A.M. Costa Rica/Saray Ramírez Vindas

Immigration branches
planned at four towns

The Dirección General de Migración plans to open branch offices in San Carlos, Puntarenas, Limón and Paso Canoas, if lawmakers approve a 1 billion colon budget for the fiscal year.

Marcos Badilla, the head of immigration and Rogelio Ramos, the minister of Gobernación, Policía y Seguridad Pública, appeared before the Asamblea Legislativa’s budget committee Tuesday.

Ramos said the agency, which is within his ministry, plans to install a more modern and secure computer system for passports. Immigration produces 90,000 passports a year for Costa Ricans, and the equipment used is approaching the end of its useful life, the minister said.

Th amount sought is about $2.1 million. With decentralized offices, Costa Ricans seeking passports will not have to come to La Uruca where the agency is now located.

The agency issues 220,000 visas and 10,000 residency permits each year.
 

Car importation decree
blamed on car dealers

The president of the Asamblea Legislativa wants an investigation of what is happening with the importation of new and used cars. He said he was unhappy that the Pacheco administration was planing to issue a decree to prevent the importation of vehicles more than seven years old.

The assembly president, Gerardo González, said that the decree was designed to benefit just some four or five families in Costa Rica, the families of new car dealers. He said the assembly just got done passing a change in the law that allowed the importation of used vehicles without a government-issued emissions certificate.

Some U.S. states do not have emission inspection programs, and hundreds of vehicles were tied up by this close reading of the law.

González said that vehicles generate 48 billion colons in taxes. That’s about $101 million. He said four or five families in the country had convinced highly placed public employees to impose a new decree that establishes other rules for the importation of vehicles.

He said this was being done under the banner of protecting the environment.

Federico Carrillo, the minister of Hacienda, the budget ministry, said May 5 that President Abel Pacheco was going to issue a decree in June that would prohibit the importation of vehicles older than seven years.
 

What’s point of residency?

Dear A.M. Costa Rica:

What would be the incentive for a property owner in Costa Rica who is nearing retirement age to seek residency if the government institutes a "global tax?" 

I think it would be easier and probably cheaper for most to just take a short vacation four times a year.

What's the point, except to drive people away?  Maybe what Pacheco wants is to be the leader of the game "Screw the Gringo."   Talk about setting a bad example.

He has better use for money

Dear A.M. Costa Rica:

All of the hoopla about the TLC here in Costa Rica including the barrage of pro TLC commercials on practically all channels and the appointment of a commission of notables seems to me to be a moot issue.

This piece of legislation doesn't have the votes in the House of Representatives of the United States to become law.

The money being spent here in Costa Rica by pro TLC advocates for nothing, could be put to much better use.

Pope Benedict XVI has created a new Catholic diocese in Costa Rica and appointed the current bishop of Limón to head it.

The new diocese includes part of the San José Diocese and part of the Limón Diocese The central religious installation is the Basilica of Nuestra Señora de los Ángeles in the Municipalidad de Cartago.

The new bishop is Mons. José Francisco Ulloa Rojas, who serves now in Limón and also is president of the Costa Rican episcopal conference. Ulloa, 64, once served as pastor at the basilica.

The news was reported in the daily bulletin of the Holy See Press Office. The Vatican said the new diocese will include the district of San Cristobal in the Canton de Desamparados and the Provincia de Cartago, except the Canton de la Unión.

The new diocese has an area of 3,105 square kilometers and 378,523 inhabitants of whom 272,388 are Catholic, said the Vatican. There are 36 parishes.

Today in Rome an image of the Virgin will be installed in a local church dedicated to Latin Americans, the Iglesia Santa María de la Luz, del Inmigrante Latinoamericano.

The ministry also noted that the pope blessed the image of the Virgin just last week during his daily audience in St. Peter’s Square.

Ulloa is a Costa Rican. He was born in Cipreses de Oreamuno, which the Vatican said would be in the new Cartago Diocese. He studied in Tres Rios and in Rome and was ordained a priest Dec. 19, 1964. He has held posts at the Iglesia La Soledad in San José and in Heredia as well as the Cartago position.

He has been a bishop since Feb. 22, 1995.

The president of Costa Rica has apologized for accepting a free trip on a private flight to see a tourism resort in the Dominican Republic.

The president, Abel Pacheco, addressed the issue at the press conference Tuesday after his usual Consejo de Gobierno. Pacheco faced criticism almost as soon as he returned from the visit, which took place on his way back from the United States. He returned May 16.

