Friday 14
March 2003
RUMORS
& FACTS
By Jack
Caine
Each
day, because of my work in organizing investors to participate
in the ICSID International Arbitration case against the Republic
of Costa Rica, I receive many emails and phone calls from
investors interested in keeping me up to date on rumors that
they have heard.
UNSUBSTANTIATED
RUMORS
1.
OSVALDO VILLALOBOS
- Osvaldo
Villalobos has been released from jail or is going to be
released very soon.
Very unlikely. I’ve heard this rumor off and on since he was put in
jail on a weekly basis.
I was told that there was a hearing on 11 March 2003
for Osvaldo and that his request for release was denied
again. I have
not seen any documentation in the court documents to support
this rumor.
- The
government is finalizing formal charges against Osvaldo.
Likely. There
is no documentation in the case file to support this rumor,
however, I received a call today stating that Osvaldo had a
hearing on 11 March 2003 and that formal charges have been
made for money laundering, fraud, altering of documents, and
illegal banking (intermediación financiera ilegal). This rumor has not been substantiated by documents in
the case file.
2.
EWALD ACUÑA
- A
court order has been signed (but not yet made public) that
will order the release of the frozen assets to only the
clients of Ewald Acuña, a local Costa Rican attorney.
Very unlikely and not substantiated.
I’ve heard this rumor since November 2002 from Acuña’s
clients. There
is no documentation in the case file to support this rumor.
Since there was a hearing on 11 March 2003 in which
it was decided that the frozen bank accounts would be
transferred into the name of the court, any rumors that the
government is going to release frozen money to the investors
seems ludicrous.
- Signing
up with Ewald Acuña is only on contingency (e.g. no money
upfront, only 30% on the backend).
Conflicting reports.
This may be true for some people and may be the
policy of the day, but many people that I have talked to say
that they paid $500 upfront and that they also have to pay
30% on anything recovered and that no punitive damages are
being asked for.
- Clients
and real estate agents (e.g. South Coast Realty) are being
paid a commission to sign up other clients with Ewald Acuña.
Unknown. There
is no documentation proving this rumor, however, many court
documents submitted to the court for various investors who
have signed up with Ewald Acuña were originally faxed from
South Coast Realty and there are conflicting reports of the
cost to sign up with Acuña.
- Only
Ewald Acuña has unlimited access to the prosecutor and
judge in this case because of his prior relationship with
them and his participation in the Banco Anglo case.
Very unlikely and not substantiated.
There is no documentation or announced public events
to support this rumor.
Investors with Acuña have contacted me to say that
they have met with Acuña recently and he has no idea when
they will be paid. In
addition, an article on 5 March 2003 in La Nación (P. 6A)
suggests that there may have been unlawful pressure put on
Acuña by Supreme Court Justices while he was the judge in
the Banco Anglo case.
- Clients
of Ewald Acuña financed the government’s operations to
find the two individuals from Savings Unlimited that are
currently in jail. No
documentation. I
have seen no documentation to support this rumor.
- Ewald
Acuña is brokering a deal between Villalobos and the
government. Very
unlikely and not substantiated.
There is no documentation to support this rumor.
- Ewald
Acuña is actually working for the CR government.
Unknown. I
have not seen any documentation or evidence to support this
rumor.
- Ewald
Acuña has promised a quick return of investors’ money
since November 2002, but now says he has no idea when
they’ll get paid. Not
confirmed. I
have not seen any documentation to support this rumor.
3.
VILLALOBOS’ ASSETS
- Villalobos’
helicopters are in the control of the government.
Wrong. No
documentation in the case file supports this.
In fact, Helicópteros de Costa Rica S.A. had their
banks accounts unfrozen in December 2002 and visitors to the
airport have said that the helicopters have been flying
normally.
- $40
million more in various foreign currencies has been found
and seized in and out of Costa Rica.
Very unlikely and not substantiated.
I’ve heard this rumor for over 3 months, mostly
from clients of Acuña.
There is no documentation in the case file to
substantiate this rumor.
- The
government must charge and convict the Villalobos Brothers
before their assets can be forfeited to the state.
Wrong. In
forfeiture cases, the asset is actually charged with the
offense. In
this case, the offense is money laundering, fraud, illegal
banking, and alteration of documentation.
In forfeiture cases, it is the responsibility of the
3rd party (the investors) to prove that their
assets are not guilty.
