Established for the recovery of investor/lender funds
personally loaned to Luis Enrique Villalobos Camacho

How the Judicial System of Costa Rica
Handled the Case of the Villalobos Brothers
By Lic. Jose Miguel Villalobos
As Attorney for UCCR
25 March, 2004
During the events that are accounted for in this document, hundreds of those affected by the illegitimate closing of the businesses of the Villalobos Brothers organized themselves to defend their interests.  The group, called UCCR, worked out a strategy based on demonstrating the non-guilt of the Villalobos Brothers in order to facilitate his return to the country and to achieve the reimbursement to investors of their legitimate resources.  Other sectors have attempted to file claims against the Villalobos in spite of the fact that don Luis Enrique is not detained, and by doing so have facilitated the Prosecutor's strategy and have affected the process for the reimbursement of monies.  However, in the end, we all share the same objective, which is the recovery of the funds.
The document you are about to read is not fiction.  It is rather an elaborate, detailed account of how the Justice Department of Costa Rica has acted in the case against two citizens of this country, Luis Enrique and Osvaldo Villalobos Camacho.  Despite the gravity of these denounced actions, all protests against them have thus far not merited the attention of the authorities for judicial inspection nor even of the press.  Possibly this is because they think only the interests of a group of investors, mostly foreigners, are involved.  Nonetheless, the issue is much more crucial than that.  We have a Prosecuting Attorney for Drug Trafficking delving into alleged financial crimes and a Judge of Rights who's only concern is infringing on the rights of the accused, going so far as to violate his own legal resolutions.  Ten million colones disappear during a seizure of assets and the authorities do not even bother to investigate those responsible.  The operation of the Justice Department is public in nature, although privacy might be an issue for those who appear before it.  Therefore, we do not believe these actions should be covered up, because doing so would make us accomplices to abuses of power, which weaken the credibility of the Supreme Court and its officials.  Actions like these endanger those who properly carry out their duties, and undermine the dignity of the highest-ranking officials of the Prosecutor's Office.
The document that you are receiving is without error.  We have evidence of its veracity, and we quote the pages of the legal record to back up our statements.  We trust that, although some self-righteous and hypocritical dignitaries might be appalled at anyone who would question Prosecutors and Judges, the majority are capable of reasoning and defending with constructive criticism our legal institutions.  Merely ignoring an injustice will not make it go away; rather, this attitude will cause it to multiply and thus favor the impunity of those guilty of committing it.  Judicial officials are our guardians, and therefore their malpractice is one of the most dangerous behaviors for all citizens, for we are at the mercy of those who defend us.
If you think it cannot happen to you, remember the words of the Nazi concentration camp survivor, Pastor Niemoller, who wrote:
"In Germany they first came for the Communists, and I didn't speak up because I wasn't a Communist.  Then they came for the Jews, and I didn't speak up because I wasn't a Jew.  Then they came for the trade unionists, and I didn't speak up because I wasn't a trade unionist.  Then they came for the Catholics, and I didn't speak up because I was a Protestant.  Then they came for me - and by that time no one was left to speak up."
The aggressions that are inflicted on one human being are suffered by all.  The bells of injustice ring not only for the offended; they ring for him, for you, for me, and for all people of good faith.
Prosecutor Espinoza knew about the request from the Government of Canada before his ranking superior did, and acted prior to having official authority to do so.
The Letter of Request sent by the Canadian Government asking for the cooperation of the legal authorities in Costa Rica arrived at the Chancellery on June 25, 2002.  Action was immediately taken on the letter, and on July 3 of that same year, it was made known to the Attorney General of Costa Rica, at that time, Lic. Carlos Arias, in whose office the letter was received at 10:00 that same day [all times herein are in the 24-hour clock method, unless otherwise noted], as recorded in the receipt records of that office.  By order of the Attorney General, the document was handed over to the Narcotics Prosecutor's Office, directed by Prosecutor Walter Espinoza, at 10:35 that same July 3, for him to take due action.  Thus far, the handling of the case appears to be normal.  However, Prosecutor Espinoza handed the Letter of Request from the Canadian Government over to Judge Francisco Sánchez at 9:00 that same day; that is, he acted an hour and a half before officially receiving the note from the Attorney General.  Lic. Walter Espinoza therefore had in his hands the Letter of Request from the Canadian Government before the Secretariat of the Supreme Court of Justice delivered it to the Attorney General, thus totally violating the internal hierarchy of the Judicial Power and encroaching upon the authority of the highest rank of the Attorney General of Costa Rica.
We should ask ourselves how Prosecutor Espinoza obtained that document before his own superior officially sent it on and what the reasons were for such a hasty, abrupt action.  For now, suffice it to say, that it is clear that Prosecutor Espinoza sent the request to Judge Francisco Sánchez before receiving the documents from the Attorney General, and it must be assumed that, in fact, he had them in his hands substantially before then, since he had enough time to read them and write up a request dozens of pages long, which could not have been done in a just few minutes.  At the very least, Prosecutor Espinoza had had access to that documentation several days prior to that moment, which would have given him time to prepare the request even before his own superior learned of it.  That can easily be proven, as shown in the following point.
Official authorities from the Government of Canada communicated with Prosecutor Espinoza using unofficial channels to coordinate collaborative actions before the Attorney General had received the Letter of Request for Cooperation and those same Canadian authorities delivered that document using informal methods and concealing their actions.
In the Supreme Court file, which refers to the Letter of Request sent by the Canadian Government, there is a copy of the note sent by Mr. Gustavo Alvarez, a staff member of the Canadian Embassy in Bogota, Colombia.  Significantly, that note is dated June 21, 2002, that is, four days before the Chancery of Costa Rica officially received the Letter of Request from the Canadian Government.  In that mysterious letter, Alvarez, the staff member of the Canadian Embassy in Colombia, advises Prosecutor Espinoza, bypassing his superiors, that two investigators from that country will arrive on July 2 to coordinate some operations.
Those operations, through the indicated date and the sender, refer to the Letter of Request, which had not yet been received and much less acted upon in Costa Rica.  In other words, even before the Canadians had officially acted, one of their staff members in another country had communicated with the legal authorities in Costa Rica for the purpose of coordinating what had not yet been requested, hence failing to respect his own Embassy in this country and the hierarchy of the Judicial Power and the Chancery.  But the matter went beyond a simple violation of formalities, which itself was serious and unusual enough.  Staff member Alvarez, from Bogota, Colombia, sends out information in Spanish and English describing a Legal Mutual Assistance Agreement between Canada and Costa Rica for carrying out investigative work in this country.  That statement is absolutely false, as both the Canadian staff member and Prosecutor Espinoza well know.  That "Agreement" does not exist, not only because it has not been signed, but because it refers to the participation of the Ministry of Justice of Costa Rica, which has no jurisdiction in investigative, police or judicial tasks.  Let us analyze the facts that show why the Canadian staff member was not telling the truth.  It is evident that the documentation sent on June 21 was the Letter of Request, which had not yet arrived through diplomatic channels, but which Prosecutor Espinoza knew about before his superiors did.  The Canadian staff member is untruthful, for which an explanation ought to be provided by the Embassy of Canada.  But even more grave is the fact that Prosecutor Walter Espinoza would receive documents and act before being authorized to do so by the Supreme Court of Justice and his immediate superior, the Attorney General.  Since June 21 he had time to prepare the request that was received by Judge Sánchez on July 3, all before the Attorney General had knowledge of the Canadians' request.
By his actions Prosecutor Espinoza assumes powers he did not possess; he disdains the Supreme Court, by acting before it had any knowledge of the Letter of Request; he bypassed the Chancery itself by maintaining contact with a friendly country through extra-official channels; and he took upon himself a case of this magnitude before his own immediate superior assigned it to him.  Thus, the legal violations committed by the Prosecutor are excessively numerous.
The Canadian Embassy never requested a raid of the offices of the Villalobos Brothers, but Prosecutor Espinoza convinced the Judge in charge of the case and also the national press, that such a request existed.
