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(506) 223-1327              Published Thursday, May 17, 2007, in Vol. 7, No. 97               E-mail us    
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Oswaldo Villalobos and lawyers
A.M. Costa Rica/José Pablo Ramírez Vindas
A white-haired Oswaldo Villalobos discusses his situation with one of his lawyers.
Villalobos conviction dashed hopes of quick payback
By the A.M. Costa Rica staff

The Villalobos faithful took a body blow Wednesday when a conviction of the brother Oswaldo dashed their hopes of a quick payback.

The judges' decision: HERE!

Some of the investors were rooting for an acquittal because they expected that then Luis Enrique Villalobos, now a fugitive, would return and pay them their investment plus interest.

Hope springs eternal, and the faithful quickly point out that Oswaldo Villalobos Camacho only was convicted on two of three charges. He was acquitted on a money laundering charge. A leader of the faithful, John Manners, has said an acquittal on money laundering would allow Luis Enrique — wherever he is — to start sending money to his long-suffering investors. The Villalobos Brothers high-interest empire collapsed Oct. 14, 2002.

The scene in the San José courtroom was grim, and some Villalobos backers bolted from their chairs and left after learning of the verdict. Conviction on fraud and illegal banking means that the three-judge panel subscribed to the prosecutor's claim that the brothers scheme was designed to trick investors.  The Villalobos brothers owe investors at least $1 billion, and the faithful hope he will return and pay to bail out his brother from the conviction for fraud.

A.M. Costa Rica/José Pablo Ramírez Vindas
Then it is time for the handcuffs

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San José, Costa Rica, Thursday, May 17, 2007, Vol. 7, No. 97

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Legislature continues debate
on key change in regulations


By the A.M. Costa Rica staff

The long-running drama over fundamental changes to the Costa Rican society continues in the Asamblea Legislativa.

Lawmakers are continuing to discuss a change in legislative regulations that will limit the time individual legislative deputies can speak on a particular measure during meetings of the full assembly, the plenario.

This piece of legislation was considered key in ratifying the free trade treaty with the United States. That decision was taken out of legislative hands when the Tribunal Supremo de Elecciones agreed to hold a national referendum on the treaty, probably Sept. 23.

But a dozen less-known laws still are in the legislative hopper. These measures will bring Costa Rican law to compliance with the treaty. For example one such law would provide for patents on new plant seeds, an intellectual property requirement. These laws, if passed, will become effective even if the treaty is defeated at the polls.

Passage of the regulation change would stop efforts toward filibuster that were used so effectively by the deputies of Movimiento Libertario two years ago in derailing the administration's tax plan.

The Partido Acción Ciudadana and other groups that oppose the free trade treaty also oppose the change in regulation, which would be made to Article 41.5 of the legislative regulations.

Opponents have been submitting amendments. Although these amendments have been routinely rejected by the full assembly, they are discussed and subject to a vote.

Youth orchestra will play
at Teatro Nacional Tuesday


By the A.M. Costa Rica staff

The Orquesta Sinfónica Juvenil will kick off its 2007 season Tuesday at 8 p.m. in the Teatro Nacional.

On the program is the overture to Mozart's "The Marriage of Figaro," Tchaikovsky's "March Slav," and the overture to Glinka's " Russlan and Ludmilla."

José Enrique Morales Hidalgo will be the featured trumpet soloist in Arutunian's "Concert for Trumpet and Orchestra."

The juvenile orchestra is associated with the Centro Nacional de la Música and hosts young artists up to the age of 27. The orchestra members come from the 800 students at the  Instituto Nacional de Música.

The juvenile orchestra gives about 15 performances around the country each season.

Admission is 1,500 colons Tuesday, about $2.90.

Public help is requested
for bad animals medicine


By the A.M. Costa Rica staff

The Servicio Nacional de Salud Animal is calling upon the public to file complaints against anyone who is selling unapproved, damaged, unregistered or expired medicine for animals.

Yayo Vicente, director general of the agency, which is part of the Ministerio de Producción, said that his investigators have come upon large quantities of suspect animal medication. His organization conducts inspections of veterinarian offices.

Anyone who has a concern about such medications can call  260-8300, Ext. 2005, to file a complaint, the agency said.

Ex-girlfriends' house a target

By the A.M. Costa Rica staff

A former boyfriend fired on his ex-girlfriend's house, shot her current boyfriend in the leg and then took police on a high-speed chase in the section known as La Rita in Guápiles, Limón, said the Fuerza Pública.

