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These stories were published Monday, Dec. 9, 2002, in Vol. 2, No. 243
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Venezuelan general strike threatening oil flow
By the A.M. Costa Rica wire services

CARACAS, Venezuela — Organizers say a nationwide strike aimed at ousting Venezuelan President Hugo Chavez will go into an eighth day Monday, further threatening the country's oil production. 

Army troops are guarding gas stations in the capital, Caracas, where long lines formed at gasoline pumps Sunday. Many gas stations in outlying areas have closed. 

The protest action has cut oil production by at least 40 percent. Speaking Sunday on radio and television, Chavez said that while the strike has severely curbed production, it has not yet started to affect oil exports. But industry analysts predict oil prices will rise on world markets Monday. 

Half of Venezuela's output, about 1.2 million barrels a day, goes to the United States and represents about 10 percent of U.S. crude oil supplies. Chavez is threatening to call a state of emergency if organizers do not end the strike. He has also called on oil workers to return to work and threatened to begin firing dissident oil executives. 

Chavez opponents, led by disgruntled military officers, are calling for the president's resignation, accusing the populist former paratrooper of economic sabotage since he won elections in 1998.  Talks to end the crisis, mediated by the Organization of American States, ended without success Saturday. 

Sunday hundreds of mourners attended funerals of three protesters who were gunned down during a protest Friday. Police say a Portuguese taxi driver has confessed.

On Saturday opponents and supporters of populist President Hugo Chavez staged rival marches through the capital city one day after deadly violence at an opposition rally in a Caracas plaza. The country was still in shock over the murders which, like everything else in the current crisis, have been politicized. 

Prayers were held at the Plaza Francia in the upscale neighborhood of Altamira Saturday where less than 24 hours earlier shots were fired into a crowd of opposition members.

Huge bouquets of flowers rose from roped off areas where the victims fell, including an elderly woman, and a teenage girl. Beneath the flowers, pictures of Catholic saints, cards, and other mementos were scattered on the pavement, still stained with blood.

Dressmaker Micheline Medina was among those standing before one of the bouquets, tears in her eyes as she stood next to her daughter. "It's a tragedy," she said, because it was a 17-year old girl who only came to demonstrate against the disaster that is happening in this country, and they kill her. As she spoke, she held her 11-year-old daughter tight in her arms.

In addition to the Portuguese-born taxi driver, six other men are being held in connection with the incident, but their role is unclear. Opposition leaders accuse President Chavez of plotting the killings in an attempt to destabilize the anti-government movement.

But Chavez and his top officials have denied these accusations, calling them irresponsible. Addressing his supporters Saturday, Chavez said the opposition did not even wait for the conclusion of the investigations before accusing him of the shootings. 

Earlier at the rally Saturday, which was called to celebrate his election as president in 1998, the mood was buoyant as tens of thousand of people marched through the streets of the president's palace.

But Chavez supporter Elinor Cesile said for her, the celebrations are mixed with sadness over what happened Friday on the other side of the city. "You can see, you can see everybody is singing and dancing, everybody's really happy, but we are also in a big pain for the people [who were killed]. I mean it is our people too," she said.

But other supporters of the populist president were quick to blame the opposition for the murders, saying it was a plot to smear the government. Gilberto Colambriez, a public sector worker, said the killings were carried to show that Venezuela is in state of crisis. "The opposition are the ones," he said, "who want to paint a situation of chaos in this country."

Latest arrestee has $13 million invested
By the A.M. Costa Rica staff

The first  Villalobos investment customer to go to jail is Alvin Edwin Moss. He also is believed to hold the record for the most money invested with the suspended operation: some $13 million.

Moss went to jail here not because of the investment operation but because of the way U.S. officials claim he got the money in the 


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first place. He is a suspect in operating a mail and telephone scam that involved advance fee lottery promotions. The case is being heard in federal district court in Tennessee.

Moss is a Canadian from Los Pozos. He is now in San Sebastian prison awaiting court action here to validate the request for extradition by the U.S. government.

If the money he invested with Luis Enrique Villalobos Camacho is found to be a product of an illegal operation elsewhere, Costa Rican officials will have strong evidence of money laundering, an allegation that Villalobos steadfastly denied until he dropped from sight Oct. 14.

