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These stories were published Monday, April 22, 2002, in Vol. 2, No. 78
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Sunday crowd gathers for end of International Festival of the Arts downtown

Online firm here getting eye of U.S. regulators
By the A.M. Costa Rica staff

The U.S. Securities and Exchange Commission filed a civil action against The Gaming Factory, Inc., last week charging that the firm, its president, Richard Onorato, 27, and Victor L. Selenow, 40, a sales representative, engaged in fraud in selling the firm’s stock.

The U.S. government agency asked for a court injunction against those involved, that their assets be frozen, that ill-gotten profits be surrendered and that a receiver be appointed to safeguard assets and find investor money.

The SEC said the company has offices in West Palm Beach, Fla., and that a subsidiary, The Gaming Factory Panama, has offices in San Pedro not far from the center of town.

The SEC claims that The Gaming Factory solicited investors to purchase unregistered stock via hard-sell telephone solicitations and via Internet Web pages.

The Web pages operated by the company say they are operated in Costa Rica and have little maps showing this country. 

An Internet lookup of the domain registrations shows that the Web sites are listed at Residencia de Dona Claudia, behind the Convention Center of the Hotel Herradurra in Cariari. Ian Smith is listed as the principal technical contact at that address. He is listed in the company literature as a vice president. He was not named in the SEC action.

The Gaming Factory (www.thegamingfactory.com) offers to turnkey Internet casinos for customers.  The firm says  it has created Players Galaxy Casino (www.playersgalaxy.com), an online casino,  and Mr. Sportsbook (www.mrsporsbook.com), where bets can be taken on sporting events.

Similar stories:

Sports equipment scam BELOW

Cartago raid details BELOW

The firm also operates Cleo Bets (www.cleobets.com) with an ancient Egyptian motif as an online betting casino. There also is (www.betoncampus.com), which seems to be both a casino and sportsbook. Links go to Players Galaxy and Mr. Sportsbook

A link on The Gaming Factory Web site goes to Web Gaming Solutions (www.webgamingsolutions.com) which offers the online casinos. It is here that the offending material was published, according to the SEC.

An investor’s newsletter, dated last September, on the Web solutions site said that Onorato went to Panama where he obtained from the Panamanian government a conventional casino license and also a seat on the country’s gaming commission, in addition to an online casino license. These statements are false, said the SEC in its court filing.

The company also says repeatedly on its Web sites that its online casinos are licensed by the Costa Rican government.

The SEC also said that the firm grossly overstated its income because it did not make much money until January when an Internet casino went online.

The filing, alleging four counts of fraud, was in U.S. Court in the Southern District of Florida. The complaint is on the Internet at: 

http://www.sec.gov/litigation/
complaints/complr17472.htm


 
 
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Cartago raid sought details of pyramid scheme
By the A.M. Costa Rica staff

A Czech citizen in Cartago is being called the technical brains behind a complex financial setup that U.S. authorities label an illegal pyramid scheme.

The man is Zdenek Kieslich, known as "bulldozer" on the Internet. He was associated with Le Club Privé, which sought to sell memberships to people who wanted inside information and abnormally high interest rates on their savings.

Kieslich came into the news last week when Costa Rican officials, upon the request of the United States, searched his dwelling in Caballo Blanco,  Cartago, and confiscated among other things, computer equipment. The case now has ended up in a Costa Rican court as the Czech fights attempts by the United States to bring the equipment north for study.

Zdenek was the administrator of the Internet-based operation and responsible for the day-to-day technical work

The computer equipment is believed to hold information relating to La Club Privé, two other defendants in the civil action, Ron Z. Mendelson and 
Eugene G. Chusid, and 11 other financial firms. Boris G. Chusid is named as a lesser "relief defendant" in the U.S. federal action.

The order seeking the computer equipment was issued by U.S. District Court Judge Jerry Buchmeyer in Dallas, Texas. The U.S. Securities and Exchange Commission says that a disproportionate number of Texans were victims of the scheme.

The original federal action was filed in August 2000. It also named Le Baron Solidarity. S.A., Le Baron Insured Fund, Le Baron High Income Fund, and Le Baron High Yield Fund as defendants. Rishon Bank, Rishon Financial Services, S.A., Rishon Investment Corp., M&R Bank Corp., World Wide Trading Group of Companies. Inc., World U.S. Financial Services, Inc., and Citadel Bank & Trust, Inc., also were named. 