The suspect was identified by the last names of Campos Arias. He was detained after police arrived at the house and the man doing the shooting fled in a vehicle.

Police shot out a tire to make the arrest.

The current boyfriend was being treated at a local hospital.

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San José, Costa Rica, Thursday, May 17, 2007, Vol. 7, No. 97


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John Manners, bearded president of the United Concerned Citizens & Residents, listens to judges deliver their opinions. His group successfully urged hundreds of investors to drop their claims against Oswaldo Villalobos on the pretext that this would let Luis Enrique return and pay off creditors.

Those who dropped will not share in the civil judgments announced Wednesday.

A judge said that the civil cases advanced in the face of interference by 'people unrelated to the process.'


A.M. Costa Rica/José Pablo Ramírez Vindas

Judges explained in detail why they convicted Oswaldo
By Dennis Rogers
A.M. Costa Rica special correspondent

Long faces among investors who still support the Villalobos brothers and tears from relatives greeted the guilty verdict Wednesday afternoon that will send Oswaldo Villalobos, 62, to prison for 18 years, pending appeals and good time. Guards had closed the courtroom doors with interested spectators still outside, and the room quickly became hot and stuffy.

Presiding Judge Isabel Porras, who had sternly overseen the three-month trial, looked uncharacteristically startled by the press and the room full of Villalobos supporters. She read the sentence immediately and turned most of the remaining material over to the other members of the panel.

Almost all of the civil claims filed against Oswaldo Villalobos and Villalobos-controlled companies were approved, some with pain-and-suffering awards and some without. A total of the amounts awarded is not available at this time, and it remains to be seen if the amount of frozen money and properties will cover all claims.

Judge Manuel Rojas “in the interest of transparency” introduced a presentation of the three-judge panel’s reasoning in arriving at the conviction.

Rojas gave the judicial investigators and prosecutors a pat on the back for the job they did in investigating and prosecuting the case. Investigator Lizbeth Flores was commended for organizing the 27 boxes of documents at the heart of the case. He also mentioned how the civil cases advanced in the face of interference by “people unrelated to the process.” That was directed at Villalobos supporters who urged claimants to withdraw their charges. Many did.

Rojas described the performance of the national financial regulator Superintendencia General de Entidades Financieras as “dull” in its failure to supervise properly and intervene earlier, and possibly prevent the loss of so many investors’ money. The Superintendencia's oversight at the Ofinter S.A. money exchange house failed to detect its involvement in the circular movements of money that were part of the fraudulent scheme, and it also recognized that large amounts of money were being collected as part of the fraud but did nothing, said Rojas.

Judge Juan Carlos Pérez, who had been quiet most of the trial, then talked at length about the judges’ decisions relating to the nature of the fraud and Oswaldo Villalobos’ involvement in it.

A document found in Oswaldo Villalobos’ house bearing the title “Emergency Alternative System” was one of the most damning pieces of evidence seen in the trial, he said. Much of it was read aloud by Rojas as part of the discussion of the premeditated nature of the fraud. The system was a plan in case of an eventual run on the fund by investors. It described the structure to avoid any criminal exposure by Luis Enrique Villalobos, mostly by the use of shell companies.

The checks given as “guarantees” were not valid instruments as they were never dated, it said. Means of communication and delegation of authority in the presumed absence of Luis Enrique and Oswaldo Villalobos were specified. Rojas looked directly at the assembled Villalobos supporters and noted that the “S.A.E.,” as it became known during the trial, surmised that many of the foreign investors were not reporting interest income to their respective tax authorities and were unlikely to pursue legal challenges.

An aspect of the investment operation that led the judges to identify a conspiracy to defraud was the constant use of religious imagery as part of the investment operation. One letterhead described “a branch office of God and his children.” Scripture punctuated mundane correspondence. Villalobos investment workers gave away Bibles in the waiting room. This seemed to offend the judges more than it did many victims, even those who noted the clash of presumed values with their personal reality.

Pérez took time out from his hour-long talk to snap at a United Concerned Citizens & Residents member who had his foot on the chair in front of him. Disrespect for the Costa Rican legal system by certain Villalobos loyalists has been a steady undercurrent kept alive by the prosecution throughout the trial. United Citizens strongly supported the Villalobos brothers and expected Luis Enrique Villalobos to return from hiding and distribute funds if his brother was acquitted.
Villalobos relatives
A.M. Costa Rica/José Pablo Ramírez Vindas
Wife, Ana Isabel Pereira Garcia, and sister of Oswaldo Villalobos consider verdict.

