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These stories were published Tuesday, Oct. 15, 2002, in Vol. 2, No. 204
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Investor reads A.M. Costa Rica story someone pasted to door of Ofinter S.A.
Villalobos says he can't make payments
By the A.M. Costa Rica staff

"The Brothers" investment firm suspended operations Monday, and the shock reverberated through the North American community.

Hundreds, perhaps thousands of the firm’s investors were waiting for late payments of September interest. With the announcement by Luis Enrique Villalobos Camacho, the fact became clear that there would be no quick interest payments and the status of their principal remained uncertain.

In a faxed statement received by this newspaper about noon, Villalobos said he could no longer continue operations because the Costa Rican government and governments elsewhere had frozen his bank accounts. However, he said he would continue to fight in order to pay his debts and make good on his commitments.

Villalobos was not available for comment. The faxed message came from a public machine maintained by Correos de Costa Rica. His office telephones were not answered, and workers in the San Pedro Mall said movers took computers and desks away Saturday. Several sources said that Villalobos paid off his employees and gave them severance pay late last week.

In his statement, Villalobos said that 300 persons had lost their jobs because of the banking freeze.

Villalobos was not answering his cellular telephone Monday morning. Later in the day the device would not accept messages because the mailbox was full, a recorded voice said.

Villalobos has tried to distance himself from Ofinter S.A., a money exchange house he said is run by his brother, Osvaldo. The money exchange occupies an office on the second floor of the San Pedro Mall, and Villalobos occupies an adjacent office. That office was closed Monday. Also closed was the money exchange house and a branch in downtown San José.

The Costa Rica freeze on the Villalobos accounts is supposed to last until Nov. 26, according to a spokesman for the Poder Judicial. Fiscal Walter Espinoza is investigating Ofinter and the transactions of nearly $400,000 that passed through the firm for the benefit of six Canadians who subsequently were arrested in Canada to face drug smuggling and money laundering charges.

Espinoza is part of the drug investigating unit of the judicial system. However, a spokesman said that another probe has been opened by the Judicial Investigating Organization. That investigation is by the financial crimes unit, the spokesman said.

When asked to explain why judicial officials are investigating Villalobos when the tainted money passed through a company he does not control, the spokesman said that this was exactly the point officials were investigating, the relationship of Villalobos and Ofinter.

In his statement, Villalobos said that investigators had frozen accounts that had no relation to the money exchange house. He said the freeze was disproportionate and covered all the firm’s accounts, not just enough money to represent the estimated $380,000 the Canadians were supposed to have deposited in Costa Rica.

U.S. investors in the Villalobos company said that banks there were not honoring his checks. Checks written for interest payments on Servicios De Soporte al Turismo, S.A. are being returned for insufficient funds by BAC Florida, said one investor.

Other investors here said that other checks were being dishonored. One said he saw a $4,500 check that had been returned.

Investors' reaction HERE!

Villalobos' statement HERE!

Villalobos generally presented himself as a private individual borrowing money from friends and associates, but he also controls corporations. Some of these are West Park Tech Marketing S.A., Dorado International S.A., Corporación Platino y Oro S.A., Corporación de Oror Internacional S.A. and Bienes Raices Dorado S.A. as well as the Servicios de Suporte al Turismo S.A., according to letters sent to investors.

Investigators raided the money exchange and Villalobos’ offices July 4. Since then investors have received varying degrees of assurances and some monthly interest money. This month Villalobos employees told his investors that he would begin paying interest Oct. 7 and had hired a contractor to handle the job.

Villalobos has been in business for at least 20 years. He pays from 2.8 to 3 percent per month on investments over $10,000. For many North Americans living here his interest represents their principal income. One investor told a story of seeing two elderly North American men hobbling along in walkers Saturday at the mall seeking to locate Villalobos so they could get money to pay their rent.

A.M. Costa Rica has estimated his investment clients at about 5,000. Others say as much as 6,000. The total amount invested is anywhere from $50 million to $1 billion. Villalobos has never told anyone what he does with the money to generate that kind of interest.

Costa Rican and U.S. officials have had their eye on him for years because many of his customers do not pay income tax on their interest. Because many payments were in cash, regulators were unable to follow the transactions.

Lately Villalobos asked investors to provide bank account numbers where the interest could be deposited. Some opened accounts just for that purpose. 

The financial impact of the Villalobos suspension is difficult to measure. Many of his investors live in the United States and Canada. About 70 percent of the North American residents here probably are his clients. 

If 2,000 heads of households here received $2,800 interest each a month from Villalobos, the economic impact of the suspension would be $67 million a year. Shops and restaurants that cater to North Americans already are feeling the pinch.