The judges have already stated in writing 5 times now
that the assets are the product of illegal activities and
will be eventually forfeited to the state and that 3rd
parties of good faith do not have ultimate rights in this
case. The
judges are ignoring the articles in both Costa Rican Drug
Laws and Criminal Code for the protection of the assets of 3rd
parties. 90% of all forfeiture cases in the US do not involve any
one being charged or found guilty of a crime.
4.
BEING PAID
- SUGEF
is going to be in charge of distributing the money amongst
the investors. Very
unlikely and not substantiated.
I’ve heard this rumor since the beginning.
I have read letters from SUGEF to the court and
prosecutor stating that this is a court affair and SUGEF
cannot be part of it. There is no documentation in the case file to support
this rumor that SUGEF will agree to this.
It seems that the court would like more involvement
from SUGEF, but that SUGEF isn’t interested.
- Luis
Enrique Villalobos never left Costa Rica and is currently
negotiating with the authorities to clear his name.
Very unlikely and not substantiated. I’ve heard this off and on since LEV disappeared.
There is no documentation to support this.
The last report was that LEV left Costa Rica through
Nicaragua. I’ve
also been told that he’s in Romania, Nicaragua, Panama,
Switzerland, Argentina, etc.
(It is kind of like the game Where’s Waldo?).
- Luis
Enrique Villalobos will pay us all our capital and the
interest that he owes us.
Luis Enrique Villalobos will pay us back over a
six-month period.
LEV unavailable to confirm.
There is no court documentation to support this
rumor.
- Luis
Enrique Villalobos is setting up new operations outside of
Costa Rica. Luis
Enrique Villalobos continues to put our money to work. Very unlikely and not substantiated.
I have not seen any documentation to support this
rumor. There is
an international warrant for his arrest with INTERPOL.
Wouldn’t it be difficult to run operations openly
with this over your head?
5.
NEW VILLALOBOS CHECK CASHING COMPANY
- The
Villalobos’ sister has opened up a new check cashing
company in San Pedro (tel. 281-3597) in Plaza del Este near
Friday’s Restaurant.
Conflicting reports.
By telephone, a representative stated “that the
company is owned by Alvaro Segura and that the same people
that worked at Villalobos’ San Jose office, work at the
new company now”.
6.
VILLALOBOS’ OPERATIONS
- Villalobos’
operation was a ponzi / pyramid scheme.
Unknown.
There is no documentation to suggest that
Villalobos’ operation was a ponzi / pyramid scheme.
Most schemes of this nature do not run more than 3
years.
- Villalobos’
operation included illegal banking because he “captivated
money”.
Wrong.
Captivation of money is not in itself considered
illegal banking. That
is why SUGEF has said that there is little evidence of
illegal banking by Villalobos.
- Villalobos
was involved in money laundering.
Unknown. After
reading the reports from the police and investigators, I
truly cannot see that Villalobos was INVOLVED in money
laundering. That
doesn’t mean that dirty money wasn’t invested, it just
means that there doesn’t seem to be any proof that
Villalobos knew that there was dirty money and was trying to
“clean” it.
- Villalobos’
operations were a fraud.
Unclear definition.
The government is going to have to define which fraud
was committed. If
the government defines it fraud because Villalobos hasn’t
paid the investors their interest because the government has
seized and frozen all of his assets and has told the
investors that receipt of payment from Villalobos would be a
crime, well, that definition of fraud won’t hold up in
international law.
7.
RELATIONSHIP WITH PLN
- The
Villalobos Brothers financed PLN political campaigns and
since they can no longer do so, the PLN has gone bankrupt.
Unknown. There
is no documentation to prove that the Villalobos Brothers
financed the PLN, however, there were recent stories in La
Nación showing that the PLN has severe financial problems.
Also, the president of the PLN wrote a very nice
letter in La Nación supporting Villalobos and a PLN
representative from Santa Ana wrote a letter of support to
President Pacheco on behalf of the investors.
8.
WHO WAS BEHIND THIS WHOLE MESS
- President
Pacheco was behind this whole mess to get rid of the
financing to the PLN by Villalobos.
Makes sense if Villalobos had been financing the PLN,
but not confirmed. I
have not seen any documentation to support this rumor.
- Banco
Interfin and other banks were behind this whole mess.
Doesn’t make sense.
I have seen no documentation to support this rumor.