Individual cases of people who lost the $10,000 minimum and with it their life savings also cast Luis Enrique Villalobos in a very bad light and led the judges to increase the charges from fraud to aggravated fraud against Oswaldo Villalobos. Despite the overwhelming North American clientele, Costa Ricans with limited financial experience also invested. One woman, who wanted the interest income for cancer treatment, was startled when she was given a Bible and asked for her money back. She was told that having already signed, she’d have to wait 30 days to withdraw her principal, judges said.

The most heinous swindle, cited by the judges, refers to a Limón resident who had received an insurance settlement after her husband was killed by a truck. She planned to use it to build a house to replace her dirt-floor shack, and gave it to Luis Enrique Villalobos in the meantime. This was after the raid on the Mall San Pedro offices July 4, 2002, when the investment scheme was in collapse, but the firm took her money anyway.

Oswaldo’s role was as a facilitator of the circular money movements, among the more than 20 shell corporations, most with officers uninvolved in their operation and many with no economic activity whatsoever.

For the judges, all attempts to suggest that the money capture operated by Luis Enrique and the Ofinter exchange house run by Oswaldo were separate entities ran afoul of evidence and testimony that described shared phone lines, payroll, and even prayer sessions. The original charge of illegal banking was basically subsumed into the fraud conviction.

Pérez said the structure was “not a Ponzi scheme, it was a Villalobos scheme.”

Oswaldo Villalobos was found innocent on a charge of money laundering. The judges declared that specific knowledge of the invested money’s illicit source was required for that crime. While the investment scheme provided an ideal environment for money laundering, there was no evidence that the Villalobos knew of the source of the funds given to them or even asked.

A visit by Canadian drug traffickers who were presumed to be investing was the pretext for the July 2002 police raid that led to the shutdown of the operation nearly four months later.

Porras closed by saying to the accused that what he and his brother had done not only affected the victims directly, but damaged “Costa Rica’s image in the world.”

Defense lawyer Rodrigo Araya said the defense team still is positive about the case and hope on appeal to reduce the sentence. He noted that only two of the original five charges led to the jail time.

Fraud prosecutor Ilem Meléndez left through a back entrance and was not available for comment. Prosecutor Walter Espinoza did not appear. Espinoza is notably camera-shy and presumably wished to avoid the assembled media.

By the time Oswaldo Villalobos was led away in handcuffs the crowd of supporters had thinned considerably and much of the media was gone.


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San José, Costa Rica, Thursday, May 17, 2007, Vol. 7, No. 97


Police catch suspects in unrelated robbery attempts in Escazú and Puerto Viejo
By the A.M. Costa Rica staff

Quick police action in both Escazú and Puerto Viejo de Talamanca led to the arrest of suspects in two unrelated crimes Tuesday.

The first was an attempted jewelry store heist in San Rafael de Escazú. The scene was the Joyeria Ana Gutierrez, which is across the street from the well-known Plaza Rolex.

About 2 p.m. a man pulled a gun on clerk Antonia Umaña Jiménez and a woman companion asked for money and jewels. They fled in an automobile when told that neither was in the store, said the Fuerza Pública.

A police net located two suspects about 3 p.m. near Plaza Colonial not far away. They were identified as Mario
Mora Vargas and Wendy Miranda Vega, said the Fuerza Pública. Officers said the car involved had been reported stolen.

The Ministerio de Gobernación, Policía y Seguridad Pública said that the pair were remanded to the Ministerio Público, the prosecutorial agency. However, policemen in Escazú said the pair were let go because the crimes alleged did not rise to the level of what would be considered a felony.

In Puerto Viejo, two tourists, an Ecuadorian Mayra Arboleda González, and U.S. citizen Jordan Klow were accosted by a man with a gun near the school in that community. Police detained a suspect, but he was reported to be just 16 years old. The tourists recovered their goods, the Fuerza Pública said.


New Peace Corps volunteers will work in community development in rural areas
By the A.M. Costa Rica staff

Some 16 new U.S. Peace Corps volunteers will be sworn in Friday.

They met with President Óscar Arias Sánchez Wednesday afternoon at Casa Presidencial.

As is traditional, the new Peace Corps volunteers will be
sworn in at the residence of the U.S. ambassador, Mark Langdale, in Escazú.

This group of volunteers will work with Dirección Nacional de Desarrollo de la Comunidad in helping rural communities.

They will be working in Coto Brus, Aguas Zarcas, Upala, Talamanca, Sarapiquí, Buenos Aires, Abangares and Osa.


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