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San José, Costa Rica, Thursday, Jan. 16, 2003, Vol. 3, No. 11
Jo Stuart
About us
A.M. Costa Rica/Bryan Kay
Investor Margaret Cowell plays with the dogs she might have to put down
Two investors here struggle with financial loss
By Bryan Kay
of the A.M. Costa Rica staff

In spite of his country’s reputation for frugality and the ability to smell a rat, Scotsman David Flett, a music star in Britain in the 1970s, was one of those unlucky souls who lost almost everything to the Brothers investment operation.

More letters BELOW!

Similarly, Margaret Cowell, who is English and a former model, is being forced to give up everything and move back to Britain. The money she lost is one thing, but what hurts most to her is the idea that her precious dogs and cat — rescued from the streets — may be put to sleep.

Both invested modest amounts, Flett, $80,000 and Ms. Cowell $25,000. However both, too, are in precarious positions, as are hundreds of similarly situated former investors here.

Flett played in bands Sad Eyes and Manfred Mann and had a No.1 hit in the British charts with the latter. Now he has nearly nothing left. He invested a disability pension which he received after being devastated by cancer into the care of Luis Enrique Villalobos Camacho.

Having a house on the beach in Hermosa afforded Flett respite from the cold winters he endured in his previous homes, Scotland, and Canada. Cold weather is extremely painful for him, he said.  Flett no longer suffers from 

the disease, but it did leave behind the lasting legacy of a destroyed nervous system.

Hermosa, too, hasn’t been altogether kind. Or rather the locals. Flett said he had his home there burglarized one and a half months ago, and lost more than $70,000 in musical equipment and his wife’s video-making devices.

Luck doesn’t appear to be prominent in his life. "The burglary was the straw that broke the camel’s back," he said.  Now his wife is back in her native Canada. Flett hopes to sell their home and join his wife in February.

Ms. Cowell plans on leaving in February, too. A job looking after an elderly Canadian woman may hand her a last-minute reprieve, but she says the position would have to be "outstanding" for her to stay.

Now she is surviving on gifts from friends and money garnered from the sale of household items. 

"I might take a pill if I have to go on welfare," said Ms. Cowell. She did not appear to be joking.

Meanwhile, Ms. Cowell’s dogs, unaware of what is happening around them, playfully jump around her home just outside of Barva.

Villalobos did not pay investors their September interest when he closed his Mall San Pedro office Oct. 14. Many lived on his 2.8 to 3 percent a month interest as the bulk of their income. He has not been seen since.

Motorcycle crash here kills retired N.J. cop
By the A.M. Costa Rica staff

A former major with the New Jersey State Police died about 8 a.m. Wednesday when his motorcycle was in collision with a vehicle west of San José.

The man, a tourist, was identified as Gregory Stith, 60, of Montrose, in the U.S. state of Colorado.

Investigators said that the death happened in the Macho Chingo turnoff in Río Grande de Atenas. 

A family member said that Stith retired from the New Jersey State Police about five years ago. He moved with his wife Irene to western Colorado.  He is survived by two children, Don and Donna, who still live in New Jersey, which is just west of New York City.

The relative said that the man loved biking and had done so all over the United States. He came to Costa Rica with friends on a five-day bike tour. 

The Judicial Investigating Organization is handling the case.

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Advocate seeks to alter persona of street kids
By Garett Sloane
of the A.M. Costa Rica staff

Bruce Harris, executive director of Latin American programs at Casa Alianza, has dedicated his life to gaining public support for the often overlooked children in the streets.  He is currently working on a 3-month project with the Inter-American Development Bank.

The "Don’t Call Me A Street Kid" project does not just campaign for the voiceless, but seeks to change a public perception, according to Harris. 

The phenomenon of street children has become almost acceptable, he said adding that the desire to act has dropped and sympathy has waned. 

The fierce child advocate said that even though in Costa Rica attention to the problem has magnified the number of children on the streets is still troubling.

Harris commended Abel Pacheco, president of Costa Rica, for recognizing the problem of street 

children, but he said the resources are still not available to reduce the number.