In addition to the flight, he received a membership in the tourism project, Club Cap Cana run in part by the Hazoury Family, the same people who gave him the free flight. Pacheco said as soon as he was criticized that accepting the free membership was a mistake and contrary to the nation’s ethics laws. Tuesday he received verification of that opinion from the Contraloria de la República, the fiscal watchdog.

According to an audit report of the Contraloria, any gift or acquisition of the president with a value of more than one base salary have to be donated for the benefit of the nation or become part of the national Patrimony. 

The Contraloria asked Pacheco to give back the membership he received from the Dominican company because the membership is not transferable and cannot be given to the nation.

Pacheco said he would write a letter explaining the situation to the club management.

As far as the plane ride, the Contraloria report said it did not make sense to make any kind of payment because the travel did not cost the nation anything.

Pacheco said he would keep a small box, valued by the Contraloria between $150 and $350.

Pacheco said that he made contacts with the operators of the multi-million-dollar club during his visit there and that this may benefit Costa Rica. He said the firm might be interested in building airports in tourist areas.

The talk is titled "Villalobos saint or sinner," and I can tell you right now the world and even this room is divided on that question.

I thought I would take some time to explore why that is true.

Enrique Villalobos is a great communicator. His handling of the Nash situation was masterful. You remember Keith Nash, the Jamaican-born octogenarian from Canada who got sick, and his son tried to get the father’s $800,000 investment from the Villalobos firm. That was in 1999.

Enrique Villalobos had no legal right to interfere. Nash had appointed a trustee if he should get sick. Nash’s son was a close blood relative. But Enrique floated the story that the younger Nash was trying to steal the old man’s investment. Enrique did this with a sort of newsletter he included with the monthly payments, and his clients generally believed what he said.

To this date, Nash has not gotten back his money, and he is the first person to have sued Villalobos.

Friday I was in a bar, and several of the fellow expats there were convinced that Enrique Villalobos would return and pay back the money he owes.

Are these people stupid for believing this? I don’t think so, but there are massive psychological factors at work.

Universally and from the beginning newspaper reporters have been skeptical of Enrique Villalobos. Three percent interest a month is not sustainable in legitimate commerce. That’s why The Wall Street Journal, the Pittsburgh Post Dispatch and others published skeptical news stories about Enrique. I believe A.M. Costa Rica can be included here.

That I also why I offered a small reward for the capture of Enrique and our other friend, Luis Milanes of Savings Unlimited.  My reward offer became controversial. Indeed, we got death threats.

What is the difference. Well, newspaper reporters were not clients of Villalobos, and we have all seen this before. And again, those psychological factors were at work among the friends of Enrique.

Remember, Enrique Villalobos is a master of psychology. He would have been a success in any field he chose.

He mixed religion with patriotism and financial gain.

How many people thought they were dealing with the U.S. Central Intelligence Agency?

How many people thought that Ollie North was somehow behind the Villalobos operation?

How many people thought they were casting their bread upon the waters and God would guarantee a substantial return?

More simply put, the reason they call them "con men" is because they win our confidence.

And Enrique Villalobos used religion for his special brand of marketing.

Here’s what one expert says about religion and finances:

''I've been a securities regulator for 20 years, and I've seen more money stolen in the name of God than in any other way.'' That was from Deborah Bortner, director of securities for Washington State and president of the North American Securities Administrators Association in 2001. 

That was the same year the Villalobos operation in the Mall San Pedro was raided. And it was the same year that the Australian securities administrators put out a warning about the use of religion in investment frauds:

"We are concerned that schemes are being promoted among members of community and religious groups and that promoters are now enticing investors by promising to give part of their profits to charity or other worldwide causes. This is often called ‘affinity fraud’."

The U.S. organization also put out a warning the same year after the failure of three U.S. frauds that used the victims' religious or spiritual beliefs: Greater Ministries International Church, the Baptist Foundation of Arizona and the IRM Corporation. The loss in just these three cases approached $1.5 billion.

Greed notwithstanding, there is a concept in psychology called selective perception. We only see and accept the facts that agree with our original mindset. There has been a lot of research in this academic area.

This is why clients were eager to accept what Villalobos said even though he was very vague on what he was doing with the money and the security amounted to a postdated check on a bank account that contained little money.

And this is why Villalobos victims argue that the default of the Villalobos scheme was some kind of conspiracy by bankers, politicians and others. In fact, the Villalobos brothers had been operating on the edge of the law for years. Nash was just the first person to complain publicly. 