At the time of the federal action 20 months ago officials said that the group of companies and individuals perpetrated a $5.6 million unregistered offering fraud against more than 2,000 U.S. investors. The amount of money involved might be much higher.

In the United States, large-scale offerings of securities to the general public must be reviewed beforehand and "registered" with the Securities and Exchange Commission.

The full information on the federal case may be found at http://www.sec.gov/litigation/
litreleases/lr16665.htm

Regulators claimed that Le Club Privé sold memberships for $1,449 and $149 in monthly dues to individuals who then were able to earn a $500 commission by recruiting even more members.

Members also were entitled to access an Internet "backroom" where club recommendations on investments were posted. One such investment was called The Premier Funds, which offered interest returns of from 6 to 40 percent a month. Shares of these mutual funds are among the securities that regulators say were unregistered.  Regulators also said that no real fund existed and the principals of the firms simply pocketed the investments.

"LCP is a highly secretive organization in which no one reveals his or her true identity," reported Ronda J. Blair, staff attorney for the SEC. "Upon joining LCP, each member selects a cyber name. 
This name is used to identify the member's e-mail address and their personalized Web site. 

LCP's principals and administrators also selected cyber names. For example, LCP's administrator, Kieslich, uses the moniker Bulldozer."

Rishon Bank & Trust was an offshore bank that Mendelson owned and controlled. The SEC said that Mendelson said the bank, chartered in Montenegro, operated from its principal place of business in San José. Rishon Financial Services provided ATM cards for investors, said the SEC. Mendelson identified himself as president of the bank in an Internet posting last June.

At one time the bank was identified as being located in the Kuiu Thling-git Indian Nation in southern Alaska. It also had an address in Barbados.

Under U.S. law, a court-appointed receiver controls whatever assets of the company that can be found. This includes Web sites that have been inactivated. 

The raid last week in Cartago may be an attempt to locate more of the money that flowed through the various investment companies. Some money is known to have been deposited in a Latvian bank. Several million are being held by U.S. financial institutions following a federal freeze order.

The raid also may be part of a continuing criminal investigation into the companies. Mendelson and Chusid are believed to live in the United States. One contact number for the club was in the U.S. state of Oregon. Typically, SEC action is taken quickly to stop what regulators see as a fraud. The SEC seeks judicial orders halting illegal practices in a civil hearing. Later the separate cases may be brought in criminal court.

Rishon Bank & Trust is believed to have been involved in a number of Costa Rican-based financial schemes. But investigations into these are not yet complete.
 
 

Equipment valuation
scheme centered here

By the A.M. Costa Rica staff

Sports clothing manufacturing equipment in Costa Rica figured in what U.S. officials said was a $5.2 million fraudulent attempt to boost the value of a company.

A former California man, David McKenzie, 42,  who now lives in Costa Rica, did not admit responsibility in the case but he did consent to a final judgment and permanent injunction, said a U.S. government release.

The company involved is Freedom Surf, Inc., which wanted to make wet suits and other ocean sports gear. The company is now known as Freestar Technologies, Inc., and is located in the Dominican Republic.

The U.S. Securities and Exchange Commission said that McKenzie, then-vice president of the  company, inflated the value of the equipment and presented the incorrect numbers to other officers, advisers and employees of the company in the United States.

Subsequently,  Freedom Surf reported the sale of the equipment in a sham transaction with another company controlled by Raece Richardson, company president, the SEC said. Freedom Surf included the fraudulent equipment valuation or the sham sale of the equipment in a registration statement, periodic reports, and other filings with the commission between January and November 2000, the SEC said.

A higher valuation would have a tendency to attract investors.
 

E-mail campaign sought to reopen murder case
By the A.M. Costa Rica staff

Casa Alianza is asking for public help in reopening a case of murdered children in Honduras.

The organization’s director, Bruce Harris, issued a statement Friday in which he asked for a flood of e-mail messages to the newly elected president of the Supreme Court of Honduras, Vilma Morales, whom he said he feels is open to the requests.

The e-mail and letter campaign relates to the murders of two young Hondurans more than four years ago.  They are among the more than 1,160 children and youth murdered in Honduras since January1998, said Harris, whose organization is an advocate for children.

Oscar Medina and Jose Luis Hernandez were riding their bikes at dusk in the city of Progreso when they were grabbed by men witnesses identified as police criminal investigators.