Two other arrests last week became known over the weekend, but they involve the demise of Savings Unlimited, another investment firm that paid from 3 to 4 percent monthly interest on deposits

Arrested was Mercedes López Blandón. She was believed to manage the Toby Brown hair salons owned by Louis Milanes, the same individual who was the principal in Savings Unlimited. She also appears to hold a number of offices in corporations set up by Milanes. The third person is believed to be her husband, identified as Edgar Ramírez. They are being held for investigation along with Michael Gonzalez, Savings Unlimited’s manager. Milanes fled the country.

Meanwhile, a local lawyer, Gregory Kearney Lawson, said that he has been empowered by some clients to offer their interest in the Villalobos operation for 35 cents on the dollar. There have been rumors of such deals, but this is the first confimation.

In other words, if an investor has $100,000
placed with Villalobos, the individual would 
sell the rights to that money for $35,000. If Villalobos returned to business and paid off his customers, a purchaser would stand to make about a 180 percent return on the investment. If Villalobos continued to keep his business suspended, the purchaser would lose the $35,000.

Although Moss is the first Villalobos customer arrested after the business was suspended, he is not the first Villalobos customer to face jail this year. That honor goes to a Chicago-area politician facing a bribery trial. The man wanted to keep himself on bail by pledging money he had posted with Savings Unlimited and Villalobos.

The man, former state Rep. Roger "the Hog" Stanley loaned $330,000 to Villalobos and $25,000 to Savings Unlimited, as A.M. Costa Rica reported Nov. 5. Stanley had bad luck. Just as prosecutors and a judge were reviewing his financial holdings, Villalobos suspended his business. Stanley was counting on pledging the money invested here as bail. 

The money deposited by Stanley represents another case where foreigners are suspected of depositing money from illegal operations. The problem with such money is explaining where it originated. 

Both Moss and Stanley, if official charges are true, faced that problem, a great deal of so-called "dirty money." Yet by investing it, the subsequent money paid as interest would be "clean" money, that is cash from an established, recognized source.

Such money laundering operations would not have to have the agreement of the person running the investment business, but in the case of Moss, Villalobos and his investment firm employees would find it difficult to ignore the source of $13 million, unless the  money came with a plausable  story.

In an other development, Rogelio Ramos, the minister of Security, has been decorated with the Gran Cruz del Mérito Civil by Juan Carlos, the king of Spain. The award is for extraordinary service.  Ramos is in charge of the ministry investigating both Villalobos and Savings Unlimited.

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Caribbean
disaster
being seen
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Crews load up emergency supplies for the Caribbean
By the A.M. Costa Rica staff

The heavy storm and flooding that followed a week ago on the Caribbean slope is turning out to be one of the worst  natural disasters in recent years. Government agencies are concentrating on getting basic food and clean water to the most affected areas even a week after the heavy rains stopped.

Some flooding victims still are living in public shelters, but by Sunday their numbers had decreased considerably. In Siquirres, some 1,200 persons returned to their homes Saturday when two shelters closed up.

Rains over the weekend did not reach the proportions that any damage resulted, according to a spokesman for the Ministerio de Gobernación, Policía y Seguirdad Pública.

The final total showed that 74 homes had been destroyed by the flooding, and in some cases, by slides of mud. In Gavilán Canta, 29 homes were reported destroyed. The number was 28 in Bri-Bri, 12 in Sixaola and five in Valle de la Estrella.

Inspectors from the Ministerio de Economía were in the field to keep track of merchants who might 
try to gouge people who need to purchase necessities.

The Comisión Nacional de Emergencias reported it had distributed 2,000 daily food packages Saturday with similar numbers being planned for Sunday. 

Water was in short supply. In Sixaola, workmen were able to fix a pump that had interrupted the flow of drinking water. Nevertheless, officials delivered 5,000 liters of water in that town. Similar deliveries were made in Puerto Viejo de Sarapiquí and Matina, both of which had been hard hit.

Misterio de Obras Pública y Transporte workmen were trying to finish up work on the Limón airport runway so the field could be used to greater efficiency for emergency relief.

