San José, Costa Rica, since 1956

Villalobos Brother’s Pre-Trial Hearing Begins

A preliminary audience began this week to determinewhether Osvaldo Villalobos, one of two brotherswho allegedly operated an illegal multimillion-dollarinvestment company that shut down in 2002, will facea trial.It is a plodding start for a justice system that hasbeen excruciatingly slow, say former investors in“The Brothers” operation. Villalobos has been inprison or house arrest for more than two years servinga detention order to prevent his possible flight (TT,July 23, 2004).He is charged with fraud, money laundering andillegal financial intermediation.Meanwhile, thousands of investors have yet to seetheir money.THE hearing before a judge involves testimonyfrom the government prosecutor, Villalobos and hisdefense team, and the official declarations of wrongdoingfrom at least 300 of an estimated 6,000investors. It should end by early March, said JudicialBranch spokeswoman Sandra Castro.It is likely the hearing will lead to a trial, saidEdgardo García, Villalobos’ normally tight-lippeddefense attorney. He told The Tico Times this isbecause “a tidal wave of actions have been takenagainst him,” referring to the investor complaints.García said he couldn’t comment on the argumentsin Villalobos’ defense, but said the court is“against the wall” because it waited too long to takehis client to court.“HE has been in jail 24 months, which worries the state,” García said. “You’re supposed tohave the investigation ready to go on to thenext phase. So, it’s the court that owns themeat in the window that’s going bad – theyhave to act quickly and have waited toolong.”Government prosecutor WalterEspinoza refused to comment on the casethis week.Villalobos’ brother, Luis EnriqueVillalobos, is at large, sought by CostaRican and International Police (Interpol)authorities for the same allegations facingOsvaldo.The two ran an unregulated high-yieldinvestment business and a currencyexchange house for approximately 20years.INVESTIGATORS raided theVillalobos brothers’ Ofinter S.A. offices inSan José and the San Pedro Mall andOsvaldo’s home on July 4, 2002, seizingdocuments, computers and more than$300,000 in cash, sparking panic amongthe thousands of investors who had loanedout minimum sums of $10,000 apiece inexchange for monthly interest returns of2.8-3% (TT, Nov. 14, 2003).The bottom dropped out in October2002, when the offices were closed (TT,Oct. 25, 2002). Soon after, Luis Enriquedisappeared and Osvaldo was arrested. Aninternational arrest warrant was issued forLuis Enrique.Luis Enrique cannot be tried in hisabsence, judicial spokeswoman Castro said.Whether the pursuit of Luis Enriquewill continue depends on the prosecutor’s“interest,” said Osvaldo Villalobos’ lawyerGarcía.SOME investors said they depositedtheir life savings in the business and havebeen cut off from the money since the closure.No one has reliably disclosed howmuch of clients’ money is missing, butsome say as much as $1 billion vanishedwhen the business folded.Prosecutors froze about $7 million inaccounts linked to “The Brothers,” unfrozeit in January 2004 and stashed it in anaccount of the Criminal Court of San Joséat a bank whose name was not divulged,according to a representative of theJudicial Branch. It will remain there atleast until after Osvaldo’s trial or release(TT, July 23, 2004).John Manners, president of the boardof United Concerned Citizens andResidents (UCCR), a group that representssome 650 investors, says Luis Enrique hassent three letters by e-mail to investorssince he disappeared.UCCR sent the latest letter Jan. 18 toits e-mail list of approximately 1,000investors, Manners told The Tico Timesthis week. He said he confirmed the letter’sauthenticity by checking separately withtwo people who each have contact withLuis Enrique, but added he could notreveal the sources.The letter is addressed “to thosewho’ve loaned me money,” and mentionsthe trial. It reads, “I reiterate my dispositionto cancel my debts at the opportunetime, once the judicial process is finished.”The letter thanks those who trustedhim, says those who didn’t will have to“await payment for a more prolongedperiod,” and concluded, “I maintain trustin God and the courts of the Republic thatwe will be shown to be correct, since all Idid was receive loans, pay them punctuallyand work honestly for more than 30years.”

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