"It was not until sunrise that the tortured bodies were found," said Harris. "Oscar's legs had been stabbed over and over again with an ice pick. The 
 

cold blooded murderers had even cut the boy's penis off. And to end the indescribable suffering, they then shot the boys in the back with a shotgun. And simply threw their bodies away."

Apparently the murders were triggered by a theft. Harris said that some teenagers had stolen a suitcase from a tourist who was on his way to the airport and the police were searching for the thief. 

Harris asked that short, polite notes be directed to the new judge. He gave this e-mail address: <vmorales@honduger.hn>.

FAXes may be sent to +504-233-8089 or by mail to Palacio de la Justicia, Colonia Miraflores Sur, Tegucigalpa, Honduras, Central America, said Harris. He asked that copies be sent to Honduras This Week, <hontweek@hondutel.hn>, La Tribuna <tribuna@latribuna.hn> and to Honduran radio <maribelsanchez@hotmail.com>.

He also said he wants a copy,  <info@casa-alianza.org>. More information is available on the organization’s Web site, http://www.casa-alianza.org.


 
 
Anti-corruption Web
pictures politicians

By the A.M. Costa Rica staff

The anti-corruption organization Probidad has published on the Internet a rogues’ gallery of what it calls corrupt politicians in Latin America.

Some 18 present and former presidents of Latin countries and two vice presidents are listed along with their alleged shortcomings.

No one from Costa Rica made the list, but Panamanian President Mireya Moscoso is there, and so is Arnoldo Alemán, who just left office in Nicaragua.

The full list is available in Spanish at http://probidad.org/regional/recursos/galeria/.

Probidad, a non-profit organization, formed to fight corruption in El Salvador, but it has expanded to be a clearing house for all of Latin America. The organization also sponsors the group Periodistas Frente a la Corrupción  (Journalists Against Corruption), http://www.cipe.org/pfc.

Although Probidad stopped short of saying the persons pictured took money, the Web page said that in common these politicians had not controlled corruption, which flourished under their administrations, and that they did not apply the rule of law. 

The organization said that public protests in various countries during March and April highlighted public disapproval of some of these politicians, not the least of whom was Hugo Chavez Frias of Venezuela, who barely survived a coup attempt 10 days ago.

Probidad noted that a number of organizations have been formed to fight corruption all over Latin America. In Guatemala, Movimiento Cívico is collecting signatures seeking the resignation of President Alfonso Portillo and of the vice president, Juan Francisco Reyes. Both made the list.

In Nicaragua, Edén Pastora, the former Comandate Cero during the civil war, has started a national movement against corruption that is planning a major demonstration May 14 in front of the parliament building in Managua to urge the legislators to dump Alemán as head of the National Assembly.

New computer worm
sends itself around

By the A..M. Costa Rice staff

The worms are on the march. The computer worms, that is.

A new version of a mass-mailing worm has hit the Costa Rican community, based on e-mails received by A.M. Costa Rica

The worm virus infests a computer and then sends copies of itself to everyone in the Microsoft Outlook address book of the computer user.

The new worm does not seem to pack a damaging punch as did similar rogue programs in the past. The most damage seems to be in replicating itself and mailing itself to every Internet address it can find.

Workers at A.M. Costa Rica noticed in the past few days that a number of e-mails had been arriving without content. A virus protection program had stripped the virus attachment from the message.

The suspect e-mails contained randomly generate subject lines, such as "check out my Web page."

The virus is activated when a user of a PC computer using Microsoft Outlook opens the attachment. 

Man kills wife,
then wounds self

By the A.M. Costa Rica staff

A man gunned down his estranged wife Sunday morning then turned the weapon on himself.

She died at the scene near Edificio Colón on one of the city’s main streets, but he only wounded himself slightly, said police.

The dead woman was identified as Argeda del Carmen Pérez, 38. The man is Angel Gutiérrez. She was on her way to the store around 8 a.m. when the man intercepted her.

The dispute developed because the couple were having difficulties and were living apart, said police. The man was reported in satisfactory condition in San Juan de Dios Hospital.

The dead woman is likely to become a political figure as women demonstrate in front of the National Assembly seeking changes in the laws to protect women.  The woman have been conducting a major publicity campaign against domestic violence and have said that large numbers of women have been killed by male companions.

Pickets have been in front of the assembly building for a week.

Japanese author
to discuss water

By the A.M. Costa Rica staff

Dr. Masaru Emoto, a Japanese author, will be at the Centro Cultural de Mexico in Los Yoses Wednesday from 6:30 to 9 p.m. to discuss his research into "hado."

