First Milanes proposal included Citi letter that was fake

Savings Unlimited investors today are trying to put the finishing touches on a second conciliation agreement that will keep casino operator Luis Milanes out of jail. What many do not know is that the first proposal was suspected of being rife with fraud and identity theft.

Savings Unlimited, operated by Milanes, was a high-interest investment scheme that collapsed in 2002 when Milanes fled the country.

The initial proposal is relevant because that and the current proposal both offered the downtown Hotel Europa to the estimated 500 victims who chose to pursue a case against Milanes and associates. The second proposal includes a long-term payout to the victims, so it is dependent on Milanes’ good faith. How much Milanes had to do with constructing the first proposal, if anything, is not known.

What is known is that the proposal identified Pedro Borges Fiol as executive director of the Savings Unlimited Recovery Fund, and he invited contact from former investors via ads published in a weekly newspaper. The proposal presented to the court included a letter purportedly from Citibank. That letter was a verification that a company seeking to purchase the Hotel Europa had $10 million in its account.

A Savings Unlimited investor in the United States asked a public service firm called Fight Fraud America to check out the proposal. The company filed a report in February that cast doubt on the initial proposal.

Leslie Kim, who heads Fight Fraud America, said that Citibank denied the letter came from its Fresh Meadows, New York, office. The bank said that no one with the name Michael Harripersaud, worked for the company anywhere in the world, she said. That was the name at the bottom of the letter. The financial giant launched its own investigation, said Ms. Kim.

Fight Fraud America also checked out the purported purchaser of the hotel, DFS International Limited that was being represented by Incite International Holdings, according to the proposal. Ms. Kim reported that Incite was a new British corporation with a mail drop as an address.

The company had no supporting documents filed with the British Registry, its Web page was new and no one at its listed Las Vegas, Nevada, location had heard of the firm when an investigator paid a call, said Ms. Kim. She deemed the firm a shelf corporation.

Eventually Fight Fraud America said it came in contact
with Teresa Collo, identified as the owner of DFS International Limited. The report said that the woman had no knowledge of Borges or Incite and did not know where Costa Rica was located.

That proposal is no longer valid, and Borges could not be located to comment on who set up the purchase offer.

The second proposal is the topic of a meeting of lawyers and investors today. Milanes wants to put up 11 properties including the Hotel Europa downtown and will continue to pay $100,000 a month for eight months with a much larger final payment, according to the proposal. Two firms seek to be trustees of the arrangement. They would have to sell the properties and remit the proceeds to Saving Unlimited victims at a percentage of what they had on deposit with Milanes. When the company failed, Milanes was believed to have had $200 million on deposit. The current proposal is estimated to be worth about $10 million.

The Hotel Europa is a key element of the deal, and the principal occupants there now is Milanes himself in the penthouse and one of his casinos on the first floor. A court-appointed appraiser never got a financial statement from the hotel, so no one among the investors and court officials knows if the business is making money or throwing off large losses. Most downtown hotels are facing hard times.

The U.S. investor who sought help from Fight Fraud America also paid to have the final report translated into Spanish. Both copies were turned over to the Judicial Investigating Organization, but it does not appear that agents followed up on the extensive information in the report. At the end of April, judicial agents completed a detailed report on the extensive business interests of Milanes in other countries, but that document is not available and, inexplicably, not part of the court file.

The negotiations between investors and their lawyers and Milanes and his lawyers are not open to the public or press. But some investors have reported that prosecutors, the majority of lawyers, the public defender representing some investors and maybe even the judge are pushing for approval of the second proposal.

Some investors said they wanted to see the deal in writing before making a decision. If the investors accept the deal, there will be no trial, and Milanes will not face the possibility of jail. Prosecutors are reported to be anxious to avoid a trial. Lawyers probably will be paid off first, if the deal goes through.

Unclear is if anyone has done a title search on the properties that Milanes is offering as part of the settlement.

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