Luis Enrique Villalobos Camacho said he expects that his bank accounts will be unfrozen and his documents returned by next Friday.

Meanwhile, he said he is fully prepared to pay interest that may be due on personal loans he accepted from his predominantly North American clientele.

He made these other points in a telephone interview Thursday:

• He and his family have absolutely no connection with drug dealing or drug money.

• His personal lending business never had contact with six persons arrested on drug money laundering charges in Canada two weeks ago.

• He is not an owner of Ofinter S.A., the money exchange house that was the principal target of police raids here July 4.

• He founded Ofinter, but he and his family transferred all shares "years ago" to his brother, Osvaldo.

• The private home police raided July 4 was that of Osvaldo and not his.

• One or more of the Canadians who face drug money laundering charges could have been among the 50,000 or so customers of the money exchange house.

• He will wage a legal fight all the way to the Costa Rican Supreme Court to defend his right to do business.

• He, supported by his 20 lawyers, will sue any newspaper that says he is a drug dealer.

Villalobos blamed a lot of the turmoil surrounding the raid and the arrest on the failure of U.S. authorities to control drugs. "We are a victim of the United States," he said, being careful to specify he was talking about the government and not the people.

Villalobos’ opinion has a strong basis in fact. After the Sept. 11 terrorist attacks in New York City and Washington, U.S. officials went after the funding sources of terrorists. Officials quickly equated drug dealing and money laundering with terrorism because so many terrorist organizations get the lion’s share of their funds from drug deals. The U.S. includes four South American rebel groups on the list of official terrorists.

In the meantime, the United States and a coalition of major industrial companies have taken steps to eliminate so-called tax havens and to make available to tax officials everywhere financial records from all parts of the world. They have done this with international agreements and treaties.

Private, unregulated operations like the one run by Villalobos are regarded with suspicion by international investigators.

Villalobos said that his personal loan business does not have a name. He operates the business as an individual. "I am a human being. I do business. I make money. I pay interest."

And he does. Some who loan Villalobos their money have been receiving interest for years and frequently have received back one or two times or more of their original principal. 

What makes the company unusual is that it pays 3 to 3.5 percent per month interest. Single-handedly, Villalobos is a major source of wealth and income for North Americans who live in or have contact with Costa Rica.

Villalobos also has never specifically said what he does with the loans from North Americans to generate that kind of return.

Because of his strong relationship with the North American community, the raid July 4 of Ofinter and the Enrique Villalobos offices adjacent to Ofinter in the San Pedro Mall was big news.

The raid came at the request of the Royal Canadian Mounted Police because several of those arrested in Canada had ties to Costa Rica, and the presumed leader of the drug and money laundering ring, who died here in March, maintained a condo in Jacó.

Canadian authorities said at least $300,000 of the group's money moved through Costa Rica to Canada.

The raid targeted the condo, Ofinter and its second location in downtown San José, and two private homes. Police removed many documents and came back again July 8 to obtain more.

Villalobos said Thursday that these are the documents that he expects will be returned next Friday. He said the seizure order from a judge requires this unless police find something incriminating among the documents. He said he was confident that they would not.

Investigators also froze up to 50 bank accounts for investigation. Villalobos said he expected these accounts to be released at the same time. 

He said he has 170 persons working for him in various capacities for whom he has had to arrange alternate sources of money for salaries. The funds to pay his investors interest comes from other sources, he said, and are not affected by the freeze.

Villalobos has been criticized because his private investment business is not registered with the local financial authorities. He is prepared to fight these restrictions in court. 

"When you lose the freedom of commerce, the country is gone," he said.

New book gives lowdown on offshore investments

An Escazú consultant has published a small book that is a guide to offshore investing.

The consultant is Scott Oliver, the principal in Consultores Britanicos S.A., and the book is titled Costa Rica’s Guide to Making Money Offshore in Bull & Bear Markets.

For a 155-page book, the author tackles a number of complex investment issues, including strategies complete with charts and explanations. He was a broker on Wall Street for years and has written a number of articles and books on investment. 

The basic thrust of the book is that non-U.S. citizens can save a lot of money in taxes by investing as a non-resident in U.S. markets and in other blue chip funds designed for international investors. 

Oliver, who is British, notes that a Costa Rican would have to pay U.S. income tax if he simply purchased stock or mutual funds through a U.S.-based broker. But the Costa Rican would owe no tax if he set up his account as being "offshore." No U.S. tax would be collected, and Costa Rica still does not levy taxes on income from elsewhere in the world.

If done correctly, the Costa Rican would have the safety of investing in the U.S. market and even be eligible for insurance provided investors there.

Oliver notes in his book that such arrangements are not available to U.S. citizens or for Canadians who are residents of Canada.

The book is a strong encouragement for someone to consider investments in stocks with a disciplined and long-range program.

The book contains a chapter by Roger A. Peterson, a lawyer, who discusses the commercial climate, and a chapter by Christopher Howard, the author of a book on retirement here.

