Updated at 1:46 p.m. on Thursday
More than 13 years after the sudden shuttering of “investment” company Savings Unlimited, which defrauded hundreds of clients, a Costa Rica court has sentenced owner Luis Milanés, known as “The Cuban,” to 15 years in prison on charges of aggregated fraud.
In the Thursday morning ruling, the court also sentenced Milanés’ employee Michael González to six years in prison on the same charge. Both sentences must be formally drafted and reviewed before taking effect, per Costa Rican legal procedure.
Judge Carlos Chávez read only part of the criminal court’s verdict on Thursday, and full sentencing is expected on Jan. 22. In the meantime, the judge ordered Milanés held in preventive prison for up to eight months. His attorney, Hugo Navas, said he would appeal the sentence after it is officially announced early next year.
The court rejected a defense strategy claiming the statute of limitations on the charges had expired.
González was ordered to surrender his passport and was placed under house arrest.
A San José criminal court previously suspended the trial last July following claims by Milanes’ attorney that his client was suffering health problems.
In 2002, the same year Savings Unlimited folded, Milanés, 64, fled Costa Rica after a group of about 500 victims – mostly U.S. and Costa Rican citizens – denounced him for allegedly making off with $46 million of their money, although some victims have said that total could be as high as $200 million. After six years on the run, Milanés was arrested on June 19, 2008 at an airport in El Salvador, where local police nabbed him with someone else’s Costa Rican passport.
In May 2011, he reached an agreement with plaintiffs and pledged to begin paying them by using nine properties with an estimated value of $12 million. He also promised to give them $1.8 million in cash by November 2012.
A criminal court in September 2014 ordered Milanés to be brought to trial and prosecuted after he failed to pay back more than half a million dollars of that settlement.
In November 2014, the owners of a San José business group that included Milanés closed a hotel and two casinos and laid off 250 employees. Navas, also the group’s attorney, at the time said the closure was due to high operating costs.
Costa Rica fraud like ‘The Brothers’
Before his disappearance in November 2002, Milanés ran Savings Unlimited, a competitor of the well-known Ponzi scheme known as “The Brothers,” operated by Costa Ricans Luis Enrique Villalobos and Oswaldo Villalobos.
Like “The Brothers,” Savings Unlimited offered 3 to 4 percent monthly returns on clients’ deposits, with a minimum limit of $5,000. Savings Unlimited was said to have had more than 2,000 victims, a mix of mostly U.S. citizens, other foreigners and Costa Ricans.
But while “The Brothers” – apparently headed up by Luis Enrique, who disappeared a month before Milanés with an estimated $800 million in clients’ money – greeted “investors” with Biblical passages and kept their operations secret, Milanés was known to take his marks on tours of his casinos, where he said much of the money was being invested.
Oswaldo, Luis Enrique’s brother who ran a currency exchange office, was convicted in 2007 of illegal financial intermediation. Luis Enrique Villalobos still has not been located.
Milanés previously was head of the casino conglomerate Casinos Europa, which ran Casino Europa, then at the Radisson Hotel; Hotel Morazán and its Casino Tropical; Royal Dutch Casino; the Toby Brown hair salons; and ASCIA, a business that imported clothing, electronics and toys, among other goods.
‘The Cuban’ could get even more time
Criminal court judges said Thursday that Milanés could receive an even longer prison term because he also was found guilty of illegal financial intermediation, which could tack on an extra five years to his sentence.
“It is clear to this tribunal that Mr. Milanés established his business as a Ponzi scheme, and there are very serious facts that aggravated his actions as he shut down his office, destroyed evidence and fled the country,” Judge Chávez said.
Ewald Acuña Blanco, a lawyer for several of the plaintiffs, said he is satisfied with the court’s ruling, particularly the decision to take Milanés into custody to prevent him from leaving the country again.
Milanés addressed the court only to request permission to receive medication in prison, saying he currently takes 12 pills a day, plus insulin injections.
Only a few of Milanés’ nearly 500 victims attended the sentencing hearing. One man, who did not give his name citing “personal security reasons,” told The Tico Times he is happy that Milanés is finally behind bars.
“He owes me $1 million,” the man said. “I was very disappointed with the system. How can a man accused of stealing $200 million spend 13 years walking free on the street?”
He added: “In the end, I can say justice prevailed.”
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