why would one question Villalobos's ability to legitimately pay 36% a year to his investors? He is a very wise and knowledgeable businessman and he (unlike the banks) has been giving his investors their fair share of the profits to be made by using money to make money. And it certainly is not greedy to expect to receive your fair share of profits.

Now, if every depositor made a run on the bank and wanted to withdraw their money, what do you suppose would happen? Of course the bank would fail if they couldn't print fast enough to meet the demand, because they would not have all the money immediately on hand to pay out to their depositors. If money is invested, it is not always readily available. So all you investors, please keep that in mind as you try to place demands on Villalobos and question the whereabouts of your money. As he has in the past, he will continue to be fair and honest.

Now as to your reward of 500 dollars for information on Luis. That's as low as you can get, a man that has never done anything to you, accept increase your reader hits, has no charges against him, and is the friend of thousands and you put a price on his head. Why don't you use your media power to get a group of investors together to help those in distress? We would be glad to help and do our part while the CR government jerks figure out how that can steal our money. Maybe some one will put a price on your head if this goes bad.

Syd Burton
EDITOR'S NOTE: The reserve requirement functions not exactly as the reader describes. If someone deposits $10,000 in a U.S. bank, the bank can loan out $9,000. Eventually, if everone in a series of transactions redeposits the money, the amount may grow to $100,000 among multiple banks. Here is an explanation from the Federal Reserve Bank of New York:

Reserve Requirements and Money Creation:

Reserve requirements affect the potential of the banking system to create transaction deposits. If the reserve requirement is 10%, for example, a bank that receives a $100 deposit may lend out $90 of that deposit. If the borrower then writes a check to someone who deposits the $90, the bank receiving that deposit can lend out $81. As the process continues, the banking system can expand the initial deposit of $100 into a maximum of $1,000 of money ($100+$90+81+$72.90+...=$1,000). In contrast, with a 20% reserve requirement, the banking system would be able to expand the initial $100 deposit into a maximum of $500 ($100+$80+$64+$51.20+...=$500). Thus, higher reserve requirements should result in reduced money creation and, in turn, in reduced economic activity.

Luis Enrique Villalobos Camacho

Our reward offer is $500

By the A.M. Costa Rica staff

This newspaper seeks the prompt return of two men who ran high-interest investment operations that have gone out of business.

Luis Enrique Villalobos Camacho, 62, was associated with Ofinter S.A., a money exchange house, and with his own private investment business that had about $1 billion in other people's money on the books. 

Villalobos closed his business Oct. 14 and vanished.

Louis Milanes operated Savings Unlimited and several casinos in San José. He left the country with other members of his firm the weekend of Nov. 23. He may have as much as $260 million in his possession.

Both operations catered to North Americans. Villalobos had about 6,300 customers. Milanes had about 2,400.

Villalobos is the subject of an international arrest warrant. Milanes is not yet named in such a document, although a case has been opened against him in Costa Rica. Associates of both men have been jailed.

A.M. Costa Rica has posted a $500 reward for information leading to the detention of either man with the hopes that others will make similar pledges. The newspaper believes that investors only will see some of their money when the two men are in custody.

Milanes has few supporters in San José. On the other hand, as the letters frequently on this page show, Villalobos still has supporters who believe that he will reappear and settle his debts. They believe he is in hiding because of a predatory Costa Rican government.

Louis Milanes

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