At the current rate, the number of street kids will increase by 50 percent over the next two to three years, he said. What little community sympathy there is will evaporate, and fed up citizens will unleash violence upon the youths of the streets, he said.

"People will blame the victim," Harris said, "They will look out for their self interest." 

"People think that couldn’t happen in Costa Rica," Harris said when relating circumstances here to the rise of right-wing extra-judicial executioners that target drug-addicted youth in other parts of Latin America.

Harris said that what Costa Rica needs to do is act now with funds, but he is not optimistic because of the lagging economy. 

"Economists see social spending as an expense rather than an investment," he said.

Four robbers make
bank withdrawal

By the A.M. Costa Rica staff

Four men stuck up the Banco Elka branch office in Barrio Amon and triggered a police chase.

The mid-afternoon heist Wednesday took place at the office on Avenida 7 when the four robbers gained access to the bank that usually does not have a large crowd of customers.

The men fled with what officials reported as being about 5 million colons or about $13,150. Some of the money may have been in dollars.

Later police chased what they thought to be the get-away car, but it got away. Elka is one of the city’s privately owned banks.

Official: U.S.-Chile bond
augers well for region

Special to A.M. Costa Rica

WASHINGTON, D.C. — The newly completed U.S.-Chile Free Trade Agreement represents a U.S. partnership with Chile "that extends beyond the agreement itself, and lends great momentum" to ongoing negotiations toward a Free Trade Area of the Americas, according to a trade representative Monday. 

Ultimately, this is aimed at establishing a hemisphere-wide free-trade zone, says Regina Vargo, deputy U.S. trade representative for the Americas.

Speaking before a gathering of diplomats and reporters at the Cato Institute, Vargo highlighted the anticipated benefits of the new trade agreement between the United States and Chile, which she described as possibly "the most trade-liberating agreement" that the United States has negotiated with any of its trade partners. 

Vargo, who served as lead negotiator for the United States during its trade talks with Chile, hailed the Andean country as "one of the outstanding performers in Latin America" on account of its successful economic reforms and its thriving democracy.

The new agreement "has been a shared vision of our two countries for over a decade," Vargo observed. 

Moreover, she said, "this free-trade agreement is a win-win, state-of-the-art trade agreement for a modern economy" because it contains four essential features that will permit both Chile and the United States to reap significant advantages. 

Those features are displayed in the agreement's "comprehensiveness, transparency, modernity, and approach to labor and the environment," she explained.

Now that the agreement is in effect, "more than 85 percent of two-way trade in consumer and industrial products becomes tariff-free immediately, and most remaining tariffs will be eliminated within four years," Vargo pointed out. 

This will translate into enhanced U.S. access to Chile's markets — and, in turn, expanded opportunities for U.S. workers and manufacturers,  said Vargo.

The United States is hopeful that this accord will have a ripple effect throughout the region, Vargo continued. Having reached a free-trade agreement with Chile, U.S. negotiators "are proceeding with the Central Americans next" in pursuit of another such pact. 

"We launch those talks this week," she said. "And we'd like to utilize that to broaden our base of like-minded countries" throughout the Western Hemisphere.

Trust focus of Americas 
gathering in Miami

Special to A.M. Costa Rica

WASHINGTON, D.C. — Methods to enhance regional trust and security in the Western Hemisphere will be the subject of a February 3-4 conference in Miami, Florida, which is being held under the auspices of the United States and the Organization of American States.

The organization said in a Jan. 7 statement that top security experts from the hemisphere will participate in the conference, which stems from a 2001 Summit of the Americas mandate. 

The conference will provide an added opportunity to help countries in the region find ways of overcoming mutual distrust, the organization said. 

Lincoln Bloomfield, the State Department's assistant secretary of state in the Bureau of Political-Military Affairs, will head the U.S. delegation at the conference.

Luigi Einaudi, organization assistant secretary general, said that confidence-and security-building measures "contribute to safeguarding peace and consolidating democracy in the Americas." 

Elaborating on that theme, Einaudi pointed to the organization's recent successes in helping to resolve disputes between Belize and Guatemala, and Honduras and Nicaragua.