Emoto freezes water and then finds ice crystals bearing Japanese characters. He says that the formation of the ice can be affected by a number of factors.

Among these are playing music to the water as it freezes, showing the water writing or allowing people to think good or bad thoughts at the water. He has written two books on the topic. He holds a doctorate in international relations. His Web site describes the process: www.hado.net.

Additional information is available from janine@racsa.co.cr.

The hado concept expressed by Emoto — that thoughts and feelings affect physical reality — are key in a number of alternative medicine procedures, extra-sensory perception studies and prayer.

Rice growers clash
with police at dock

By the A.M. Costa Rica staff

Rice growers staged another road blockage Friday and Saturday near the Caldera docks, and police used teargas late Saturday.  More than a dozen protestors were arrested, and about 40 persons, police and protestors suffered injuries.

A presumed accord with government officials Saturday afternoon resulted in a lifting of the blockade. But rice growers returned late Saturday and police responded in force.

The rice growers are unhappy that a ship laden with 26,000 tons of U.S. rice is being unloaded in the harbor. They believe that the rice will flood the market as their own crops near harvest.

The government has agreed to make sure farmers can sell all their crop.

The farmers were blocking the road where 18-wheelers were taking the rice from the docks to various points in Costa Rica.  Farmers said they thought the rice was being imported for the benefit of Megasuper, the supermarket chain. They threatened a boycott of the chain’s outlets.

Rightist is winner
over French socialist

By the A.M. Costa Rica wires services

PARIS, France — The main far-right leader, Jean-Marie Le Pen, has created a major political upset by ousting Socialist Prime Minister Lionel Jospin from next month's presidential runoff election.

Le Pen came in second with 17 percent in Sunday's first round of voting, one percentage point ahead of Jospin. He will face conservative incumbent President Jacques Chirac, who polled just under 20 percent.

Demonstrations against Le Pen took place in several French cities after the results were announced. Sunday's results mean that for the first time since 1969, no leftist candidate will be in a presidential runoff election.

France's extreme-left also scored well in the first round, taking 12 percent. Turnout was a record-low 71 percent. Observers say many voters either stayed at home or supported extremist candidates to show their discontent with the political establishment.

Several of the 16 first-round presidential election candidates called on their voters to support President Chirac in the May 5 runoff. Prime Minister Jospin's Socialist Party also announced it will reluctantly back Chirac, who early polls say will win the runoff easily with 77 to 80 percent of the vote. Jospin announced late Sunday he is retiring from politics.

Civil war predicted
unless Chavez changes

By the A.M. Costa Rica wires services

CARACAS, Venezuela — The leader of the country’s largest workers union says the country faces greater unrest, even civil war, unless President Hugo Chavez changes his ways and accommodates his critics.

Carlos Ortega, head of the Venezuelan Workers' Confederation, emerged Saturday from a week in hiding to announce that he had held what he called tough talks with the country's defense minister and would soon meet with Chavez.

Ortega led the three-day general strike that led to bloody anti-Chavez protests on April 11 in which 17 people died. Chavez was briefly ousted the next day, but he resumed office after the military withdrew its support from a transitional government.

Although Chavez apologized for his high-handed rule over three years in office, he has made no concrete concessions to his opponents. On Friday, he ruled out holding a referendum on his rule. Ortega said that if a new political consensus cannot be reached, Venezuela will "be headed for civil war." 

Meanwhile, Venezuela's new air force chief, Gen. Luis Acevedo, and nine other soldiers died when a military helicopter crashed in mountains north of Caracas. Officials say bad weather was the likely cause and foul play is not suspected. Everyone on board the helicopter was killed, including three other generals. 

The newly-appointed air force chief was flying back to the capital late Friday after attending a ceremony installing a new navy chief. President Chavez reshuffled his high command after regaining power.

School in Peru
falls on students

By the A.M. Costa Rica wires services

PUNO, Peru — At least 10 people have died and more than 30 others are injured after a university preparatory school collapsed here in southern Peru.

Officials here, about 800 kilometers (480 miles) southeast of Lima, said Saturday they are continuing to look for victims and survivors in the building's rubble. A Puno firefighter said that most of the victims are teenagers.

Authorities say the three-story building collapsed Friday after the top two floors crushed the first floor, which was made partly of adobe.
 