At the San Pedro Mall Monday a steady procession of investors came up quietly to the Ofinter office and read the short suspension notice taped to the door. About 3 p.m. someone also taped a news story from A.M. Costa Rica that was based on Villalobos’ morning statement.

Each investor had a story to tell. Each seemed to want assurances that the suspension only was temporary. One woman, a Tica of North American parents suggested that most of the family’s money was invested there.

Villalobos in his statement referred to enormous moral damage caused by the freeze of his accounts. Anecdotal accounts from investors include tales of persons who have invested money for the distant family members, mothers, fathers and brothers. 

Other accounts report that some business people were making a living by offering 2 percent a month interest on the Internet and then investing clients’ money with Villalobos, thereby pocketing the difference. Some of these are believed to have done business with unsavory Runyonesque characters to whom they must now report the halt in the interest payments.


 
A.M. Costa Rica’s first Halloween story contest
Since Halloween is not really celebrated in Costa Rica, we thought we would help to get everybody into the spirit.
We are looking for your original horror stories of 1,000 words or less.

Sure, you can scare the bejeezus out of a group of boy scouts around a campfire, but can you frighten our readers?

The stories will be judged by the A.M. editor and staff on the basis of their originality and spook-factor. Extra points will be awarded to stories related to Costa Rica.

The scariest will be published in our Oct. 31 edition, and the winner will receive $25. The deadline for submissions is Tuesday, Oct. 29. Send your spooky stories to editor@amcostarica.com
 

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Villalobos issues statement to his creditors
This is a translation of a statement released by Luis Enrique Villalobos Camacho late Monday morning directed to his creditors:

FIRST: Six months ago with absolute transparency the money exchange house Ofinter S.A. announced through the press to its clients and creditors that national authorities had raided its installations, presumably because there were reports that Canadians linked to money laundering deposited dollars in this company. According to reports of the authorities, there were approximately $380,000 brought to Costa Rica, and where they deposited it is not known. But these persons also had checking accounts and savings accounts in other banks, including state banks, institutions that despite this were not raided.

SECOND: Along with the raid they froze all the checking accounts not only of the money exchange house but also of persons and companies that in some moment figured or figure as partners in this corporation or did business with the same but whose operations and activities had no relation with the money exchange house. Instead of freezing money for the amount of the money being investigated, they proceeded to freeze absolutely all, declaring in advance without having a trial without having accused the civil, economic and bank death of companies and persons, injuring among others more than 300 employees and third parties of good faith.

THIRD: The disproportionate and overbroad freezing of dubious legality of all the resources has produced economic damage of enormous magnitude in addition to irreparable moral damage and the disparagement, national as well as international, so that in other countries they have closed accounts of our company. It is evident that in these conditions not even a judicial victory would repair all the damage caused up until today.

FOURTH: During these 100 days in the midst of adverse circumstances the undersigned Luis Enrique Villalobos Camacho has ratified the confidence of all his creditors and has met his commitments and obligations facing the difficulties with the hope that justice will be done 

as quickly as possible. Once again we offer our words that any person, any business, any partner of those companies in investigation form part of any network of narcotraffickers of any money laundering operations, as we are absolutely sure that we will show that in court.

FIFTH: Nevertheless and despite all these forces that have been made to complete all the obligations, it is not possible to continue, and for these reasons, I see that I have the arduous obligations to say that the office of Luis Enrique Villalobos Camacho located in the mall San Pedro will remain closed as of this date and suspend temporarily all of its activities for the time that it is necessary until the situation is resolved with the courts of the Republic. It should be understood that it is materially impossible to continue working and completing my obligations while the freeze continues.

SIXTH: We ask respectfully of all creditors to maintain their understanding, their discretion and their confidence in the sense that we will do anything necessary to finally finish this situation so we can normalize the payments of all the debts. To everybody I give you my heart and will communicate with everyone. I pray to the Almighty God that he gives us all the strength necessary to the end that this economic strangulation will not have implications that damage the financial integrity of anyone.

SEVENTH: Finally, I advise the public opinion in the sense that it is not possible that because some criminal eventually makes some transaction in a money exchange house, in a bank or in a financial institution it is presumed then that this company, person or institution is linked to the crime of money laundering and reaches the extreme of freezing all the accounts producing enormous moral and caustic damage and liquidating persons and companies before a judicial verdict is produced.

Nevertheless and despite all these adversities, I will continue in the fight to safeguard our honor, and I maintain confidence in God that the light of justice and the truth will appear.

Investors downtown show range of emotions
By the A.M. Costa Rica staff

Investors in Luis Enrique Villalobos Camacho’s investment operations were left without a clue as to what is happening with their money Monday afternoon. 