The last organization meeting of experts on confidence and security building measures was held in 1998 in San Salvador.

Navy practice bombing
resumes amidst protest 

By the A.M. Costa Rica wire services

VIEQUES, Puerto Rico — The U.S. Navy has resumed training exercises here, one day after local protesters squared off with military personnel along the perimeter of the controversial firing range. 

The ongoing training exercises, involving warships and Navy aircraft, are the last such maneuvers before the military's planned withdrawal from the firing range in May.

But Puerto Rican demonstrators continue to denounce the Navy's use of the facility, which covers one-third of the tiny island. Tuesday, protesters hurled rocks at military personnel patrolling the firing range, who responded by lobbing canisters of tear gas. No one was seriously wounded in the skirmish.

In 2001, after years of unrest surrounding the bombing range, the Bush administration announced that Navy ships and warplanes would begin using empty shells for training exercises. 

Additionally, the administration pledged to cease operations entirely by May 2003, at which point the facility would be turned over to the Department of the Interior and be converted into a wildlife refuge.

Demonstrators are far from satisfied. They say a massive clean-up effort will be required to remove toxins and other materials that they contend are destroying the island's ecology and pose a health threat to its residents.

The Navy has long disputed such claims.

The range has been used for shelling and bombing exercises since the 1940s. Until 2001, the Navy insisted that the firing range was indispensable for training purposes and that naval preparedness would be harmed if the facility were closed.

The maneuvers have never been popular among Puerto Ricans. But the issue reached a boiling point in 1999 when an off-target bomb killed a civilian security guard on the firing range. 

The Navy says, once it abandons the bombing site, it will shift training exercises to Florida and elsewhere in the United States.

Violent land dispute 
in northern Peru

By the A.M. Costa Rica wire services

LIMA, Peru —Officials here say at least eight people have been killed and 14 injured in a clash between farm workers and squatters trying to claim unused land on a sugar plantation. 

Police say the clash occurred Tuesday when farm workers attempted to push the squatters off a plantation in the north of the country. The squatters are claiming the land for their own. Officials say both groups were armed with machetes and other weapons. 

Haiti stands still
in most recent strife

By the A.M. Costa Rica wire services

PORT-AU-PRINCE, Haiti — A strike by public transportation workers has paralyzed the Caribbean nation's two major cities. 

Bus and taxi drivers refused to work Tuesday to protest recent dramatic increases in fuel costs after the government eliminated a subsidy program. Schools and businesses were closed here and in the country's second-largest city, Cape Haitian. 

Transportation workers staged a similar walkout Jan. 7. The government said budget deficits have made it impossible to continue the subsidies. 

Terrorism forum 
held in El Salvador

Special To A.M. Costa Rica

WASHINGTON, D.C. — Robert Bonner, U.S. customs commissioner, will head the U.S. delegation to the Third Regular Session of the Inter-American Committee Against Terrorism Jan. 22 - 24 in El Salvador, according to a press release Wednesday issued by the U.S. Customs Service.

The terrorism committee is a technical body of the Organization of American States that works to foster multilateral cooperation to prevent, combat and eliminate terrorism.

The conference agenda is designed to build on momentum created by the June 2002 adoption of the Inter-American Convention Against Terrorism. The meeting will expand cooperative counter-terrorism efforts in the hemisphere, the Customs Service said. The conference will also yield formal counter-terrorism recommendations to the Special Conference on Hemispheric Security in May.

The United States will make a presentation on the increasing importance of cyber-security at the conference and is organizing presentations on regional border security cooperation, the Customs Service added.

Bonner's leadership of the U.S. delegation to the conference reflects the United States' interest in developing a regional strategy to improve border security and disrupt terrorist operations without inhibiting legal trade and legitimate travel, Customs indicated.

He is shot at home

By the A.M. Costa Rica staff

What appeared to have been a planned killing took the life of a Cartago man about 5 a.m. Wednesday.

The victim was identified by the Judicial Investigating Organization as 43-year-old José Portuguez. Investigators said that two men came looking for him at his home in Los Llanos de Santa Lucía, Paraíso de Cartago.

