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Minor Vargas guilty of fraud

From the print edition

WASHINGTON, D.C. – A 15-member jury convicted Costa Rican businessman Minor Vargas, 60, on Monday of one count of conspiracy and three counts each of mail fraud, wire fraud and money laundering to the tune of more than $600 million in a federal case tried in the U.S. city of Richmond, Virginia.

Vargas could face up to 182 years in prison. He will be sentenced in October.

Vargas’ company, Provident Capital Indemnity Ltd., sold bonds guaranteeing funding for life-settlement companies, which
buy life insurance policies from insured people at less-than-face value and collect benefits when those people die.

Jury members found that Provident selected victims who were older or who were likely close to death. The jury also believed that Vargas lied to his clients and investors, and was aware of the actions of his employees, including the company’s accountant, who defrauded clients with false company information and non-existent bonds.

Vargas spent more than a year behind bars in a Virginia jail while awaiting a trial that was delayed twice because of the magnitude of the financial losses and the enormous amount of evidence in the case. The trial lasted more than a week, but the jury took only three hours to render a guilty verdict.

Throughout the trial, Vargas maintained his innocence, saying he inherited the troubled company and tried to fix its  problems by enlisting accountant Jorge Castillo. In January, Castillo pled guilty in exchange for a lighter sentence.

Prosecutors had originally asked for a 28-year sentence for Castillo, who testified against his former boss on Tuesday.
For a year, U.S. federal prosecutors waded through a mountain of documents, copies of financial statements from several banks, and hundreds of emails that required translation from Spanish to English.

Key witnesses in the case include IRS agents and U.S. postal employees, whose testimonies helped bring a conviction. The case has drawn significant attention both in Costa Rica and the U.S. Thousands of victims in numerous countries were defrauded, some losing their entire life savings.

Prosecutors described in detail and with the help of several visual aids the true amount of funds the company had to back
up the bonds they offered clients, a number that was miniscule compared to what the company told its customers. Some of the most incriminating evidence included emails that showed that Vargas was aware of false company statements to victims in order to collect on fake bonds.

Vargas not only misrepresented the company’s assets but also lied when he told clients, investors and regulators that Provident was protected by reinsurance agreements with major companies,
the jury found.

In total, 21 witnesses testified against the Costa Rican businessman, including several of the company’s clients. Attorney Michael Dry, who declined to comment on the case, headed the U.S. government’s team of prosecutors.

Vargas’ attorney, Jeffrey Everhart, did not indicate if he would appeal the conviction. Castillo and Vargas are being held in the Pamunkey Regional Jail outside of Richmond awaiting sentencing. Castillo will be sentenced in September, and Vargas will likely be transferred to an unnamed federal prison.

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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