Once the Letter of Request was officially received, its content was known, and it can be concluded that in no way did the request for the cooperation made by the Canadian Government involve raiding the Villalobos brothers' offices.  Pages 18, 19 and 20 of the Letter containing the cooperation requests make absolutely no mention of raiding those offices.  The request for a raid is limited to the condominium of the Canadian citizens, who were staying at Jacó de Garabito, for the purpose of seizing documents at that location.  Because the Canadian authorities were interested in locating any information related to the bank accounts of those individuals in Costa Rica, their requests were not limited to obtaining information on possible deposits with the Villalobos Brothers; they were asking for all types of reports on any transactions made in this country.
A careful reading of that Letter of Request will show that the Government of Canada never had in mind a raid of the Ofinter offices and those of Mr. Luis Enrique Villalobos, but rather they were requesting a raid on the condominium of the Canadians under investigation in their country, as well as information on any relative banking or financial transactions in Costa Rica, and not exclusively information on possible operations with Luis Enrique Villalobos.  Nevertheless, Prosecutor Espinoza requested in his written communication, received at the Preliminary Criminal Court at 9:00 on July 3, 2002, that the Villalobos brothers' offices be raided and that all documents, books, accounting statements, monies and other items related to the alleged investigations be seized and held.  On folio 107 of the court file, Prosecutor Espinosa, in his request to the Judge, asks for a raid and search of the Ofinter offices and the sequester of any information having to do with to the Canadian citizens under investigation, but at no time did the Prosecutor manifest the same eagerness in soliciting information concerning the financial transactions of those Canadians in other Banks or financial establishments in the country.  This reveals that he used the Letter of Request merely as a pretext to target his forces against the Villalobos brothers, so he made his actions coincide with the Canadian's request and transformed the matter into an international issue.  With that conduct he has involved the Canadian Government in an investigation it did not request, and has been untruthful in his written communications to the preliminary Judge, by trying to link the Canadian investigation of several of its citizens with his own criminal vendetta against Osvaldo and Luis Enrique Villalobos.
The Chancellery of Costa Rica altered the essence of the request from the Government of Canada and gravely modified its contents, and Prosecutor Espinoza hid that information from the Penal Judge.
The Letter of Request sent by the Canadian Government clearly establishes that it is a request for cooperation on the part of the Judicial Power of Costa Rica in an ongoing police investigation in that country, pointing out that at that time no charges had been brought against anyone.  The Interim Judicial Director of the Chancery altered the thrust of the note, officiously categorizing it as a request for legal cooperation and stating that it was a case against several Canadian citizens, even though the note from Canada was absolutely clear in that it was a simple police investigation, that at that time there was no case and that no charges had been brought against those individuals.  Moreover, the Supreme Court repeats the error initiated by the Chancery, categorizing the Letter of Request in like manner.  But what is really unacceptable, is that Prosecutor Espinoza, who had supposedly read the letter in its entirety, in his request of the Criminal Judge, would almost completely transcribe the Canadians' request verbatim, except for the phrase found on all pages, which explains that it has to do with an ongoing investigation and that no charges have been leveled against the individuals in question.  It is not believable that this was just a careless mistake on the part of the Prosecutor; rather it is obvious he had intended to mislead the Judge and make him believe that the letter was about a court case in Canada, which was totally false.
Prosecutor Espinoza had prior information about the operations of the Villalobos Brothers for several years, and without new evidence, had the Letter of Request for Cooperation coincide with the start of the investigation.
Since May 11, 2000, Prosecutor Walter Espinoza had knowledge of the matter related to the operations of the Villalobos brothers.  On that date he received official letter SUGEF-2310-2000-03 signed by the then General Intendant of Financial Entities, Helberth Pineda Solís, notifying him of the case referred to as the Villalobos Brothers Case and another dated July 20 numbered 3358-2000-03.  The investigation was initiated by reason of an official letter sent by the Banco Crédito Agrícola de Cartago, which informed the Superintendence of frequent checks being cashed at that bank by the brothers Luis Enrique and Osvaldo Villalobos-Camacho.  The report mentions possible fund gathering in dollars at a business location in San Pedro de Montes Oca.
Time passes with no progress with respect to the Prosecutor's concerns, and meanwhile the banking and financial oversight authorities repeatedly request information from the Ofinter business without establishing any liability on the part of any of its representatives.  On March 19, 2002 (almost two years after the first references to the case), Mr. Adolfo Rodríguez-Herrera, General Superintendent ofSecurities, sends to the Attorney General a simple document reporting on risky operations being conducted by the stock brokerage, Mercado de Valores Puesto de Bolsa, S.A.
The Superintendent, instead of opening an administrative investigation against the mentioned brokerage, orders an investigation of the firms that allegedly were investing in the brokerages.  Surprisingly, the Attorney General Carlos Arias, the next day sends the document to the Narcotics Prosecutor, Walter Espinoza, and transforms the letter from Superintendent Rodríguez into a charge of possible money laundering.  That is absolutely false, since the note from Rodríguez cannot be construed as a charge at all in that sense, making the Attorney General's categorization truly astounding.  The case is even more absurd considering that it cannot be inferred from Prosecutor Arias's note who the possible guilty parties of that alleged money laundering could have been.  Prosecutor Espinoza was so confused by that note that he ordered the Rapid Processing Unit of the Public Ministry to assign a unique number to the case against "Unknown" and for the crime of "Drug Trafficking."  Yes, that's right.  As far as Prosecutor Espinoza was concerned, at that time there was no evidence whatsoever of any crime committed by Luis Enrique and Osvaldo Villalobos-Camacho, so much so that he received the note from his superior and for two months thereafter, he went about trying to open the case without finding anyone to charge.  That is how the case began.  One can actually read on the cover of the file for Case 02-008579-042-PE that it is against "Unknown" for the crime of "Money Laundering," and that was a month before the raid and sequester that took place at the Villalobos brothers' offices.  It is obvious that as of May 27, Prosecutor Espinoza did not so much as suspect those men, even though he had been familiar with the case for two years prior to that time.
Prosecutor Espinoza, after learning through unofficial channels of the Letter of Request for Cooperation, asks CICAD (Joint Center of Anti-Drug Intelligence) to prepare a report about the Villalobos Brothers' case, with the intent to have it coincide with the procedural delivery of that Letter.
In the file there is a note dated July 1, 2002, received in Prosecutor Espinoza's office that same date, Official Letter UAF-045-02-38-1999, through which the Joint Narcotics Intelligence Center (CICAD) submits its findings after updating the information on the Villalobos brothers as of October 2001.  It presents eight conclusions, after 34 pages, and none of them even considers a possible relationship to the crime of money laundering.  CICAD merely presents the list of immovable assets belonging to what it calls the Associated Enterprises of the Villalobos Brothers, erroneously indicating that they cover an area of 7,500 square kilometers (which is actually bigger than the area of San Jose Province!).  It also states that the Villalobos brothers engage in financial intermediation, describing the interest rate at which funds are gathered, without even mentioning any possible illegality.  It speaks of a heavy flow of funds, without conjecturing as to the possible causes or offering any opinions.  That report contains no reference to possible illicit activities, and much less any having to do with money laundering; nor do the investigators ask the Prosecutor for more time to finish the work that was assigned to them.  Thus, as of that date, there was no evidence, nor even suspicions, of any criminal activity, despite the fact that CICAD had been conducting the corresponding investigations for a long time before that.
In spite of all this, Prosecutor Espinoza, on July 1, presents to the Preliminary Criminal Court a request for a raid, search, sequester, seizure of items and other things, against the Villalobos Brothers' assets.  In that petition he mixes the contents of the Letter of Request from Canada with alleged internal investigations, which he neither describes nor details, and information internally gathered, also not described, to justify the request.  The first 15 pages are nothing more than a copy of the Letter of Request, from which the Prosecutor omits the Canadians' clarification that it involved no legal cases but rather a police investigation and that the individuals under investigation were Canadian citizens and not the Villalobos brothers.  Starting half way down on page 15 until page 32, the document merely transcribes the CICAD report mentioned above but indicates no crimes.  It must be pointed out that Prosecutor Espinoza states that the information had come from SUGEF, SUGEVAL and CICAD, when actually only the latter is true.  The SUGEF had actually produced a lengthy file beginning in March 2001, which indicates that the Villalobos brothers were not involved in financial intermediation activities, according to the official letter from SUGEF's Legal Consultancy Office, DAJ-074-2002, dated June 12, 2002.  In other words, less than a month before the Prosecutor's request for the raid, the technical experts in that discipline had stated that they had detected no crime of illegal financial intermediation.  That fact was reiterated before the Prosecutor himself by the Superintendent of Financial Entities in April 2003, which shows that Walter Espinoza had been untruthful before the Criminal Judge.  In reference to SUGEVAL, there is only a note calling for the investigation of the money movements, which had been received by the Prosecutor way back in March.  The part about CICAD is the report we described.
