The deal struck between former fugitive Luis Milanes and his Savings Unlimited investors is fast approaching a meltdown.
The casino operator and some investors agreed to set up a committee that would receive in trust a number of Milanes properties. This is called a fideicomiso in Spanish. After sale, the proceeds of the properties would be divided among the investors who accepted the deal.
The five-person committee, three lawyers and two investors, has yet to receive the properties, and the main reason appears to be that some of the properties have liens. Some of the liens have been filed by employees Milanes fired at the height of the conciliation negotiations, A.M. Costa Rica has learned. Those actions followed the release of a report by the Judicial Investigating Organization that seemed to rely on statements from Milanes employees.
One of the fired employees says that about 50 former workers filed liens to protect the money they are supposed to get under Costa Rican labor laws. Basically employees who lose their job due to action by their employer are entitled to at least severance pay plus a month’s pay for every year they have worked.
Some sources estimate that the liens amount to $400,000. Among those properties that have liens is believed to be the Hotel Europa downtown, the cornerstone of he conciliation deal.
About 450 investors signed on to the conciliation deal because they were promised 20 cents on every dollar they had given the Savings Unlimited high interest operation. Milanes fled and left investors in the lurch in November 2002.
He returned to Costa Rica in June 2009 under a deal brokered by former fiscal general Francisco Dall’Anese and spent just a night in jail.
Investors had about $200 million with Savings Unlimited,
purportedly to finance more casinos for the Milanes operations. However, now the lucrative Milanes casinos are outside the scope of the proposed settlement that was drawn up in May.
At least 100 investors did not take the conciliation deal, and Milanes still is facing a fraud trial. However, the judiciary has not shown a strong desire to engage in such a trial. A source said that of 200 investors represented by the Defensor Pública only 60 took the deal.
Milanes and his lawyers have negotiated the terms of the conciliation agreement aggressively. At one point they promised investors 40 cents on the dollar but quickly changed their minds.
One of the leading lawyers for the fraud victims, Ewald Acuña, is on the committee that is supposed to receive, sell and distribute the estimated $10 million in Milanes properties. He has said he represents about 270 investors.
A lot of the activity in this case takes place among the lawyers and the judge, Mario Piedra, an many of the investors are very much in the dark. However, the judge is believed to have given Milanes and his defense team a deadline to clear the titles on the properties that will be transferred to the investor committee.
There are other complications. Some of the investors are dead, and those representing their estates probably have not been contacted. There also seems to be disagreement over who actually is an investors holdings guarantee checks from Savings Unlimited. Prosecutors probably have very little paperwork because Milanes sanitized his Edificio Colón office when he fled.
Savings Unlimited had offices that looked like a bank, including a teller’s window. The business had a professional appearance in contrast to the high-interest operation run by the Villalobos Camacho brothers where investors were paid in cash stuffed in envelopes and presented with Bibles. Oswald Villalobos is in jail convicted of aggravated fraud, and Luis Enrique still is a fugitive. A trial court determined that the Villalobos operation was a ponzi scheme.