More than a dozen teams from the ministry were studying a number of different roads and highways in order to prepare a definitive list of damage and to set up priorities on repair.

Tourism to the area has been hard-hit because damage to public and private property has caused a lot of tourists to spend their time elsewhere. Major highways are back in service, although some have emergency repairs.

In the hills particularly in Talamanca roads and bridges took a beating. There still is no clear view of possible damage in the deep interior there.

Thanksgiving trip provides lots of excitement
EDITOR’S NOTE: A reader ended up visiting the Caribbean coast just when a fierce storm hit. More than 6,000 had to leave their homes during the last few days of November.

By Pat Bliss
Special to A.M. Costa Rica

We three friends; Bobbie Jagush, Karen Ebanks and myself started our trek to the Caribbean side Wednesday, Nov. 27 to spend Thanksgiving with 30 friends in the Punta Uva area. 

We knew that bridges were down and that we needed to take the back roads through the pueblos of San Clemente and Bomba. We were carrying the 
precious cargo of turkeys and vegetables as food 

Photo by Pat Bliss
Retreat operator Max finds a way out.
trucks were still not getting through to the Caribbean side. 

As night fell, we seemed to be the only ones on the black back roads and were feeling an eerie sense of devastation by the recent storms. The police, in all their concern, escorted us with blue car lights flashing for over an hour through the back roads and even drove our car at times over fallen barely passable bridges. 

We arrived at the home of Ron Duran, our friend, as the storms continued to rage. Through it all, we had a wonderful Thanksgiving of feast and friendship. As we bowed our heads in silent prayer, it was hard to imagine that beaches had disappeared and floods continued their destruction leaving destroyed homes, and dead and missing persons. 

During this all, we met a new friend, Karen Henderson, and continued on together to a Samasati Spiritual Retreat Center, way up the mountain to a beautiful private 250-acre rain forest reserve between Cahuita and Puerto Viejo. (http://www.samasati.com)

Now mountains did crumble and left a 25-meter deep and 30-meter long hole to the entrance to the retreat. Trees began to fall and mud began to slip down upon us. And this became the worst storm ever to hit Costa Rica. 

A tree hit the power lines, and we were without electricity. We needed to evacuate down the back side of the mountain with a 800-meter drop at the end of the trail. Max, one of the owners of Samasati, went into action and chopped a trail down and secured horses and a local rescue team. 

Then the next day 14 of us went down the mountain (of course, that is another story called, The Long Journey Down) 

We all survived the rains and the mountain that day, and certainly had a lot to give Thanks for as we returned to Escazí. The retreat probably is closed for up to two months for repairs.


 
 
Prison of horrors
blown to pieces

By the A.M. Costa Rica wire services

SAO PAULO, Brazil — Authorities have blown up most of what was once known as an overcrowded "prison hell."

In an explosion that took about seven seconds Sunday, three blocks of the Carandiru prison in Sao Paulo were destroyed.

The facility was built with a capacity of 500 during the 1950s but its population grew to over 7,000 criminals before its closure in September.

The prison gained international notoriety in 1992, when police killed 111 inmates during a prison riot.

Sao Paulo's state government plans to build a "Park of Youth" with soccer fields, schools and a theater on the grounds of the demolished prison. The inmates have been transferred to 11 new prisons built across the state. 

IMF chief optimistic
on Brazil’s future

By the A.M. Costa Rica wire services

SAO PAULO, Brazil —  The head of the International Monetary Fund says he is optimistic about Brazil's President-elect Luiz Inacio Lula da Silva's economic policies. 

Horst Koehler made the comment Saturday in Sao Paulo following a meeting with Silva. Koehler said he was impressed with Silva's dedication to fighting corruption and creating a good investment climate in Brazil. 

Silva, a leftist former union leader who prefers to be called by his nickname Lula, won a landslide election victory in October after campaigning on a pledge to fight widespread poverty and improve education. 

The IMF leader also said he had good meetings with outgoing President Fernando Henrique Cardoso and other officials.
 

Powell renews pledge
to work with Colombia

Special to A.M. Costa Rica

BOGOTA, Colombia — Secretary of State Colin Powell renewed the United States' commitment to work with Colombia on common goals during his visit last week to that nation. 