The only input from Espinoza is the statement that Ofinter gathers funds from investors, which had already been stated by CIDAD and, in and of itself, is not an illegal activity.  This can be verified by comparing the Prosecutor's report with the CICAD report and noting that 99 percent of it is the same document, found in the appendix to the copy of the Canadians' Letter of Request.  Despite such weak justification, the Prosecutor requests from the Judge and is granted a raid and search of the Ofinter offices, owned by the Villalobos Brothers, as well as the sequester of any physical and material evidence relevant to the case.  He includes in the request the confiscation of money found on the premises, irrespective of who it belonged to.  What is really striking about this is that he does not ask the banks for information pertaining to the Canadians sought by the Canadian Government, even though that is precisely what was requested, but rather only seeks information related to the Villalobos brothers.
The Prosecutor presents no evidence whatsoever to justify his requests, and the Judge consents without prior, serious review.
Judge Francisco Sánchez authorizes the petitions from the Prosecutor in record time.
Judge Sánchez receives Prosecutor Espinoza's request at 9:00 on July 3, 2002, and by 13:00, he has not only read the respective documentation but has issued a resolution.  There were 70 folios, including the Letter of Request, but with an agility worthy of a much more important case, someone read all of that information, interpreted it, made a decision on it and drafted an entire 13-page resolution concerning it.  Amazingly, in the heading of that resolution the Judge indicates that he has decided on the request after analyzing it, which is obviously not true considering material and time limitations.
Of the sums confiscated from the Offices of OFINTER, property of the Villalobos Brothers, Ten Million Three Hundred Thirty-One Thousand Colones disappeared, without any explanations to this day about this situation from Prosecutor Espinoza.
On July 4, 2002, the Ofinter offices were raided, confiscating a large sum of cash, which was put in charge of the Prosecutor's office.  The Judge responsible for the action was Licda. Cindy Williams, who had a large number of officials from the Judicial Power accompany her.  The 16-page search warrant was issued at 21:15.  Everything that was seized is properly documented, except for the sum of 10,331,000 colones, which do not appear as deposited in the Court accounts, nor is the Prosecutor able to explain the whereabouts of that money.  Page 10 of the Search Warrant mentions that amount of paper money was found in a small safe, but no one will assume the responsibility of explaining what subsequently happened to the money.  The money was lost at the time the judicial agents were on the scene and raided the offices; there is a record that the money was found at the location, but it was evidently not deposited in the Judicial Power accounts.  This is no small amount, but even if it were, the Prosecutor and the Judge in charge are obligated to explain its whereabouts and divulge who is responsible for its disappearance.
The Prosecutor insists in the Press that all the money is located in the accounts of the Judiciary.
On August 6, 2003, Prosecutor Espinoza publicly referred to the complaint about money allegedly disappearing during the raid and categorically stated that the amounts of money in their entirety are deposited in the Judicial Power accounts, producing the respective deposit slips.  Once again Prosecutor Espinoza is untruthful, being that the amount of 10,331,000 colones does not appear as deposited in those accounts, despite the fact that it does appear as seized in the records of the raid.
Prosecutor Espinoza commits serious errors of addition and retracts information he had provided in regards to the deposited funds.
On June 9, 2003, Prosecutor Espinoza responded to an investor's request by stating that the entirety of the money deposited in the accounts of the Costa Rican Anti-Drug Institute (ICD), is US$204,189.  Nonetheless, on August 6 he had to acknowledge that there were actually 56,000 dollars more, since he had had failed to add correctly, and that had occurred without the 10,331,000 colones showing up yet.  It is difficult to trust an office whose calculator works so poorly in such sizeable amounts and where those responsible constantly change their statements without explaining the reasons for their errors.
The Prosecutor requests and the Judge concedes the holding of financial assets and the freezing of accounts of the companies related to the Villalobos Brothers, affecting the rights and interests of the investors without due process.
Right from July 3, Prosecutor Espinoza requested the freezing of the accounts and the immobilization and sequester of the money confiscated from the Villalobos brothers' offices.  The raid is supposedly justified by alleged crimes of money laundering and illegal financial intermediation.  Although no legal regulation to back up the action was cited, the Judge went right ahead and authorized the confiscation of those funds anyway.  Sufficient was a reference to an alleged operation with some Canadian citizens, under police, not judicial, investigation, to freeze the totality of the funds of thousands of investors who had nothing at all to do with the case.  No reference whatsoever was made of the knowledge that the Villalobos brothers might have had of the Canadian operations, nor was any consideration given to the fact that a month earlier the SUGEF itself had established that they found no evidence of illegal financial intermediation.  Nonetheless, a mere invention of the Prosecutor sufficed to freeze the funds of third parties.  The Prosecutor could have requested information concerning the Canadians or investigated the destination of the funds gathered, but instead, with the help of the Judge, who should have been a guarantor of rights, he closed a business that had been operating smoothly for over 18 years.
The Prosecutor is arbitrary in the application of the Law, because similar cases are handled in a different manner.
The gathering funds from the public by non-authorized entities or individuals in Costa Rica is not a crime.  It becomes illegal whenever it can be proven that the destination of those funds is for money lending or investment in stocks and bonds.  That is why the SUGEF always deemed that the Villalobos brothers had not committed that crime.  It is well known that the same activity of fund gathering up until that time was being conducted publicly by Luis Milanés and his firm Savings Unlimited and Vinir, S.A., owned by Vinicio Esquivel, who was involved in fund gathering in exchange for the payment of interest, without the authorization of the government regulatory entity.  However, the Attorney General at that time had never investigated Milanés, but rather allowed him to continue to operate.  But with Mr. Esquivel the situation is much worse, because he continues to operate in the country and openly states to the national press that he has been gathering funds for years without legal authorization, without it concerning the Attorney General in the least.  The law ought to be applied equally to all, regardless of whether legal authorities are dealing with friends or acquaintances.  If the Attorney General considers that mere fund gathering without legal authorization is tantamount to the crime of illegal financial intermediation, then he should have, right from the onset of investigating those who engage in such activities, intervened in their operations, raided their businesses and possibly pressed criminal charges against them.  The Attorney General has been arbitrary in applying the law, in that he has only exercised his powers against the Villalobos brothers, in spite of the fact that he had at his disposal that case along with technical reports indicating that no crime was being committed.  It is even worse when a bad government official is also arbitrary, or more specifically, the worst government official is not the most ignorant but rather the most arbitrary.
Prosecutor Espinoza processes a criminal accusation of more than 127 people in less than three days.
On Friday, September 26, 2003, the attorney Edwald Acuña-Blanco, representing more than 120 people, files a lawsuit against the brothers Osvaldo and Luis Enrique Villalobos-Camacho for the crime of fraud.  The document submitted, which is over 70 pages long (although it is practically all taken up with lists of the plaintiffs), was received in the Attorney General's office at 14:00, as indicated by the receipt form of that entity.  By the following Monday, that is, in less than one half a business day, Prosecutor Espinoza had reviewed the entire document, verifying compliance with the provisions of the Criminal Process Code.  Believe it or not, by 8:00 a.m. on Monday, September 29, less than half a business day after attorney Acuña's request, Prosecutor Espinoza ruled to accept the case and proceed with the public lawsuit.  That is not only impossible; it is also objectionable.  Lic. Espinoza cannot logically affirm that he worked all weekend on a lawsuit filed by private individuals for a possible crime of fraud, when he is the Narcotics Prosecutor.  Such swiftness is uncommon with that Prosecutor in particular, and in the Court in general, and reflects an absolutely preferential treatment of matters arising from those who seek to denounce and sue the Villalobos-Camacho brothers.  When it comes to defense matters, the decision is delayed and normal procedures are affected, but a lawsuit for alleged fraud filed by over 120 people is somehow given this impressive, speedy treatment.
