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Minor Vargas fraud trial begins in U.S.

April 24, 2012

Minor Vargas, head of a Costa Rican company accused of a $670 million insurance fraud scheme, lied to investors about the firm’s financial assets and stability, a U.S. federal prosecutor told a jury Monday in a trial held in the U.S. state of Virginia. But a defense attorney said the government lacks evidence in the case, Life Health Pro magazine reported on Tuesday.

The jury heard opening statements in the trial of Vargas, who is charged with conspiracy, wire fraud, mail fraud and money laundering. The trial is expected to last several days.

Vargas, held in custody in the U.S. since January 2011, was president and majority owner of Provident Capital Indemnity Ltd., which agreed Friday to plead guilty to a single count of mail and wire fraud conspiracy.

Provident sold bonds guaranteeing funding for life-settlement companies, which buy life insurance policies from insured people at less than face value and collect the benefits when those people die. The government says Provident sold bonds based on fraudulent financial statements from 2004-2010, with $40 million going directly into the company’s bank account.

“This case is about lies,” Assistant U.S. Attorney Michael Dry told the jury. He said Vargas told investors that Provident had hundreds of millions of dollars in assets that had been verified by an independent auditor, and that it had “reinsurance agreements” providing an extra layer of protection – all of which was untrue.

In Costa Rica, Vargas became a publicly prominent person by founding magazines and newspapers. He was also involved in professional soccer as president of Saprissa, one of the top teams in the country.

He later bought two soccer franchises and began a synthetic turf business that won several contracts for replacing soccer fields for local professional teams

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