When Portuguez came out of his home to meet the men, they shot him in the head.

New rule targets
suspicious money 

Special to A.M. Costa Rica

WASHINGTON, D.C. — The U.S. Department of the Treasury has issued a proposed rule that would require managers of mutual funds to report suspicious activities to Treasury's Financial Crimes Enforcement Network.

In a news release Wednesday, Treasury said the proposed rule is consistent with reporting requirements currently imposed on banks and other depository institutions and is part of efforts to strengthen money-laundering controls following the September 2001 terrorist attacks against the United States.

Written comments on the proposed rule may be submitted within 60 days of its publication in the Federal Register, which is expected to occur later this week, the Treasury said.

Agency to help
Central America trade

Special to A.M. Costa Rica

WASHINGTON, D.C. — Adolfo A. Franco of the U.S. Agency for International Development announced Wednesday that U.S. Agency for International Development will step up assistance to Central American nations to help them prepare for a U.S.-Central America Free Trade Agreement.

The U.S.-Central America Free Trade Agreement will eliminate tariffs and other barriers to trade in goods, agriculture, services, and investment between the United States and Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua. 

Negotiations were officially launched here on Jan. 8 and working-level negotiations will begin in San José, Costa Rica Jan. 27. The participants will seek to complete the negotiations by December 2003.

Stored gas explodes
killing children

By the A.M. Costa Rica wire services

CARACAS, Venezuela — Rescue officials say seven people were killed and at least four others injured when a family's private stockpile of gasoline exploded. 

Fire officials say four children were among those killed in Tuesday's blast in the Andean state of Merida, some 500 kilometers west of the capital. 

Many Venezuelans are reported to have begun storing gasoline to offset severe shortages caused by a seven-week-old nationwide general strike. 

Authorities have warned citizens against storing fuel because of the risk of fire. 

New president sworn in;
once took part in coup

By the A.M. Costa Rica wire services

QUITO, Ecuador — Three years after staging a coup that unseated the then unpopular President Jamil Mahuad, Lucio Gutierrez has been sworn as in as the country’s new president. 

In an hour-long speech outlining his plan to rebuild the country, Gutierrez pledged to clean out corruption, build the economy and fight poverty. The president said his government plans to move quickly to increase a government subsidy for the poorest, with more improvements for the poor later in his term.

In addition he proposed a national nutrition security fund, supplied in part by the country's food processors. 

"In my government," the president said, "we will have all food processors channel to the food security fund their non-saleable wares to apply toward a national nutrition plan." He then quoted from a common saying, "When the poor cannot eat, the rich must not sleep."

Seven Latin American presidents were among the guests at the inauguration, including leftist leaders Fidel Castro of Cuba and Venezuela's Hugo Chavez.

Gutierrez is a political outsider, elected in November over a banana exporter whose campaign was better financed. The new leader's name first became known to people during a January 2000 coup when he and other renegade military officers helped protesting Indians to throw out Mahuad in a short-lived coup. 

Gutierrez was jailed. After being released he entered politics. 

With crime rising, the president said he wants excellent security that protects children, senior citizens and the disabled. 

His speech was interrupted numerous times by applause. 

The new president promised to recover the country's pride and national unity. But his efforts may run into trouble in the country's Congress, where his coalition holds only 17 of 100 seats.

Israeli on space mission
raises security issue

By the A.M. Costa Rica wire services

KENNEDY SPACE CENTER, Fla. — The U.S. space shuttle Columbia is due to lift off today amid tight security as the first-ever Israeli astronaut joins a seven-member crew for a science mission. 

The presence of Israeli Air Force Colonel Ilan Ramon on Columbia's 16-day flight has threatened to overshadow the nearly 90 scientific experiments scheduled during the mission. 

Columbia, will not fly to the International Space Station after its launch here, but will orbit the earth. Experiments will focus on weightlessness, advanced technology development, and astronaut health and safety. 

Earlier Wednesday, two U.S. astronauts at the International Space Station ventured out for a 6.5-hour space walk to do maintenance work. 