The Prosecutor's Office attempts to intimidate an investor who has questioned its action and deprives him of his freedom in an arbitrary manner.
On August 21, 2003, the OIJ supposedly received a complaint from Mr. Francisco Sánchez-Fallas against Mr. M. Shizard, for alleged threats.  The data entry operator of that entity, Mr. Marco Andrés Brenes-Durán, assigns to the case the unique code 03-016146-042-PE, according to him, at the request of Mr. Gustavo Porras from the Section of Miscellaneous Crimes of the OIJ.  He even states that the complaint was filed personally by Mr. Sánchez-Fallas at 4:11 (understood to be a.m. because if it had been the afternoon, the time would have been indicated as 16:11).  That same day, OIJ Agent Gustavo Porras-González transfers the complaint to the Coordinating Prosecutor of the Specialized Unit of Miscellaneous Crimes of the Public Ministry, classifying it as URGENT.  On Friday, August 25, just four days later, Mr. Shizard is arrested, taking from him a statement, and he is immediately handcuffed and taken to an OIJ jail cell, in spite of the fact that he was still recovering from an operation.
This incident is incredible because Mr. Francisco Sánchez-Fallas has never denounced Mr. Shizard and much less the on day and hour falsely indicated by Mr. Brenes Durán, the OIJ data entry operator.  It is certainly preposterous to conceive that at four o'clock in the morning Judge Sánchez, the judge over the Villalobos brothers' case, would be filing charges at the OIJ.  What Judge Sánchez actually did was to send to the Superior Council of the Judicial Power a note on August 19, making known several letters sent by Mr. Shizard and which did not please him, with the purpose, not of criminally indicting anyone, but to make sure that care was taken so that those incidents did not happen again in the future.  The title page of the file of the case against Mr. Shizard indicates that the plaintiff is Francisco Sánchez-Fallas, although no complaint has been made and the record prepared by the OIJ is totally false.  To this day, the case is dead, and Judge Sánchez has not ratified any indictment.  This is just one more case of arbitrary actions and falsehoods contained in the documentation of a legal file.  The purpose is clear: to intimidate any investor who would even think about vehemently defending his or her rights, as Mr. Shizard did before he was so barbarously accused.  A foreigner still hurting from a fresh operation is arrested and held in an OIJ jail cell for a nonexistent accusation and a case is initiated against him for an act that is no longer a crime.  Yes, even that, because the criminality for threats had been repealed many years before.  Ignorance mixed with arbitrariness and the abuse of power, are, disgustingly commonplace in the case we have before us.
The Prosecutor's case is absolutely weak, for the crime of illegal financial intermediation, for fraud, and in regards to the freezing of monies.
Financial Intermediation.
As for the Villalobos-Camacho brothers, they are accused of committing the crime of illegal financial intermediation, contemplated in Article 157, clause a) of the Organic Law of the Central Bank of Costa Rica, which relates to Article 116 of the second paragraph of the same law.
The mentioned article 157, which prescribes imprisonment of three to six years for anyone who "engages in unauthorized financial intermediation," is completed in Article 116, the second paragraph, which defines financial intermediation as the gathering of financial resources from the public in a habitual manner, for the purpose of investing them, at the intermediary's expense and risk, in any type of lending or in securities, irrespective of the contractual or legal mode or the type of document, electronic record or any similar means employed in the transactions."
Observe what the legal definitions that apply in this case require: Not only is it necessary to engage in habitual fund gathering, but also to invest those funds in something specific, expressly defined by the legislature -any form of money lending or investment in stocks and bonds.  It is not enough that funds be gathered for the purpose of investing them; the legislature stipulates that the investment must be made in some form of money lending or be backed by stocks and bonds (securities).  Any other form of investment made with the gathered funds does not constitute financial intermediation, and therefore, to engage in those activities without legal authorization does not constitute a crime, and it is an unsanctionable act from the legal standpoint.
In the case of the Villalobos brothers, the prosecution has been referring to illegal financial intermediation as if it meant merely gathering funds and paying interest, in flagrant disregard for the rest of the description of the type of crime as presented above, and what is clearly stated in Article 116 of the Organic Law of the Central Bank.  In all the cases in which the Public Minister and the Criminal Office have cited the crime of illegal financial intermediation prior to January 2004, they have ignored the legal destination of the funds, acting in total negligence with respect to the real legal definition, justifying the preventive custody of the accused Osvaldo Villalobos-Camacho on the mere grounds of fund gathering from the public.  We may cite many requests made by the prosecutor and judicial resolutions, but all of them are summarized on folio 2 of the writ of extension of preventive custody dictated by the Criminal Court of San Jose at 13:00 on May 27, 2003:
"The investigations conducted based on the documentation and reports obtained from the raid and search carried out in the mentioned month [referring to July 2002], try to demonstrate the likelihood that through the OFINTER S.A. firm and other related businesses and enterprises, Mr. Osvaldo Villalobos-Camacho was involved in the activity of illegal financial intermediation, that is, in the gathering funds from public investors and paying interest in exchange, all without such activities being registered with the Superintendence of Financial Entities and without the oversight of that agency."
It is quite evident that the Criminal Court persists in only partially interpreting the type of crime, making legal acts illegal, that is, violating the true intent of the law and infringing on the personal liberty of the defendants, the Villalobos-Camacho brothers.  It is impossible that at this stage of the game those responsible are incapable of reading the law correctly.  One can easily deduce from articles 116 and 157 of the Organic Law of the Central Bank that the described conduct requires that the funds gathered be used for a particular purpose, that is, money lending or investment in securities.  To assert, as in the quoted resolution, that the mere gathering of funds and payment of interest constitutes the crime, is reckless and misleading.
Delving more deeply into this matter, the General Superintendent of Financial Entities, Mr. Bernardo Alfaro, testified before Prosecutor Espinoza stating that the actions of the Villalobos brothers could not be classified as the crime of illegal financial intermediation since the funds were not used for the purposes specified in the respective articles.
Prosecutor Espinoza and the Criminal Justice Office are also attempting to classify the Villalobos-Camacho brothers' actions as money laundering.  The Criminal Justice Office asserts in the above-mentioned resolution issued at 13:00 last May 27 that the accusation "is based on the fact that through the structure of financial intermediation established through OFINTER, money derived from serious crimes including drug trafficking that were mobilized for the purpose of covering up their illicit origin and thus favoring those involved in such criminal activities . . . , probably mobilized funds arising from the drug trafficking of Henry St. Onge and Sandra St. Onge, people accused of drug trafficking in Canada."
These assertions of the Criminal Court are nothing more than mechanical repetitions of Prosecutor Espinoza's flimsy arguments, and do not line up with the truth of the documentation contained in the legal case file.  What gave rise to the case in the first place was the request from the Canadian Government for international cooperation in ordering the intervention and search of the St. Onges' residences in Costa Rica, and the offices of the Villalobos-Camacho brothers, supposedly because it was needful for the investigation conducted by that country.  Surprisingly, the letter of request sent by the Canadian Government is not included in the file, but rather is transcribed according to the interests of the Prosecutor in his request, and curiously, the Criminal Justice Office takes it up in the same manner.  But at the bottom of each page of the actual letter of request, one finds the following clarification:
"All of the information contained in this request is part of a police investigation and consists of unproven allegations."
Moreover, from the Prosecutor's petition one gathers that Mr. St. Onge has not been accused of any crime in Canada; what it states is that he was convicted of a crime in the United States in 1976 (!!!), for conspiracy to import marihuana, but the sentence was suspended.  In other words, the Criminal Court is untruthful when it states in its resolution that extends the time of preventive custody for Osvaldo Villalobos that St. Onge is accused of drug trafficking in Canada, when in reality, that man died on March 10, 2002, thus making it impossible to investigate him.  The letter of request itself clearly states that what was under police -not judicial- investigation was an assumption impossible to prove:
"The Royal Mounted Police of Canada opines that the money will be used in a short while to finance the purchase of a large quantity of cocaine to be smuggled into Canada."