Coupled with this phenomenon of selective perception is something called cognitive dissonance.

"There is a human tendency to feel the pain of regret at having made errors, even small errors, not putting such errors into a larger perspective. One ‘kicks oneself’ at having done something foolish. If one wishes to avoid the pain of regret, one may alter one's behavior in ways that would in some cases be irrational unless account is taken of the pain of regret."

"If what I once believed to be true now appears false, other beliefs may prove to be false as well. The intensity of response to each insight is relative to the salience of the knowledge domain: namely, how central the notion is to an individual’s sense of self."

In other words, belief in Villalobos is rooted with other core beliefs of some individuals. And they will go to great lengths not to change their beliefs even if the evidence says otherwise.

Not to mention the fact that it is better to have a $500,000 fixed asset that is somehow tied up, like the money with the Villalobos Brothers, than a negative number at the bottom of your personal balance sheet.

In short, Cognitive dissonance is the mental conflict that people experience when they are presented with evidence that their beliefs or assumptions are wrong.

So people will go to great lengths to avoid this discomfort. They will seek out like-minded individuals. They will refuse to read discordant information and they will attempt to isolate themselves from contrary evidence.

Regret theory is tied up with cognitive dissonance and may be demonstrated by investors who avoid selling stocks that have gone down in order not to finalize the error they make, and not to feel the regret. 

This is according to Robert J. Shiller, professor of economics at Yale, who wrote a book chapter on the concept in 1997. His general thesis was that human emotions affect the world financial system, which is true.

There have been a number of academic and financial studies in this area, including of mutual fund investors who rate funds higher if they hold shares — regardless of actual performance.

Speaking of psychology, what was the function of the Milanes operation, Savings Unlimited?  We know that Milanes, the so-called Cuban, tried to differentiate himself by having a little more professional operation complete with computer printouts.

Was this a setup by the Villalobos Brothers to attract those creditors who might not be impressed by the informal Mall San Pedro operation? Do you think the two operations were linked? And I wonder what happened to those beautiful cut glass doors that were the entrance to Savings Unlimited’s Edificio Colón offices.

I know several things about Villalobos. I know that he did not tell me the truth in a telephone conversation  when he said his brother Oswaldo was not involved with the high-interest operation. A subsequent Judicial Investigating Organization report says that he was in up to his neck.

I also know that he was nervous about publicity. I was general manager for The Tico Times for about six months on loan from my college in Denver. Early in my stay there I made an offhand comment that "The Tico Times should investigate Villalobos" when I first heard he was offering compounded interest of over 40 percent a year. 

I had no newsroom responsibilities at The Tico Times, but my comments were carried back to Enrique Villalobos by a worried client.

In a day or so a nice Spanish lawyer showed up at my office. I explained that my responsibilities were advertising and circulation, but he still told me that Villalobos wanted to enhance his image and place-quarter page ads in The Tico Times. One week the ad promoted the Ofinter money exchange house. The next week the ads promoted the helicopter service.

I got the impression Villalobos was trying to buy The Tico Times. Hey, I was in advertising. I could be bought.  Unbeknownst to us, the Nash case was brewing elsewhere, and Enrique was trying to stifle bad publicity.

I asked the nice Spanish lawyer if he knew how Enrique made his money. He said he did not but volunteered that he did not have any money invested with the operation.

A few months later, after I had returned to Denver, the Nash case became news.

The writer, Christine Pratt made one mistake that I would not have made. She said that rumors on the street connected Villalobos with money laundering. That was not a very startling revelation., How else can you make that kind of money? Villalobos sued. The suit still is pending.

But developments have vindicated Ms. Pratt. Villalobos indeed was exchanging dollars and Colombian pesos. But what I do not understand is why he needed a continual inflow of investor money. Was it to mask the Colombian money as it moved into the U.S. banking system?

If so, Villalobos has more problems than just with the Costa Rican judiciary and the U.S. Internal Revenue Service. I suspect that the Drug Enforcement Administration and others would like to talk with him.

And that is why if you ask me "Where’s Enrique?" I would tell you: Probably in Costa Rica where as a citizen he cannot be extradited to the United States.

If he is arrested anywhere else, I would bet that Costa Rica never will see him. I think but do not know for sure that there are sealed indictments somewhere waiting for him to surface. And those indictments carry the name of a U.S. federal district court.

If not Costa Rica, consider as a hideout southern Nicaragua with easy access to Tico soil.