A few American investors in Villalobos were not even aware that his offices in San José were temporarily closed. They were interviewed in some of the bars downtown.

Many Americans who live in San Jose — and some from the United States — are invested with Villalobos, and some even depend entirely on the enormous interest payments he has provided, until recently, to survive.

One investor, who declined to provide his name, invested $10,000, the minimum allowed, in April. He said he was "scared to death" that he would not see his return when he was informed that Villalobos’ offices were closed for the indefinite future. He figured he had already been paid around $1,800 on his initial investment, and has not seen any payments since September.

The investor was surprised to see that after nearly 25 years of providing payments to investors, Villalobos was now unable to pay up consistently.  He said it has not been proven that Villalobos has done anything illegal. 

When another man, who was said to have invested far more than the initial $10,000 minimum, was informed of the situation, he ran off in what looked like a panic.

Another investor, who refused to be named, said he was advised by an attorney not to invest with Villalobos anymore than he would be willing to lose in Las Vegas.

None of the sources for this story lost their entire livelihood, but the shock of lost investments was still palpable.

One investor thought that spreading the news about Villalobos would only hurt his chances of seeing a return on his money. His sentiments are reminiscent of the World War II mantra, "Loose lips sink ships." 

Jailed drug baron lodges
complaint with U.N. 

By the A.M. Costa Rica wire services

LA PALMA, Mexico — A notorious drug lord here has filed a complaint with the United Nations Human Rights Commission over alleged abuses at the prison where he is being held. At the same time, turf battles continue over the lucrative drug trade along the U.S. border. 

From his prison cell here in the central region, Benjamin Arellano Felix sent his complaint to the U.N. Human Rights Commission, President Vicente Fox, the Mexican Supreme Court and the Mexican National Human Rights Commission. In the document, he alleges that prison guards keep him in constant isolation, apply psychological torture and limit his access to reading material. 

The alleged drug smuggler also claims he is held for hours in a bathroom before each visit with his attorney and that his meetings with lawyers as well as his conjugal visits with his wife are being tape recorded. 

Arellano Felix is accused of operating the country’s largest and most violent drug cartel out of the border city of Tijuana. He has been held in isolation at the prison here since his arrest on March 9 in the city of Puebla, about 62 miles east of Mexico City. A few weeks earlier, his brother, Ramon Arellano Felix, was killed in a shootout with police in the Pacific coast resort city of Mazatlan. 

Since that time, authorities say, other members of the Arellano Felix family have taken over drug smuggling operations. There are also indications that the gang may be involved in a number of recent violent incidents along the 1,860-mile border with the United States. 

Experts on the drug trade say the gang is trying to defend itself from inroads by other gangs and is also trying to expand into other border areas. 

Several hundred federal police and Mexican soldiers are now in the northeastern states of Tamaulipas and Nuevo Leon to control violence caused by a turf battle between drug gangs. 

Although the Arellano Felix group is allegedly involved, experts say the main players in the war raging now in the industrial city of Monterrey and the border city of Nuevo Laredo are from rival gangs based in Ciudad Juarez, across the border from El Paso, Texas and Matamoros, across the border from Brownsville, Texas. 

There have been more than 60 gangland-style killings in the area since January. 

Drugs plan requires re-think, says official

By the A.M. Costa Rica wire services 

BOGOTA, Colombia — A top human rights official here has recommended that the government suspend a U.S. backed drug crop eradication campaign. 

Eduardo Cifuentes, a human rights ombudsman, said Thursday that the fumigation program needs to be assessed for possible health and environmental damage. 

Cifuentes says he has received reports that peasants in the southern Putumayo department are suffering from respiratory and other health problems. 

He also says that policy makers need to determine, if the forced eradication project violates agreements with small growers that called on them to voluntarily destroy their coca crops. Coca is the main ingredient used in cocaine. 

The government has been spraying vast areas of Putumayo to eliminate coca fields. Alvaro Uribe, president of Colombia, says the program will continue because it is the most effective way to defeat the drug problem. 

Uribe has backed the campaign to wipe out the coca crops as part of his effort to end the country's 38-year civil war involving leftist rebels, right-wing paramilitaries and the government. 

Both the rebels and paramilitaries profit from Colombia's illegal drug trade to finance the war that claims thousands of lives each year.

Castro reminisces with
a few old friends

By the A.M. Costa Rica wire services

HAVANA, Cuba — Fidel Castro, the president of Cuba, has met here with former U.S. officials to discuss the Cuban missile crisis, 40 years after the event nearly triggered a nuclear war during the Cold War.