There is no evidence at all that the St. Onges' money had come from any crime, since no crime had even been proven in their country, and therefore it is not possible to charge the Villalobos brothers with money laundering when there is no money to launder.
And what is even graver is the fact that after raiding the St. Onges' condominium in Jacó, absolutely no evidence was found that would link those Canadians with the business of the Villalobos-Camacho brothers.  What was actually confiscated was a savings passbook and a checkbook which shown that they managed their funds legally -- until the contrary can be proven -- through the Banco Nacional de Costa Rica.  Thus it is truly astounding that Prosecutor Espinoza and the Criminal Court have not show the same care, enthusiasm and eagerness to place the staff of the national bank under preventive custody and freeze the accounts of that banking institution.  It is clear, then, after 18 months of investigation, including raids on the Canadians' condominium and the offices of the Villalobos-Camacho brothers, that there is no evidence whatsoever that links them.
In the above-mentioned judicial resolution, the Criminal Court states that monies arising from serious crimes, even drug trafficking, have been mobilized, and throughout the case file only the St. Onges are mentioned, one of whom passed away 3 months prior to the initial request from Canada, and who could no longer be the object of a police investigation, unless they intend to violate the rights of the deceased.  What exactly are the other serious crimes whose proceeds are mobilized through the Villalobos brothers enterprises?  Who are the perpetrators of those "grave crimes" referred to by the Criminal Justice Office citing no more than a dead man and his surviving wife, whose savings were mobilized through a branch of the Banco Nacional de Costa Rica in Jacó?
Of course, the Prosecutor could respond by saying that he has other evidence to warrant the continuance of the case under investigation, but no such explanation is found in the case file.  It is evident that his response would be inappropriate for a matter of such magnitude.  Neither would it be appropriate to respond that in order to support the case, he is investigating all persons who deposited money through the Villalobos brothers, with which it would be found that there is no case at all for money laundering, since for this criminal charge one must prove the commission of a felony that would make it necessary to legitimize that capital with the intent of concealing its illegal origin.  If by now he has not established so much as one felony committed by the over 6,000 investors, what is reflected is the reckless and arbitrary behavior of the Prosecutor and the Criminal Court to the detriment of the Villalobos brothers.
Weakness of the charges for illegal financial intermediation.
Article 157, subsection a) of the Organic Law of the Central Bank establishes a prison sentence of three to six years for anyone involved in unauthorized financial intermediation, which is classified as the crime of "illegal financial intermediation."  The objective classification is constituted by the definition of financial intermediation, which is not some abstract or subjective concept to be liberally filled in by the judge and much less by the Prosecutor.  To even begin a case for this crime, one must have a clear understanding of the legal definition of financial intervention, because it does not suffice to merely engage in financial activities without legal authorization, but rather to indict a person for this crime, the activities involved in the financial intermediation must be precisely those set forth in the law.
Therefore, it is perfectly possible to engage in financial activities without the authorization of the SUGEF and still not commit a crime, simply because those do not fall under the legal classification of financial intermediation.
Article 116 of the Organic Law of the Central Bank sets forth the precise concept of financial intermediation as follows:
"For the purposes of this law, financial intermediation is understood to be the habitual gathering of financial resources from the public, for the purpose of using them, at the expense and risk of the intermediary, for any form of credit or investment in securities, regardless of the contractual or legal modality followed or the type of document, electronic registration or any similar instrument employed to formalize the transactions. . . ."
This description clearly defines financial intermediation, and to classify any action as such, it must meet all of the particular criteria set forth.  Specifically, the crime involves the habitual gathering of resources for the purpose of credit or investment in securities (i.e., stocks and bonds).  For the classification of this crime, it is not enough to engage in fund gathering or to do so habitually, for that is only the first part of the definition and does not therefore in and of itself, constitute a crime.  We certainly accept, reiterate and acknowledge in this case that Luis Enrique Villalobos did indeed engage in fund gathering by receiving checks and cash from banking and other financial institutions regulated and monitored both inside and outside the country.  The investors would deposit their money for the purpose of earning interest paid periodically, trusting that their money would be returned at the end of the agreed term.  Mr. Villalobos did not habitually use those funds either for money lending or for investment in stocks and bonds; he did possibly invest in business activities that generated enough profit to pay the agreed interest rates, with the additional advantage of having much lower overhead than other financial institutions.
The case file contains the names of the investors and the amounts of their investments, but despite having raided the offices and confiscated thousands of documents, after a year and a half of investigation, there is absolutely no evidence that Mr. Villalobos was using the gathered funds for money lending or investment in securities.  Observe that the above-mentioned Article 116 establishes not only the criterion of investing the funds but also that of investing those funds in securities.
The most deplorable action on the part of the Prosecutor in this case is that he has simply ignored the SUGEF's technical opinion, thus failing to maintain the level of objectivity required by articles 6 and 63 of the Criminal Process Code.  It is truly surprising that, notwithstanding the fact that twice (the first time publicly in November 2002 through the written press) the responsible State body for determining the existence of financial intermediation has indicated that the criteria for financial intermediation have not been met in Mr. Villalobos's case, the Prosecutor persists in going on with the investigation of the matter.
In November 2002 the SUGEF published a paid announcement in which it clearly indicated that in its opinion, the Villalobos brothers and the companies they own had not engaged in financial intermediation.  Perhaps one could hypothesize that the Prosecutor does not read the newspapers or that he has not grasped the technical opinion presented in the report.  What is unacceptable is that since July 2002 and for eight months thereafter he did not formally request the SUGEF's opinion, even though it is the technical body with the expertise needed to determine the existence of financial intermediation.  It was not until the defendant Villalobos-Camacho demanded it that testimony was heard from head of the SUGEF, who in unequivocal clarity stated that no financial intermediation had been proven, despite a lengthy investigation of the matter in search of evidence.
In this regard, Dr. Bernardo José Alfaro-Araya, the General Superintendent of Financial Entities, in a statement given at 10:30 on March 4, 2003, indicated, as recorded in the court file: ". . . we could not demonstrate that any financial intermediation had taken place.  I am a financial intermediary, if at my own expense and risk I gather funds and I invest them . . . ." Dr. Alfaro adds, ". . .what we did verify was that Mr. Villalobos gathered funds from third parties, but we could not prove that he invested the money in securities or loans . . . ." Dr. Alfaro further stated how the SUGEF itself had never determined that any movements of that type had been engaged in, whether investments in securities or money lending, with the investors' monies, but only that the funds had been gathered.  In this same vein, Dr. Alfaro went on to say: ". . . based on the depositions taken from Mr. Nash and Mr. Clinton, we were able to verify that the money gathered was from third parties, but we could not determine that financial intermediation was taking place . . . ."
What was surprising and unacceptable in that statement is the fact that Mr. Roldán, apparently from OIJ, asserts that the SUGEF cannot say that there was NO financial intermediation taking place.  In a manifestation that was totally partial, subjective and unacceptable in a preliminary procedure aimed at determining the truth about the facts, the OIJ representative expects the SUGEF to prove a negative -that no financial intermediation had occurred.  Dr. Alfaro had already stated clearly that since 1999 they had been investigating Mr. Villalobos and that they could not prove any engagement in financial intermediation.  Nonetheless, the Prosecutor and the OIJ want the SUGEF to tell them what they apparently want to hear.  But since the SUGEF, in its capacity as a technical body, declares after four years of investigating Mr. Villalobos, that there was no financial intermediation, they [prosecutor and OIJ] then ask the judge to authorize them to continue the investigation, having neither the training nor the technical knowledge necessary to determine the existence of financial intermediation.
Since July 2002 they have had access to all of the documents concerning Mr. Villalobos.  Since January 1999 the SUGEF had unsuccessfully attempted to prove that the Villalobos brothers were engaging in financial intermediation.  To attempt now to demonstrate that the case is complex when they have at their disposal the studied technical opinion that denies the existence of the crime is an abuse of power.  Certainly the judge ought not contribute to something so incongruous: This case is not complex but simple; it is clear that no financial intermediation was taking place, as the SUGEF has stated and restated.  The judge should rather reject the case for the charges of illegal financial intermediation and request that it be shelved.