NASA officials say the two astronauts, both first-time space walkers, deployed a radiator panel and cleaned debris from a docking ring. 

One of the astronauts, science officer Don Pettit, was filling in for his Russian counterpart Nikolai Budarin, who was not allowed to participate in the space walk for medical reasons. 

NASA says Budarin has a cardiac abnormality. The other astronaut is Kenneth Bowersox. The Expedition 6 crew began its mission in November 2002. They are scheduled to return to Earth in March.

Defending women costly

By the A.M. Costa Rica staff

A man defending the honor of three women took a bullet in his leg for his trouble a little bit after midnight Wednesday.

The victim, Anibal Gómez, 22,  was walking on Calle de la Amargura in San Pedro with the three women when two men in a car began to hurl insults. As Gómez responded, one of the men in the vehicle pulled out  a gun and shot him.
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Coffee Corps will help famers with technical advice
Special to A.M. Costa Rica

WASHINGTON, D.C. — The U.S. Agency for International Development is providing seed money for a new volunteer program to address the crisis faced by small coffee farmers in Latin America and in nations elsewhere which rely heavily on coffee for the majority of their export revenues.

The agency said Tuesday that it will work with the non-profit, California-based Coffee Quality Institute to improve the livelihoods of coffee farmers, workers, and entrepreneurs in developing countries and to establish a "Coffee Corps" to help ensure a reliable global supply of quality coffee.

The Coffee Corps volunteers will develop projects to address the business needs of small coffee farmers. Potential projects may range from consulting on post-harvest processing improvements to environmental issues. The volunteers will be experts in the coffee industry who are willing to share their time and talent with coffee farmers and coffee communities. The agency said it will provide initial funding for the program, while the coffee institute will pay for volunteers' travel and basic living costs during their assignments, which will typically run for about two weeks.

Agency Administrator Andrew Natsios said the partnership with the coffee institute is an "innovative way to address the crisis facing small coffee farmers around the world." 

Natsios said the volunteer program will rely on the "expertise, technology and resources of private corporations and others to help poor countries grow out of poverty." He added that "by mobilizing top-level expertise on a volunteer basis from U.S. coffee companies, the coffee corps program will help small farmers improve the quality of their production and tap into high-paying markets that would have been inaccessible to them."

The agency said that the crisis has hit such regions as Central America particularly hard, because an oversupply of coffee on world markets has driven coffee prices to historic lows and caused great hardship to the area's coffee producers and coffee workers.

Adolfo Franco, agency assistant administrator for Latin America and the Caribbean, said that in the last year Central American coffee producers lost about $1.5 billion while 600,000 coffee workers lost their jobs.

Franco said last month that his agency signed in 2002 a quality coffee agreement with Panama, the Dominican Republic and five Central American countries in which the agency will provide $8 million for a program to assist small and medium-sized coffee producers to improve coffee quality and form new business linkages. The program will also secure longer-term contracts with the specialty coffee industry and identify and implement crop diversification options for producers who cannot be competitive.

Franco said his agency's effort to form partnerships with private corporations and organizations will help coffee-producing countries affected by the sharp fall of world coffee prices. 

For instance, an agency agreement with Green Mountain Coffee Roasters of Vermont will support the development of small- and medium-scale coffee producers that are environmentally, socially and economically sustainable.

Franco said the agreement "will improve livelihoods and incomes for coffee farmers and their communities while maintaining a reliable supply of coffee in the range of qualities demanded by consumers."

Groups interested in requesting Coffee Corps assistance may contact the organization on-line at: http://www.coffeecorps.org.

Our reward offer is still $500

Louis Milanes

Luis Enrique Villalobos Camacho
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 and Milanes are the subjects of international arrest warrants.  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.

More letters on the Villalobos case
Tax expert comments
on IRS amnesty

Dear A.M. Costa Rica:

I have just read the article regarding income tax amnesty that you published today. As a former IRS revenue agent who now represents clients who have tax problems, I wish to clarify certain facts. 