"We renewed our commitment to work toward our common goals of strengthening democracy, increasing respect for human rights, combating drugs and terrorism, and especially, and perhaps most importantly, widening the circle of economic prosperity to include all Colombians," Powell said following his meeting with Colombian President Alvaro Uribe and other senior Colombian officials. 

In a press conference here Wednesday, the Secretary noted that security and economic development are linked in Colombia. He explained that once an attractive investment environment is established, investment will create jobs. These jobs will provide alternatives to illicit coca cultivation in Colombia and will — in turn — enhance security, Powell said. Powell acknowledged that there is much to be done in these areas, but applauded Uribe's efforts to date. Powell voiced U.S. support for Colombia's new national security strategy directed "towards defeating the deadly combination of terrorism and drugs" and said that the United States is "very impressed" with Uribe's commitment to the eradication of illicit coca crops. 

Powell said he also had useful conversations with Colombian officials on the increased U.S. support necessary to expand cooperation on security, development and eradication programs. He indicated that upon his return to Washington, he will push for full funding in Congress for U.S. programs assisting Colombia. "This is a partnership that works and a partnership we must continue to invest in,"  he said

Cartel leader goes
to U.S. for trial

By the A.M. Costa Rica wire services

BOGOTA,, Colombia — This country has extradited to the United States a former leader of the Cali cocaine cartel to face narcotics trafficking and money laundering charges. 

Security was heavy Friday as Victor Patino Fomeque boarded a plane for the U.S. state of Florida, escorted by agents of the U.S. Drug Enforcement Administration. He is the first leader of the infamous cartel to be extradited. 

The move comes nearly two weeks after the government of Colombian President Alvaro Uribe authorized the extradition. 

Nicknamed "the chemist," Patino Fomeque is accused of sending some 30 kilograms of cocaine to the United States. The Cali cartel once controlled the majority of the world's cocaine supply. Once a leading member of the cartel, Patino Fomeque spent several years in a Colombian prison for drug trafficking. He was later released on parole, only to be arrested again last April. 

On Wednesday, U.S. Secretary of State Colin Powell underlined U.S. support for Colombia as it fights narcotics trafficking and illegal armed groups. Colombia is by far the world's biggest cocaine producer with the United States being a major consumer.

Contraband and pirate
operation busted up

By the A.M. Costa Rica wire services

MEXICO CITY, México — Authorities have broken up what they describe as a "Korean mafia" that has been illegally importing and selling contraband goods from Asia on the Mexican market. Mexican business leaders are calling for more action against contraband gangs.

In raids carried out Thursday in Mexico City, the Federal Preventive Police arrested 43 people of Korean nationality and 36 Mexicans accused of working with the so-called "Korean mafia." They are accused of operating smuggling organizations that illegally import goods from Asia, including pirated items. 

The police confiscated 180 tons of merchandise, including toys, clothing, purses, bags and even Christmas ornaments. They found many items with well-known brand names that were actually pirated copies produced in Asian nations. 

The President of the Mexican employers association, Jorge Espina, said more such police action is needed to protect domestic industries. He said all the contraband, pirated items and stolen goods sold in Mexican markets are under the control of organized crime. He said he hopes the police actions represent the beginning of an effort to stop this criminal activity. 

Espina said much more needs to be done to combat corruption at the nation's ports, in particular the Pacific port of Manzanillo. Authorities have traced some of the goods to shipments that came through that port. Last year, the federal police stopped a load of similar merchandise at the port, but there are indications that the contraband trade has continued. 

Federal authorities say some 600 police agents took part in this week's operation. They say the Korean citizens who were arrested will be charged and put on trial. Authorities say some of the Koreans who lack proper immigration documents will be deported. There are about 15,000 Koreans living in Mexico legally and working in various sectors including retailing and small manufacturing. 
 
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Reader letters on Villalobos
U.S. tax exemption 
is on EARNED income

Dear A.M. Costa Rica:

Just a quick note to set Ken Prescher, who wrote Friday, and several other people straight regarding tax law. The $72,000 exclusion for foreign earned income that the U.S. government allows, is for "earned" income. That means wages or earnings from a business that the taxpayer participates in. Interest and dividend income does NOT qualify for this exclusion. Even if it did, to qualify for the Foreign Earned Income Exclusion a taxpayer MUST attach Form 2555 to their 1040 reporting the income and calculating the allowable exclusion. 