Fraud is another charge the Prosecutor makes against the Villalobos-Camacho brothers.  This one is just as ludicrous as the others.  The Criminal Justice Office asserts in its well-known resolution that the fact on which this alleged commission of this crime is based is that the brothers promised to pay high interest and the investors were given as collateral for their investment a check written with insufficient funds.  In the first place, the interest was paid religiously every month, until the Prosecutor ordered the closing of the business and the Judge consented to it; until the Prosecutor ordered the freezing of the accounts and the Judge consented to it.  Obviously, with the business shut down and the accounts frozen it was materially impossible to pay interest, even low interest, and much less return the principal to all of the depositors.  Secondly, the checks do not have funds because they are to be paid only when a bank cashier verifies that condition and indicates the corresponding reason on the reverse of each check.  Before such time, the check can be cashed, except in the case before us in which the Judge orders the freezing of the accounts, making it impossible, funds or not, to cash even one check.
Weakness of the fraud charges.
Several investors have filed suit for the alleged crime of fraud supposedly committed by the defendants in this case.  All of those suits were filed subsequent to the start of this investigation in July 2002, and they demand that the money collected by Mr. Villalobos be returned since it is impossible for them to cash the checks written out to them due to the freezing of the accounts in the banks of the National Banking System.
The crime of fraud is described in Article 216 of the Penal Code as follows:
"Anyone by leading another person into error or causing that person to continue in an erroneous course through the simulation of false facts or through the distortion and concealment of the true facts to obtain illegal patrimonial benefits for him/herself or for a third party, who infringes on another's assets, shall be sanctioned in the following manner:
"The preceding prison sentences shall be increased by a third whenever the stipulated acts are carried out by any agent or administrator of an enterprise that obtains, entirely or partially its funds from the savings of the public, or obtains them through anyone, who personally or through some unregistered entity, of any nature, that has obtained the resources either entirely or partially from the savings of the public."
Fraud is a patrimonial crime, and the criminality of the action is derived from a type of deceit categorized as fraudulency.  The Superior Criminal Appellate Tribunal in Resolution No. 397 issued at 12:25 on May 12, 1997, conceives of it in the same way:
"Fraudulency, understood as any patrimonial harm inflicted through deceit, is a generic definition that encompasses several types, among which are fraudulent conveyance and swindling, which are, therefore, special forms of fraud."
Plainly, then, fraud has both objective and subjective components.  Within the objective component there are elements of deceit, misleading of a passive subject, a dispositive act on the part of the deceived person and some resulting economic harm.  The subjective component includes the fraud, which necessarily must be aimed at the aforementioned objective (which may be direct or incidental).  Likewise, the Court in that same resolution goes on to clarify:
"The crime of fraud (for the purposes of sentencing) can be divided into two major parts, namely the objective and the subjective.  The objective part of fraud is comprised of four elements: (a) Some form of ruse or deceit, defined in the text as the simulation of false facts and the distortion or concealment of true facts; (b) An error in the passive subjective -the deceived person-, whether that person is led into error or is kept in it; (c) A dispositive act of the deceived; and, (d) Some economic damage.  And the subjective part of fraud is dolus (ill-intentioned deceit), which must necessarily be aimed at the objective part."
All of the cases directed against the Villalobos-Camacho brothers are flawed by a serious conceptual error, which being so obvious ought not have escaped the intelligence of the Prosecutor right from the start.  In the first place, there has been no ruse or deception, that is, a simulation of false facts or a distortion or concealment of the true facts.  For over 15 years Enrique Villalobos ran a system of fund gathering with payment of interest to the investors and subsequent return of the principal invested at the appointed time.  There was never any ruse or deceit, nor was there any pre-established intent to deceive or entice people into handing over their money.  In all of the cases known in Costa Rica in which funds were not returned by the financial agencies and even banks that have shut down their operations, complaints are filed when those entities cease paying their clients of their own accord and because they are unable to honor their obligations.  The investors normally arrive some Monday only to find that the facilities are closed and those responsible for the business are already outside of the country without having owned up to their actions.  In this case the situation is entirely different.  Mr. Villalobos' business serving over 6,000 investors was totally normal until July 4, 2002.  That day the police shut down the facilities from which the business operated.  They seized papers and support documentation and froze the accounts of the defendant Villalobos-Camacho.  Despite that incident, Mr. Villalobos continued to honor his obligations to return the gathered funds, until the total shutdown of the business made it impossible to continue doing so and the unprecedented incarceration of his brother prompted him to exit the country.  Observe that the closing of his operations was not prompted by Mr. Villalobos but rather by a judge's decision.  Then, in the face of the freezing and immobilizing of his bank accounts, it was materially impossible to return the funds gathered, being that no means of transferring funds out of those accounts was left.  All of this clearly demonstrates the non-existence of any fraud aimed at the objective parties to their economic detriment.
It is revealing to observe that all of these fraud accusations came about after the operations and accounts were shut down by the judicial authorities, which suggests that at no time was the economic damage, with which the investors are still being inflicted, ever instigated by Mr. Villalobo-Camacho's decision, but rather was produced by an external decision beyond the control of the defendant.
It is quite evident that Mr. Villalobos could not have foreseen the closing of his operations and his accounts with an eye to reneging on his obligations, since that would mean even the Judicial Power and the Prosecutor would have to be accomplices of the alleged fraud.
Neither is it logical to suppose that the Prosecutor would claim that the economic damage and the failure to fulfill the obligation of returning the money has somehow magically transformed a civil offense into a crime punishable by something akin to a debtors' prison.
One distinguishes no complexity to this case, because there is no case.  Clearly, there has been no scheme aimed at the objective type of fraud, nor any ruse or deceit devised by Mr. Villalobos to swindle the investors out of their money.  It is remarkable that the accusations were not discarded at the onset.  The crime of fraud could have been alleged, if Mr. Villalobos had suddenly and voluntarily shut down his own operations and immediately fled the country, which would have been indicative of a premeditated ruse or deceit.  However, it didn't happen like that; no, the closing was the result of an external, uncontrollable action.  It is preposterous to classify the case as complex merely on the basis of the number of victims, when it is clear there was never any deception aimed at committing fraud, as was already shown.
Hence, we see in this specific case there has been absolutely no fraud, being that the element of deception is missing, because the Villalobos brothers had no intention of deceiving or tricking anyone.  There never was a single complaint filed by any investor until Mr. Villalobos' accounts were frozen, and it obvious that under those conditions it is impossible to return the money.  It is important to add also that the accusations made for the crime of fraud were not initiated until after July 3 and 5, 2002 (the dates on which the Criminal Court of the First Criminal Circuit of San Jose ordered the immobilization of the money), and the lawsuits were filed by Attorney Acuña in September 2003.
Likewise, it is clear that Mr. Villalobos never had any intention of appropriating any money for himself, since the freezing of the accounts is the real cause of not returning the invested funds.
Weakness of the resolution related to the freezing of the accounts.
The Criminal Court's resolution issued on April 25, 2003 states that the freezing of the accounts of the defendants and their enterprises is based on the application of articles 110 of the Penal Code and 198 and 199 of the Criminal Process Code.  It must be remembered that thus far the only charges that have been investigated are for the crime of illegal financial intermediation, and based on that alleged offense, Osvaldo Villalobos-Camacho has been jailed (under the pretext of preventive custody), raids and seizures have been conducted, and the application of the procedure of complex process for the case has been requested and granted.
The regulation cited by the Criminal Justice Office is totally inapplicable to this case.  The aforementioned articles establish the following:
"Article 110.- Confiscation
The crime results in a loss in favor of the State of the instruments with which the crime was committed and of the things and values arising from their use, or which constitute for the agent some advantage derived from the crime, excepting the right that the offended party or third parties may have over those instruments.
Article 198.- Warrant of seizure
The judge, the Public Ministry and the police may decide to collect and hold the articles related to a crime, both those subject to confiscation and those that could serve as evidence; for that purpose, whenever necessary, a seizure will be ordered.  In urgent cases, this measure may be delegated to an executive of the judicial police.