First, this tax amnesty has absolutely nothing to do with the Villalobos or Milanes matters. The IRS is quite imaginative in creating programs to increase the revenue of the Federal government of the United States. This "special offer" has to do with forcing a panic among those who have taken their wealth outside the U.S. without paying tax on it but who used their Visa, Mastercard, or American Express credit cards who unwittingly created a paper trail that the IRS might follow. 

Second, these "amnesty" programs are rarely advantageous when compared to other options available to those with IRS difficulties. For those who don't have seizable assets within the borders of the U.S., there are other ways to settle such tax matters. 

Frankly the U.S. Treasury has very little, if anything, to lose in making such seemingly generous offers. Quite often they have no information which will allow them to successfully pursue a civil tax case when it involves money that has been removed from the U.S. Criminal cases are much, much more difficult to make due to the complexity of tax laws. 

Given that the investment activities you are referring to often paid out cash and no "reliable" third party information was provided to the IRS about the transactions, only by creating a paper trail would the investors fall prey to the IRS. Of course, if the investors want to stand up and report the income on their own, then the IRS will happily send them a bill. 

John McLaughlin, EA 
Phoenix, Arizona 

Cautions investor 
tells why

Dear A.M. Costa Rica:

I travel to Costa Rica each year for about six weeks. A Canadian friend told me about the Brothers a few years ago. As a somewhat cautious investor, I said I would never hand my money over to such an operation because of the obvious risk. It is painful to loose a great deal of money, especially your life's savings. 

What the investors had for security was the hope that they would not be ripped off. When it comes to money, everyone should have their guard up. There are many problems in Costa Rica as there are in other countries. Yet, the Ticos are a resilient and friendly people who cope with much less then the average Gringo. 

I try to show respect when I am in their country. I do not think it is fair for the investors to blame anyone but themselves. I lost $25,000 in the stock market in 2002. I accept this loss. I took the risk. I could have bought a G.I.C. but I wanted a higher return. 

G. Dorrington
Letter was obnoxious

Dear A.M. Costa Rica:

I would like to respond to the obnoxious letter sent by Mr. Robert W. DePretis of Connecticut.

In his letter, he implies that he is an honest taxpayer and because he pays his taxes "cheats like you can vacation in Costa Rica." I don't really understand how your paying taxes and others vacationing in Costa Rica have anything to do with each other. Some people in the world have money, and some don't. This is a fact of life. Taxpayers do not pay for my vacations, I do. 

I am not an investor, but that is unimportant. I do have friends who are investors, and I must add that it is terrible that many people have lost so much money due to a corrupt government. Some people have acquired their money through great suffering and trusted Mr. Villalobos with their lives. Many would not hesitate to do it again.

Have you ever been to Costa Rica, Mr. DePretis? It sounds to me as if you are telling us all what you would do if you had been fortunate enough to have been an investor and received cash payments. How can you accuse all of the investors of being tax cheats? One word — JEALOUSY. You naturally assume all are guilty because this is how you would conduct your own affairs if you were to venture out of Connecticut. 

I don't suppose you have heard of tax deductions for business purposes or anything as sophisticated as that. Is it so inconceivable to you that people may actually have no tax liability for different reasons? For one example, it might be that an account had been opened in 2002 and no interest collected due to the government's intervention. This could be declared a capital loss. With the amount of income generated by the Villalobos operation, many people would have no problem with declaring and paying their taxes. Certainly in this age of international terrorism, one would have to be a fool to believe that they can evade taxes as was once the case. Don't you think that many investors are aware of this?

And how are you "the honest taxpayer" suffering because many people have lost a lot of money temporarily or permanently as the case may be? I guess you don't make enough money to even be aware of tax loopholes that people of substance employ, just as people with lesser incomes do their best to get every tax deduction that they can. 

This is not illegal. It seems to me that you are a small-minded, bitter and ignorant fool who would love to have someone hand him an envelope full of cash every month that you could hide from the IRS. It takes a cheat to know a cheat. Am I close to the mark, Mr. DePretis? And please spare us your phony sympathy for the "poor guy who shot himself." You are obviously relishing the whole affair. Get a life!

Ellen Beattie 
Puna, Hawaii

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