Castro took part in the opening of a three-day conference Friday with Robert McNamara, former U.S. defense secretary, and other aides who served under John F Kennedy, the Ü.S. president in office during the crisis. The conference participants are also examining recently declassified U.S. documents on the issue.

McNamara said the conference is aimed at learning lessons that will help in preventing nuclear wars in the future.

He also praised Castro, Kennedy and Nikita Khrushchev, former soviet premier, for their role in defusing the situation. 

The crisis arose when the United States discovered the Soviet Union had secretly put nuclear missiles in Cuba that were capable of hitting U.S. targets. 

Kennedy demanded the Soviets remove the missiles and ordered a naval blockade of the island to prevent further shipments of Soviet missiles. 

After 13 days, Moscow agreed to remove its missiles from the communist-ruled island, located only 87 miles from the United States.

Soldiers tortured, says
human rights group

By the A.M. Costa Rica wire services

MEXICO CITY, Mexico — A human rights group here says the army has confined 600 soldiers to their barracks and has tortured them as part of an investigation into narcotics trafficking. 

The non-governmental "Mexican Front for Human Rights" Monday said the soldiers of the 65th Infantry Battalion have been detained for nearly two weeks in the northwest Sinaloa state. 

The group says it learned of the alleged mistreatment from the soldiers' wives, who complained that their husbands were held in a secluded location for several days. 

The human rights organization says that when the wives were allowed to see their husbands, they discovered that some of the men had lost teeth and showed signs of having been tortured. 

Mexican defense officials refuse to comment on the charges. Jaime Cinco, the president of the Sinaloa commission for human rights, told the Reuters news agency he was denied access to the barracks when he tried to investigate the allegations. 

Authorities say scores of drug traffickers operate in Sinaloa, where they say marijuana and heroin poppies are grown in the Sierra Madre mountain range.

Prison breakout
lead to wild ride

By the A.M. Costa Rica staff

Two inmates at Centro Penitenciario La Reforma in San Rafael de Alajuela forced their way onto a bus and crashed their way out of prison about 4 p.m. Monday.

When the dust cleared, two men were wounded, a police officer crashed into a ditch and 12 persons went on the wild ride of their life.

The convicts were identified as Douglas Mojica Chirino and Carlos Saavedra Ballestero, both long-term inmates. Mojica was in for rape and Saavedra was in for robbery.

The two men took advantage of a lapse in security to board the bus that takes prison employees home. The inmates crashed the bus through double gates and went on a ride to Santa Ana followed by an army of prison officials. There the men engaged in a running gun battle, and one police officer suffered wounds to the chest.

Later a man on the bus was found to have suffered a stab wound to the leg.

Police finally caught up with the bus in Ciudad Colón where one officer was injured trying to force the vehicle off the road. Eventually more than 25 officers surrounded the vehicle and captured the men.

Four men arrested
in kidnap caper

By the A.M. Costa Rica staff

Investigators arrested four men Monday to face charges that they were the persons who kidnapped a 17-year-old in Dos Rios last July 27 and traded him for 30 million colons, some $80,000, about eight hours later.

The boy is the son of a U.S. citizen.

Operations were carried out in four locations at the same time about 6 a.m. Monday.

A fifth suspect, identified by the last name of Rojas, 22, already was in jail as a bank robbery suspect.

Police said they arrested a man named Salazar, 35, in Concepción Arriba de Alajuelita, a man named Rojas, 25, in San Miguel de Desmaparados, a man named Ramos, 21, in San Geronimo de Loma Linda de Desamparados and a man named Vásquez, 28 in Guararí de Heredia.

The operations were carried out by the Judicial Investigating Organization with the assistance of tactical police.

The kidnapped youth was the victim of a so-called "express" kidnapping where relatively small amounts of money are demanded and demanded quickly. The youth was with some friends when the kidnappers took him about 8 p.m.

Police have always been reluctant to talk much about the family of the boy, but his father is reported to be involved in the investment business in central San José.

Opinion in Brazil 
remains on the left

By the A.M. Costa Rica wire services

BRASILIA, Brazil — An opinion poll here shows leftist presidential candidate Luiz Inacio da Silva far ahead of his rival Jose Serra in the run-off election race. 

The poll found that da Silva has 64 percent of the valid votes while Serra has thirty-six percent. 

Da Silva is running on the left-wing Workers' Party ticket, and is seeking to succeed outgoing President Fernando Henrique Cardoso in the run-off scheduled for Oct. 27. 

The da Silva campaign has tapped into growing frustration in Brazil with unemployment, poverty and crime. He won the first round vote last week by a wide margin. 
 
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