Article 199.- Seizure procedure
The provisions prescribed for a search shall be applied to a seizure.  The articles seized shall be inventoried and placed in safekeeping.
Copies or replicas of the objects sequestered may be made whenever the originals could disappear or be altered or they are difficult to keep, or whenever it is advantageous to do so for investigation."
It is clear, then, that the financial resources collected from the investors are not objects related to the crime of illegal financial intermediation, and much less instruments used to commit the crime, nor are they valuables produced through committing the crime.  Even if that crime had been committed, certainly the frozen funds belong to third parties, since the Criminal Justice Office itself permits such actions.  It is completely illegal to hold those funds whenever the conditions of the mentioned regulation are not met.  Moreover, what the judge concludes, saying that the sequestered funds are only a small portion of the total amount invested, is totally improper, because that statement actually reflects the fact that those resources belong to third parties and not the defendants.  Purporting that the freezing of accounts is justified because of alleged money laundering would oblige the Prosecutor and the Judge to follow the procedure established in the Narcotics Law in notifying the possible interested third parties with the greatest rights, which has thus far not been done.
The Court and Appellate Tribunal granted the Prosecutor an absolutely inappropriate process of complex procedure, which allowed him to lengthen the terms in which to complete the investigative phase.
This type of procedure is regulated by Article 376 and articles following of the Criminal Process Code, which states:
"Whenever the process is complex because of the multiplicity of actions, the large number of defendants or victims or with any case related to the investigation of any form of organized crime, the court, through an official letter o request from the Public Ministry shall authorize, by a well-founded resolution, the application of special norms contemplated under this Title . . . ." (The boldface is ours).
For this case, the requirements established in the above-cited article are lacking. The wording of the article indicates that this has to do with an exception procedure and as Lic. Rosario Fernández-Vindas well states in her article entitled "Complex Process Matters," contained in the collective work, Reflexiones sobre el Nuevo Proceso Penal (Reflections on the New Criminal Process), only in exceptional cases, and only with timely notification of those affected, is it to be authorized.  The interpretation for the application of this process is to be restricted, inasmuch as the extension of time limits will affect the rights of the defendants and the victims, placing at risk the application of the right to timely, consistent justice and to be tried in a reasonable time frame, as established by the Political Constitution, the San Jose Pact and Article 379 itself of the Criminal Process Code.
It is important to point out that the first thing the Prosecutor must prove when he requests the application of this procedure is that there indeed exists a clear and unmistakable difficulty in processing the case, because first the complexity of the case must be established and then the reasons for the request studied to ensure that they line up with those specifically stipulated in Article 376.  It can well be that there are a large number of victims without there being any difficulty in processing the case, or that there are multiple facts involved but which are easy to process: The legislature required that first one establish the complexity of the process and that the complexity was for one of the cited reasons.  Thus, if the complexity of the case is due to any of the causes enumerated, the procedure may be authorized; on the other hand, if there are a large number of defendants or victims, or many facts involved, or even if organized crime is involved, but, ". . .if there is no complexity or difficulty in the investigation, the procedure of complex process shall not be authorized" (Fernández, p. 766).
For the 18 months that the Attorney General has been conducting an investigation of the case within the preliminary procedure, he has not found any evidence or even sufficient indications to transform the charges made into an indictment, according to Article 303 of the Criminal Process Code.  One of those charges has been under investigation since 1999 – four years - and the Prosecutor to date has not been able to find enough evidence upon which to base even one indictment.
It is clear that the purpose of the preliminary procedure is to determine if there are any grounds for a trial, through the gathering of information that would make it possible to found an indictment and build a defense (Article 274 of the Criminal Process Code).  Nevertheless, it is obvious that to begin the preliminary procedure, and especially when preventive custody is requested, and raids and confiscations have been ordered, the Prosecutor should have done a prior study so as to determine whether there was any fairly sound reason for doing so.  Otherwise, the Prosecutor would order the arrest of people and carry out confiscations and raids with the authorization of the Judge with no justification whatsoever.  We believe that in this case a long enough time has elapsed for the completion of the preliminary procedure, be it through rejecting the case, dismissal or any other conclusive act specified in Article 299 of the Criminal Process Code, or else by presenting an indictment requiring the opening of a trial, as stipulated in Article 303 of the same code.
In this case the Judge has granted all of the Prosecutor's requests:  Throughout 18 months the Judge has permitted the Prosecutor to raid offices and premises of the defendants, confiscate articles they own and even some that belong to the depositing investors, access all the papers and supporting documents of the companies of the defendants, and since November 2002, facilitated by a judicial order, to detain in prison one of the defendants under the pretext of preventive custody.  On the other hand, he has consistently rejected requests to cease the preventive custody measures while receiving all the technical information from the responsible government agency in charge of overseeing financial intermediation, such as the General Superintendence of Financial Entities.  For 18 months the Prosecutor has had access to the list of investors and has encouraged the filing of criminal charges for fraud in the Victims Protection Office.
The resolution of the Criminal Court of San Jose issued on 16:45 on April 25, 2003, by the Criminal Court of San Jose, which declared this case to be of Complex Process is not duly founded, contravening the provisions of Article 376 of the Criminal Process Code.  Observe that to date the only charges investigated are those related to the crime of illegal financial intermediation allegedly committed by the Villalobos brothers, being that the Prosecutor supports his request exclusively on that basis.  The Judge backs him and grants that petition based on a scant 15-line paragraph, in which he affirms that the cause is complex due to the multiplicity of facts and the large number of victims involved.  Let us analyze these circumstances.
The Judge asserts that there are a multiplicity of facts involved in the case, because the gathering of funds from the public was maintained over the years and generated countless facts, which is certainly debatable.  The facts pertaining to the crime of illegal financial intermediation do not need to be investigated with respect to fund gathering, because that has been duly proven and accepted.  It is not necessary to investigate whether there was any fund gathering taking place, because that is quite evident, proven in the legal file and accepted by the defendants.  What does not exist, and shall be shown, is any evidence whatsoever of involvement in money lending or investment in securities using the financial resources gathered.  Hence the resolution is improperly supported.
The other criteria the Judge relies on to establish that the case is complex is even weaker.  The cited crime is defined in the Organic Law of the Central Bank of Costa Rica without establishing the legally protected asset, which shows that it is dealing with a victimless crime, typically serious and is constituted by a fraudulent, objective act.  The only thing affected by illegal financial intermediation is the legal code itself, the law and the SUGEF's dignity, but the law is not established for the purpose of protecting legal patrimonial assets.  It may well be that a financial intermediary acts illegally, but fully honors its obligations and the agreed payment of interest, and likewise returns the principle upon expiration of the contracted term.  This shows that this has to do with a formal crime.
The alleged victims are not victims then because of the alleged commission of that crime, but because, it seems, that the Prosecutor and the Judge are referring to the accusations for fraud.  The weakness is evident in the total lack of grounds in this sense, which will be dealt with in greater depth below.
Judge Sánchez alters the Prosecutor's petition and is not capable of carrying out his own decisions.
This past January 22, Prosecutor Walter Espinoza, in charge of the Villalobos case requested that Judge Francisco Sánchez extend the house arrest order against Osvaldo Villalobos-Camacho for another four months, leaving open the possibility of requesting new extensions.  In other words, the Prosecutor was clear in the sense that Osvaldo should stay home under a so-called house arrest.  At no time did he ask to suspend the house arrest nor that the defendant be incarcerated.
Nonetheless, in a completely inexplicable act, Judge Sánchez ruled this past January 27 to rescind the house arrest order for Osvaldo Villalobos and dictated his preventive custody for a period of three months, expiring in April 27 of this year.  Even worse, the Judge asserts at the beginning of the resolution that the Prosecutor had recommended the preventive custody, when in reality it was quite the contrary, as pointed out.  The judge prevaricates and bases his resolution on a falsehood and even states that he is granting the Prosecutor's petition that the house arrest be rescinded and preventive custody be dictated, when the truth is the Prosecutor had backed the house arrest.