The larger banks all have stock brokerage
subsidiaries. The
government has made reports that many of these subsidiaries
made large transactions for the Villalobos group.
This means that the stock brokerage subsidiaries were
making a lot of commissions.
Why would the banks want to stop that?
- The
IRS was behind this whole mess and there were IRS agents
sifting through the court documents.
Doesn’t make sense.
Not confirmed. I
have been told this rumor, along with a rumor that Treasury
Department agents were there as well.
No one can give me any type of documentation (or even
a name) of an agent that was there.
I have seen no evidence to support this rumor.
9.
UCCR & JOSE MIGUEL VILLALOBOS
- Jose
Miguel Villalobos has inside information that will expose
those involved. Information
not confirmed. I
don’t know what this means.
- The
Minister of Security must be receiving “chorizos” since
he is driving a $48,000 Mercedes-Benz even though he only
clears $3000 a month from his government job.
Not confirmed. I have not seen what the Minister is driving, nor do I
know where he has received his income or a Mercedes (if he
is driving one at all).
- Jose
Miguel Villalobos has the experience necessary to get
results in this case. Not
confirmed. I have yet to see a strategy from JMV or the UCCR that
shows how their actions will get the investors paid. In addition, I have yet to see documentation of cases in
which JMV has won a case against the government, especially
involving foreigners being paid or punitive damages being
paid to foreigners. I
do see the efforts of JMV and UCCR as beneficial to our
arbitration case in that it may bring out additional
information damaging to the government.
- By
turning around public sentiment through the press, Jose
Miguel Villalobos will be able to unfreeze the frozen
assets. This
one makes me laugh. I
can’t imagine Costa Ricans lining up in front of the
courthouse to protest that their government won’t release
money owed to foreigners.
10.
ICSID ARBITRATION
- Costa
Rica can refuse to participate in ICSID arbitration
involving Americans. Wrong.
The owner of the land in the Santa Elena case was an
American and Costa Rica was forced into ICSID arbitration by
the World Bank and through the threat of the Helms
Amendment. In
the Santa Elena case, the Government of Costa Rica paid the
American $16 million and 70% of this award was for punitive
damages. In
addition, CAFTA, the Central American Free Trade Agreement,
requires all outstanding disputes to be settled prior to
being signed and once signed, acts as a bilateral investment
protection agreement requiring Costa Rica to participate
automatically once a complaint has been filed by an American
with ICSID.
- Investors
have to wait until charges are made or dropped against
Villalobos or Villalobos is convicted before going to ICSID
arbitration. Wrong.
This is not a requirement.
- The
law firm will only allow 500 investors to join the
arbitration case. Wrong.
At least 500 investors are needed to make arbitration
affordable.
- You
must drop all civil and criminal actions against Villalobos
NOW in order to join the ICSID arbitration case.
Wrong. You
must do this before we go to the arbitration, but that is at
least 6 months in the future.
- I
can join the arbitration if I am Costa Rican, but have a US
passport. Wrong.
Article 25 of
the ICSID Convention prohibits this Costa Rican citizens
from putting a complaint against their own government in
ICSID arbitration.
- If
I don’t join the arbitration case and there is an ICSID
settlement or award, I will still receive my money back from
the ICSID settlement or award.
Wrong. Only
investors that have signed up are represented by the
attorneys and will receive anything from an ICSID settlement
or award.
- Costa
Rica can refuse to pay an ICSID award.
Wrong. Costa
Rica has already agreed to pay any award ordered by ICSID
through their signing of the ICSID Convention and bilateral
investment protection agreements. Not doing so would alienate them from the world
completely.
- Governments
with bilateral agreements will not represent their citizen
investors. Wrong.
The only government that has been formally notified
is Canada and we are still waiting for their official
answer. The Dutch government is in the process of being notified
also. The
French, German and Swiss governments will be notified next.
SUBSTANTIATED
FACTS
1.
UNFROZEN BANK ACCOUNTS. Confirmed - Done in December 2002. The judge in this case unfroze several bank accounts in
December 2002 including accounts belonging to Agropecuaria de
Caribe (ACARI) in Banco de Costa Rica, to Edison Galeano Arias
in Banco Banex and Banco Nacional, and to Helicópteros de Costa
Rica S.A. in Banco Nacional.
2.
FROZEN LANDS. Confirmed.