Anyone who has not reported their interest payments on their tax return could, and should, be charged with tax fraud. If the unreported interest exceeds $10,000 in any given year, this would meet the IRS's definition of fraud. As such, the 3 year statute of limitations would not apply. The IRS would be able to go back to the first year that the interest payments were received, even if that is over 20 years ago. The IRS surely has access to the investor list since several other people have been able to obtain those same lists. 

I would be more worried about this potential problem than getting my money back. With penalties and interest, most people would owe the IRS far more than what their original investments were. Canadian tax laws are very similar. I am not familiar with Costa Rican law.

Jeffrey Vogel, CPA 
New York
Ignore rantings,
reader urges us

Dear A.M. Costa Rica:

Compliments to the staff at AM Costa Rica.

In spite of the rantings, ravings, threats of boycotts by a fevered minority, most of us appreciate your professional coverage of the Villalobos case.

These hot-eyed minorities attack the messenger and look for someone to blame, rather than facing up to their own responsibility in lending money to Villalobos.

Ignore the rantings and ravings and grasping at straws of the fevered few, and continue your professional work of delivering the news.

Again, compliments to the entire staff of A.M. Costa Rica!

Jack Evans
Denver & San Jose
Was exit orchestrated
as a way to get out?

Dear A.M. Costa Rica:

I am curious for feedback from other Villalobos investors whether they, like myself, are beginning to feel that this whole ordeal beginning on July 4th was a premeditated and orchestrated "out" by Luis to end his business. The almost surreal chain of events since that day suggest to me an overwhelming sense of complicity between all parties.

My sense is that everyone will be paid off (everyone of course except the investors) either financially and otherwise, and that a sufficient amount of time will be extended to the resolving of this matter such that "it will just go away." I have the distinct feeling that the ending for this drama will ultimately be the Villalobos brothers return to Costa Rican society without impunity; the personal enrichment of all prosecutorial and governmental officials as a result of their 'cut' for allowing this whole sting operation to go through with the appearance that Luis and his brother we're at all times, 'The Good Guys"; and finally, The Brothers having the bulk of investors money neatly and forever squirreled away in their favorite stash spots.

 I wish someone could provide insight to me why Luis, if he was the true Christian he portrayed himself to be, issued the final two interest checks knowing full well they would bounce and why he would continue to solicit additional investor's funds knowing full well the doors of the business would soon be closed??

Am I the only person who continues to smell a whole pack of rats in this entire scenario???

Joe Roe 
Fort Wayne, Ind.
Why can’t he pay
interest from afar?

Dear A.M. Costa Rica:

I am asking the same question that was asked Friday in The Tico Times on page 2 by a David Housman. Why can't Villalobos make arrangements with a neutral tax and banking country, such as Panamá or one of the others, and distribute the monies owned to investors? Just the interest payments at this point would restore his credibility. Can anybody give me a sound legal reason why this can't be done? 

I have asked Tico Times writer David Boddiger the same question by e-mail Saturday morning, with no response as of yet. I have asked A.M. Costa Rica editor, James Brodell, the same question, and he sees no reason why not, but he is not a lawyer. I would like to ask the same question to Arnoldo Segura, Villalobos' attorney. Does anyone have a phone or fax number for him? Or can somebody relay this question to him? The public has a right to know.

John Bisceglio
San José
 
Reader says we hide
positive news on case

Dear A.M. Costa Rica:

Re: John’s letter Friday

He is right when he says you have hidden positive news, and have slanted your publication against Sr. Villalobos. Is he wrong? — Where is your publication of positive facts. I'm finding you slant everything on this subject and can't see how you maintain a clean conscience. You are hurting the investors, Costa Rica, and yourself by your biased and erroneous stuff. Better change your mind and your attitude and do right by the honest people and their honest investments with a proven-honest business man. In the end, Villalobos will be exonerated and deserving of all respect for his long-established help to investors and this country.