But the lamentable role of Judge Sánchez does not end there.  In the last page of the resolution, the Judge establishes that Osvaldo must be placed in a Police Force Headquarters rather than in the Penitentiary System, citing his health as the reason, and nevertheless allows the person whose freedom he ought to ensure to be sent to a jail, in stark contradiction to his own decision.  Since last February 3, when the resolution was legally challenged, Judge Sánchez has not owned up to his action nor addressed this deplorable situation.  Perhaps over the next few days the Constitutional Court or even the Superior Criminal Court will repeal that preventive custody order on Mr. Villalobos.  But once again Judge Sánchez erroneously interprets and applies the Law and in so doing, tramples on the rights of a citizen, when it is his duty to defend them.
The Prosecutor and the Judge are arbitrary in this case and omit the investigation of the Banks in which the Canadians deposited their monies.
From the onset of this case, the Defense has requested consideration of the fact that the Canadian Government had solicited reports of all of the financial entities in which the Canadian citizens under investigation had deposited funds.  Thus far, from at least two banks, deposit records were found pertaining to those two Canadians, and yet the Prosecutor does not apply the same criteria and zeal in the process and opens no case against the people in charge of those entities.  He takes note of this fact, but he shirks his duties, thus causing one to believe that he must have a persecutory attitude against the Villalobos brothers.  It does not concern him that the Canadians opened bank accounts in Costa Rica, but only that they might have had investments with the Ofinter firm, Luis Enrique or Osvaldo Villalobos.
The Prosecutor recognizes that there is no evidence as to the existence of accounts of the Canadians with the Villalobos Brothers, yet he continues with the case.
The origin of the case against the Villalobos brothers, as indicated earlier, was the Letter of Request sent by the Canadian Government in June 2002.  The letter alleged that the Canadians had deposits with the Villalobos brothers and that could possibly evidence the Villalobos brothers' participation in the crime of money laundering.  Believe it or not, after 18 months of investigation, the Prosecutor only manages to write on January 22, 2004, in a communication addressed to Judge Sánchez, folio 1961 of the file, that the only evidence of the value of the account is a promissory note presently located at the condominium in Playa Jacó, Costa Rica, which was not found during the initial raid of the condominium on July 4, 2002.  This sentence is transcribed verbatim from the Prosecutor's record.  Incredible indeed that after 18 months of investigation, the Prosecutor would acknowledge that there is absolutely no proof that the Canadians had any accounts with the Villalobos brothers -- because the alleged promissory note was not found in July 2002, 18 months before.  I hope Prosecutor Espinoza does not expect us to believe that the promissory note that supposedly exists could somehow appear two years after the raid, considering that the place has not been under any kind of surveillance or care.
The Prosecutor's phrase is a monument to ignorance and ill-will.  To assert that a promissory note would be found in a place 18 months after the first fruitless search, is characteristic of a negligent, careless official, to say the least.  But it seems rather the result of a desperate person who has made irresponsible statements, which now he is unable to prove.  If the promissory note is the only evidence of the alleged investment, and it did not show up in the raid of the condominium in July 2002, it simply does not exist, and even it were found there and was not seized, after so many months, the sudden appearance of such a document would be absolutely spurious.  A responsible Prosecutor should admit that he has no evidence at all of the existence of the Canadians' investment with the Villalobos brothers, other than the statements made in Canada without the oversight of the Defense and with no investigative findings to back them up.
The Prosecutor falsifies the truth in relation to the accusation against Sandra Kerwin St. Onge in Canada.
In folio 1960 of the case file, the Prosecutor states that the Ms. Kerwin-St. Onge was accused of the crime of "profit derived from a crime related to assets in Costa Rica." That accusation did not previously exist, and it is from such statements about that woman that the deduction arises concerning the existence of the aforementioned promissory note.  The only assets referred to in the Canadians' case is the condominium purchased in Jacó and the Canadian Judge's request to claim the money allegedly deposited with the Villalobos brothers.  But since the request was signed on March 10, 2003, no formal steps have been taken in Costa Rica nor does there exist any proof that it was ever sent to this country through the corresponding channels.
The Prosecutor again alters the facts and makes statements that he knows are untrue, with the intent to confuse the Judge and public opinion.
The Prosecutor has improved his knowledge in the criminal matter of illegal financial intermediation but still does not understand it.
Throughout the process of the investigation, the Prosecutor has insisted that the criminal classification of financial intermediation was constituted by mere fund gathering without authorization.  After repeated arguments making it very plain that it is also necessary to demonstrate that those habitually gathered funds need to be used for money lending or investment in securities, possibly he finally read the legal criminal description and became concerned enough to investigate whether or not the funds gathered were being used for money lending or investments in securities.  In that remarkable communication of January 22, he continues to repeat something no one is denying, namely, that the Villalobos brothers were engaged in habitual fund gathering activities.  Now, however, he states that "a substantial portion" of the money collected was invested in stocks and bonds (securities).  After asking the OIJ and other agencies for reports, he found only one alleged investment, which he also fails to demonstrate.  In folio 1916, he says that on March 18, 2002, Mr. Osvaldo Villalobos signed a contract with the Banco Popular to participate in an investment fund and that on June 19 he authorized the purchase of Costa Rican external debt bonds for the amount of three million dollars and for that purpose he used checks written by the investors.
Frankly, the Prosecutor's conclusion is astonishing.  First of all, since there is no record anywhere of Mr. Villalobos's signed authorization for this investment, it cannot be stated that it even occurred.  Secondly, after 18 months of investigation and showing that the Villalobos brothers collected hundreds of millions of dollars, there appears only that one alleged investment, in absolutely secure bonds pertaining to this country's own external debt.  No one in his right mind would consider that just one investment reflects a habitual practice and much less would think that the purpose of money gathered to pay the rate of interest that was actually paid to the investors would have come from those securities because their rate of interest is substantially less.  In that unproven alleged investment there was no risk, being that it had to do with external debt securities issued by the government of this country.
The other alleged investments that the Prosecutor tries to show were made are nothing of the kind.  What was occurring, rather, was the cashing of checks by a stockbroker, as indicated in folio 1917.  To cash a check is definitely not an investment in securities, even though the stockbroker may do it, and if that firm is not authorized to engage in the activity, that is not the responsibility of the Villalobos brothers.
The Prosecutor's document dated 22 January 2004 is incorrectly collated and in that manner was supposedly read by Judge Sánchez.
Starting at folio 1921 of the file, the data entry operator working at the Prosecutor's office, who typed the document, erred in his work, and from folio 1922 to 1935 the document is repeated, without anyone having noticed it, much less Prosecutor Espinoza, who is the one who signed it.  With this error, the document is practically incomprehensible, but that is no problem for a person who receives without any intention of reading it.
A mysterious document appears named "Alternative Emergency System" that for the Prosecutor represents proof that the Villalobos Brothers intended to evade their legal responsibilities to the investors, a totally unacceptable interpretation.
From folio 1962 and following, Prosecutor Espinosa refers to a mysterious document that he found 18 months after the initial sequester and which bears no signature of the person responsible.  From its text, one gathers that there supposedly was a meeting of attorneys to review a case of a possible criminal accusation by the investors.  The Prosecutor assumes that is proof of an alleged fraud, because according to him, they were preparing to cease payment of the investors, which would have adversely affected their patrimonial rights.  That estimation is totally unacceptable.  If the Villalobos brothers had devised some type of fraud, they would not have left a written record of their intentions.  If they had done that, they would have fled the country long ago, taking with them the money of the investors, especially when we realize that the alleged minutes are from a meeting that took place on May 12, 1999, over three years before the beginning of the criminal case, the sequester of the documents and the freezing of the accounts.  The records reveal that at no time were the Villalobos brothers planning to leave the country, and much less were they preparing to stop paying the investors.  They were simply referring to the appropriate document to give as a guarantee to the investors, and it was suggested that they use a bill of exchange instead of a check, because that would be more appropriate.
To deduce that an unsigned document dated three years before the onset of the case and that in this way the alleged fraud was being planned, is entirely consistent with the arbitrary, slipshod manner in which the Prosecutor has conducted this whole process of investigation, infringing on the rights of thousands of investors, with absolutely no grounds.
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Sunday, 10. June 2007
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