IMF plans new trip
to ailing Argentina

By the A.M. Costa Rica wires services

WASHINGTON, D.C. — The head of the International Monetary Fund says he is sending a mission to Argentina to negotiate a new loan package for the financially-strapped nation. 

At a meeting of IMF policymakers here Saturday, Managing Director Horst Koehler said the fund expects to send a team to Buenos Aires in May. Koehler says any new financial aid will depend on whether the Argentine government can make sustainable economic reforms.

The IMF action follows an announcement that Argentina's Central Bank has ordered an indefinite closure of the country's banks, beginning today. The move is aimed at preventing a run on deposits that could drain the country's capital. 

The IMF suspended a $22 billion loan to Argentina in December, after the Buenos Aires government failed to control deficit spending. That caused a cash shortage that prompted Argentina to default on its debts of over $140 billion. 

Argentina is seeking billions of dollars in new IMF loans to escape a deep recession and avert a repeat of the deadly social unrest that plunged the nation into a serious political and economic crisis four months ago. 

Finance ministers taking part in the Group of Seven meeting in Washington on Saturday expressed their concern about the Argentine economy. They urged authorities to improve bankruptcy laws and establish a sound exchange rate. 
 

Hundreds protest
World Bank policies

By the A.M. Costa Rica wires services

WASHINGTON, D.C. — Hundreds of people rallied outside World Bank and International Monetary Fund headquarters here for a second day Sunday to protest policies made by finance officials meeting inside. 

The protesters chanted slogans denouncing what they call socially and environmentally destructive projects in developing nations. Sunday's rally was peaceful and police report no arrests. 

The protesters later marched to the Washington Monument to join a rally against U.S. policies in Colombia. 

Meanwhile, banking and finance ministers from around the world are winding-up two days of meetings on debt reduction and economic development strategies for poor nations. World Bank President James Wolfensohn announced a plan to extend primary education programs to every child in the world by 2015. 

Wolfensohn said the World Bank will select 10 countries for a pilot project in June to test methods for increasing school enrollment. 

On Saturday, the finance officials agreed that the world economy is recovering from recession. However, they also acknowledged that rising oil prices, ongoing economic stagnation in Japan, and Argentina's economic woes threaten the global recovery.
 

Bush aide laudes
president on trade

By the A.M. Costa Rica wires services

TOKYO, Japan — The Bush Administration is committed to leading the world forward in free trade, Commerce Secretary Donald Evans said during a press conference here Friday.

"This President will continue to push this world forward toward free trade," Evans said. "But a very important part of that is also a level playing field. And everybody playing by the same rules. And everybody complying by the rules. And countries doing it in a transparent, open kind of way."

Enforcement of U.S. trade laws, he added, is a transparent process fully consistent with the rules of the World Trade Organization (WTO).

Asked about what the U.S. response might be if the European Union decides to impose tariffs on U.S. steel exports and Japan sets up a panel in WTO against U.S. tariffs, Evans said: "It's very important for us to have a system of rules, a system of laws, a system of standards that we all live by and we all honor. I think when countries begin to take unilateral action outside of those rules and regulations -- I think that's very dangerous."

Pope tells new priests
to try to be ‘perfect’

By the A.M. Costa Rica wires services

VATICAN CITY — Pope John Paul has told a new flock of priests to adhere to their vows, to be "perfect." The words take on unusual significance two days before an unprecedented summit of American cardinals to discuss a sex scandal that has thrown the Catholic Church into crisis. 

The Pontiff has called the cardinals to Rome to air the mounting sex abuse scandal that has rocked the Church in the United States 

In a number of dioceses, church members are claiming their parish priests sexually abused them as boys. There is evidence that when the victims complained, church higher ups knowingly moved offending priests from job to job. 

In an interview on the CBS television program "Face the Nation," Bishop Joseph Gallante of Dallas, Texas, said he thinks this week's discussions in Rome will focus on accountability within the Church hierarchy. 

". . . Accountability also to the people in the sense of providing openness and honesty and also safeguarding the most vulnerable people in our society," he said. 

Polls shows that public support of the Catholic Church in the United States is at an all time low, with about seven out of 10 American Catholics believing the Church is in crisis and to blame for the sex scandal. 

Washington D.C. Cardinal Theodore McCarrick is in Rome, among the hundreds of Cardinals summoned by Pope John Paul for a communication on the sex scandal. McCarrick said American Catholics should not expect too much from the two-day meeting, which begins Tuesday. 


 
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