As to Keith Nash -- I haven't found any up-dated news of facts. It seemed to me his son, their attorney, and another woman wanting rights to Nash's money were all operating a dirty game. Villalobos protected Nash's money from people without rights to it and was awaiting the courts decision as to whether Nash possessed sufficient presence of mind to get access to his investment, or if others had the legal right to receive it. All of which exhibits genuine care on the part of Villalobos. I found no part of those facts in any of your articles though you've been quick to accuse Villalobos and express your opinion of how he should function, contrary to his personal wisdom.

Apparently more good news is one the way in behalf of Villalobos and his friends/investors — but the government/banks haven't yet realized their case against him is all but over. The first day they open his accounts Villalobos will begin paying all accrued interest and refunding loans to anyone who wants to withdraw their investments. At that time I'll put some of my own money back with him and enjoy the fruits of honest and wise money handling.

It's time you changed your ways,

Don Paulsen 
Cartago
Writer gives diagnosis:
Stockholm Syndrome

Dear A.M. Costa Rica:

As a disinterested observer (I've been to Costa Rica only once, for a week's vacation, a few years ago.), I've been following your fascinating, detailed coverage of the Villalobos affair. It's obvious that none of the gullible victims is going to retrieve any of his funds (well, perhaps a penny or two on the dollar, from the accounts within Costa Rica), but many of them unrealistically and pathetically cling to hope. The rumor cited in your editorial (Dec. 2, 2002) that Villalobos might have been acting as an agent of a U. S. Government (presumably, intelligence) agency is about as plausible as the earlier, preposterous, pre-debacle rumor that the Brothers made their money in the factoring business.

As for the editorialist's suggestion that, "if the Villalobos brothers were acting as honorable and respected agents of the United States, that government must guarantee any money lost by investors," I say, stop dreaming. The term "government" in this context is a euphemism for "taxpayer." We U. S. taxpayers have had enough of bailouts. We are not going to cover the losses of gamblers posturing as investors, who had a pretty good run rolling the dice, but eventually crapped out. 

When one reads the victims' amazing testimonials to the absconder, one realizes that they are suffering from an acute case of "Stockholm Syndrome." (You might recall that this term originated a few decades ago, after some prison inmates in Stockholm captured, tortured, and repeatedly raped their female hostages. Astonishingly, after the women were freed, some of them professed affection, even love, for their tormentors.)

The best course of action for the hapless, money-lending marks is to stop engaging in self-delusion and accept reality. It evokes only pity to see some of them now throwing away more good money after bad by hiring lawyers to recover funds that are almost certainly irrecoverable. They should take it on the chin, and move on.

Peter Culhane 
Avon, Mass.

 

Money does not exist,
reader says of interest

Dear A.M. Costa Rica:

It's amazing to see all these "investors" (not the most sophisticated, I might add) have all their attention turned to the legalities of the Villalobos operation and have overlooked the most obvious scenario. It's fraud. Just as the Cubans were too. They were both frauds. The brothers could pay everyone back if they wanted to. They could use a bank in one of the countries that they stashed all the money in. The $1 billion doesn't even exist either. 

Many people were letting their money compound. The money only existed on paper, it never was actually there. The fact that it went on for 20 years proves NOTHING. In fact, that's the genius of it. After 10 years or so, they achieved credibility with the "investors." Then they got all the money. Millions of dollars, people selling their possessions and handing the cash to the brothers. If they were fly-by-night they never could have gotten this incredible amount. Plus the operation was loosely tied in with religion . . . p-l-e-a-s-e.

How did they pay the 3% a month? They didn't have to. With as much as half the "investors" compounding their investment, the Bros. only had to pay out 1.5%, perhaps 2% a month. With the steady increase of deposits they were receiving and dipping into the principle they easily could keep this thing afloat for as long as they did . . . until the run on the bank. Then the house of cards falls in. I think the freeze of the accounts gave them the excuse they needed to fold the operation and keep everyone's money.

Please wake up everyone and pull your collective head out of the sand. This is getting embarrassing. If anyone has one FACT that points to the contrary on anything I just wrote, please post it. I wish I was wrong, but I'm not,

Another John 
EDITOR’S NOTE: Normally we do not run letters without full names. But this letter raises some new questions and the writer is known to us.

 


 
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