The court has frozen 7.5 square kilometers of land owned
by the Villalobos group. Most
of the land is not in the personal name of LEV or Osvaldo.
It is located all over the country and worth MUCH more
than the frozen bank accounts.
Estimates of the value of the land are between $50 and
$200 million.
3.
PROCEEDING TO FORFEITURE. Writing on the wall.
The prosecuting attorney in this case asked the judge in
February 2003 to transfer the name of the frozen bank accounts
into the name of the court.
This means that the government is moving to the
forfeiture stage of this case without formal charges or a
conviction. In
addition, two civil court judges have ordered the criminal court
judges to release specific money from specific bank accounts to
specific investors of Villalobos and the criminal court judges
have stated that the assets are the product of illegal activity
and will be eventually forfeited to the state and that 3rd
parties of good faith (the investors) do not have ultimate
rights in this case (even though the CR Drug Laws and Criminal
Code are very specific about the rights of 3rd
parties). A hearing
on 11 March 2003 indicated that the judge will be putting into
writing the order to transfer the name of the frozen bank
accounts into the name of the court.
4.
RCMP REQUEST / WARRANT. Formal complaint. A formal complaint was made recently to the Information
Commissioner of Canada against the RCMP for the RCMP not
providing a copy of the original RCMP request / warrant to the
Costa Rican authorities in the Oilcrew case.
The Commissioner has 30 days to reply.
5.
GOVERNMENT KNOWLEDGE / NEGLIGENCE.
- CENTRAL
BANK. Confirmed.
An employee of the Central Bank (from 1975 to 2001)
was also an investor of Villalobos.
This was shown by documents submitted by the employee
himself to the court in order to show that his investment
was from a clean source. The Central Bank is responsible for SUGEF and SUGEVAL by
law. Mr. Lizano,
the previous president of the Central Bank, resigned
unexpectantly and was interviewed shortly afterwards about
this case…he said that this crisis was caused by poor
regulation and monitoring by the government.
- PLN.
Confirmed. There
are several politicians of the PLN political party and / or
their family that are on the 2002 List of Clients seized on
the 4th of July raid at Villalobos’ offices.
The president of the state bank in Cartago where so
many suspicious transactions were made was also involved in
PLN politics.
- SUGEF
& SUGEVAL. Confirmed.
SUGEF made annual inspections of Ofinter’s operations and
investigated them for illegal activities prior to the July 4th
raid without making any formal charges of illegal activities
to the police. To
date, SUGEF maintains that no illegal banking has occurred
in this case. Reports,
since 1999, have been reported various unusual transactions,
including $100 million in transactions between the
Villalobos group and Mercado de Valores S.A. to the
government for investigation.
SUGEVAL was notified in writing by investors that
they wrote checks directly to Mercado de Valores S.A. and
that their checks were put into Osvaldo Villalobos’
personal account without a limited power of authority to do
so. When asked
to freeze Mercado’s accounts, SUGEVAL stated it was
without merit. When asked to do an investigation, they refused to name
the name of the investigator.
- CONTRALORIA
DE LA REPUBLICA. Confirmed.
A request was made in December 2002 by investors to the
Contraloría General de la
Republica
(who oversees the Central Bank, SUGEF, SUGEVAL, etc.) to
investigate the Central Bank, SUGEF, SUGEVAL, Ofinter,
Mercado de Valores S.A., and the Villalobos Brothers for
negligence in this case…the investors have yet to be
notified of the completion of the
CGR’s
investigation.
- CONTRALORIA
DE SERVICIOS DEL PODER JUDICIAL.
Confirmed. A
formal request by an investor (3rd party of good
faith) to the Contraloría de Servicios del Poder Judicial
to exam the 13 boxes of evidence seized on the 4th
of July was denied.
- PROCURADURIA
GENERAL DE LA REPUBLICA. Confirmed. Local Costa Rican attorneys representing
investors have talked with the Procuraduría General de la
Republica (the attorney representing the interests of the
government) to ask the PGR to intervene in this case since
the end result if resolved later will be that the government
will have to pay more in punitive damages for their
mistakes. The
verbal response was that it was already too late to
intervene.
Jack
Caine
Class Action Center – ICSID Arbitration
Case
Tel.
(506) 289-9917
Fax. (506) 228-8270
THIS ARTICLE DOES
NOT INCLUDE ANY LEGAL OPINION AND WAS WRITTEN WITHOUT PREJUDICE.
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