In Costa Rica the book is available in Universal and Libreria Internacional bookstores and soon will be available at other locations. Oliver’s business Web page www.offshorecostarica.com contains a link to an outlet in the United States.
 

Democrats to discuss
USA Patriot Act

Democrats Abroad of Costa Rica will host its next lunch meeting Monday, July 29 at Hotel Torremolinos.

The topic of this month’s panel discussion is the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act, or more widely know by its acronym: the USA Patriot Act.

The panel will consist of members Julie Carlson, Christine Johnson and Hans Austermuhle.

Since being passed by Congress on Oct. 24, just six weeks after the Sept. 11 terrorist attacks, the act has been the subject of much debate. Its naysayers claim the act sacrifices Americans’ political freedoms in the name of national security, while its advocates argue that such measures are required to counter terrorism.

Whichever camp you’re in, all in the community are welcome for the buffet lunch and the group’s discussion.

The cost is 3,000 colons for members and 3,500 colons for guests. For information and required lunch reservation, contact Dorothy Sagel at 249-1856 or Jerry Karl at 232-7048 no later than next Thursday.
 

Plunge by vehicle
causes suspicions

Was it more than a traffic accident? That is the question investigators are hearing as they try to explain why a man in a Nissan Patrol left the roadway early Thursday and plunged over a 190-foot precipice.

The man was Alexander Castro Umaña, 44, and he had been receiving telephone death threats. Relatives blame a band of car thieves who tried to extort money from him.

Right now investigators are handling the case as a traffic accident, according to Jorge Rojas, director of the Judicial Investigating Organization. That agency investigates every fatal highway accident.

In this case suspicions were triggered because Castro called home shortly before the crash to say he was on his way, but the accident site is not on his normal route. Some observers also are concerned because the vehicle burst into flames, which is typical of crashes on television but not actual ones.

The car ran off the road on a curve near El Alto de Santiago de San Ramon.

Dear A.M. Costa Rica:

I have known Sr. Luis Enrique Villalobos for about 12 -13 years; I now consider him almost a personal friend. The people that criticize "The Brothers" operation are taking pot shots without knowing a lot. Some of what keeps things moving (in various directions) is the inflation and slipshawed banking practices in Costa Rica.

I don't know anyone that has specific knowledge of any wrongdoing by the Villalobos Brothers. The idea that it is drug money laundering is pure speculation, and is easy to come by when you read about it quite often and hear it on all the news. The Ponzi schemes (pyramid) will last only about 3-4 years.

If you consider what it costs for the Costa Ricans to borrow money you may get a better picture. It was published several years ago that it costs them anywhere from 27 percent to 51 percent interest. 

A quick spreadsheet analysis of exchange of various currencies will show you that the casinos, hotels, and tourist dollars will provide considerable exchange rate fees; and give an idea of how many times it must be turned over to break even with the rate that Villalobos pays as interest. 

That doesn't even consider the American businesses which may be involved. I certainly agree with those who have given general support (Michael Rochard & El Norte Americano, and others) to an entity that has been diligent and has provided a service for those retirees; especially when the U.S. stock market is taking a real beating with all the bad publicity given to some very big American firms that juggle their profit statements to get the investor dollars.

Obviously Mr. Simon Shaw has written an opinion letter based on what he has for experience — probably the U.S. Stock Exchange. I managed a profit sharing trust for my own corporation some years ago; when it appeared that the insiders, the Yuppies with all their high earnings, and the fact that big corporations could ill afford to provide substantial pensions for their employees came to light, I looked at what had become a tremendously inflated market and turned elsewhere.

I hope that there is a high level of confidence maintained in "THE BROTHERS" so that there is not a slide like that is occurring in the U.S. stock market.

Reporting is pedantic,
and paper should MYOB

Dear A.M. Costa Rica:

Overall, I believe your reporting is well in accordance with conservative journalistic standards and practices.

Your reporting about the Villalobos investment firm is a bit pedantic, moralizing and redundant. You know well that the world can be divided between investors who trust Mr. Villalobos while receiving substantial interest, and those who will not invest, but sit on the fence and wait for any kind of trouble, even 9/11 conservative fallout — only to be able to say, "I told you so."

However, if I need to read one more time something like: "He contends that his loan business is private and between friends. He never has explained specifically how his firm generates the profits necessary to pay 3 to 3.5 percent monthly interest, some 42 percent compounded annual," I will ask you to take a deep breath and meditate, because you seem incapable to write one article without the comment that Villalobos has withheld certain information from you. It's like a kid asking for 27 years if Santa Claus is real, and the elders avoiding an answer because there is no answer that can ever satisfy all involved.

In reality, how the firm generates those excellent revenues for its investors is none of your business, because, according to your own disclosure, you are not even invested. Keep up the good work, but please watch your agendas. We are all just human, not perfect but striving to be.