The nation’s criminal appeals court unanimously upheld Osvaldo Villalobos’ 2007 fraud conviction this week.
Enrique Villalobos, the other member of “The Brothers” operation that ran the Ofinter currency exchange business in eastern San José’s Mall San Pedro, is still at large (TT, Sept. 24, 2004). He was never convicted because the country’s laws do not allow a person to be tried in absentia.
Osvaldo’s conviction is for “illegal financial intermediation,” which means he was running an illegal, unregistered bank.
Roughly 6,300 investors lost an estimated $800 million in what many of them had come to trust as a black-market bank offering extremely high interest return rates on so-called “personal loans.”
According to defrauded investor Curtis Lewenz, The Brothers accepted money and returned it to him and other investors with interest in yellow manila envelopes; the rates were 3 percent per month, 36 percent annually and 42 percent if customers allowed it to compound annually.
Authorities also investigated The Brothers for drug trafficking and money laundering, but authorities dropped the drug trafficking charges for lack of evidence, Costa Rican Drug Institute Director Maurico Boraschi said. And judges later threw out the money laundering charges for lack of evidence.
The 2002 police raids of Ofinter were spawned when a concurrent Royal Canadian Mounted Police investigation of Bernard Henri St. Onge, an alleged drug trafficker, since deceased, revealed he had a $300,000 investment with The Brothers (TT, May 18, 2007). Charges against St. Onge were later dropped by Canadian prosecutors.
Last year, Villalobos’ lawyers appealed his 18-year sentence, arguing that the 2002 raids on Ofinter and the home of its treasurer were illegal. Judges threw out that argument in their ruling.
Osvaldo will have eight months subtracted from his 18-year prison sentence for time already served.
A group of 137 Canadians have sued Costa Rica through the World Bank for failing to protect them and their investments with The Brothers (TT, May 16).
A judge was selected in May to handle the case.