Former fugitive Luis Milanes is seeking to modify the conciliation deal that his lawyers negotiated with former investors who lost money with his Savings Unlimited high interest scheme.
A lawyer representing some of the former investors confirmed Tuesday that a hearing has been scheduled for Sept. 21 with the judge overseeing the case. Milanes wants to pay much less than the $100,000 a month he originally promised.
The lawyer is Gregory Kearney Lawson, who said that he still is accepting clients in the case. Many lawyers have been refusing to represent victims who came forth after they became aware that Milanes might go to trial for fraud. Kearney said he had just been retained by a client who had been represented by another lawyer in the case.
Some clients are complaining that they have not been given any information by the lawyers they hired. The conciliation deal is in the hands of a committee of five, which includes three lawyers and two investors. This group is charged with disposing of property Milanes surrendered to avoid a criminal trial. Milanes agreed to pay $100,000 a month to support the work of the committee. Any excess would be returned to the investors who accepted the conciliation deal. This is the aspect that is up for renegotiation.
Kearney said that he represents some former investors who have accepted the conciliation deal but he also represents former investors who are prepared to go to trial against Milanes. A hearing in the Milanes criminal case was supposed to be this week but was postponed.
Milanes handed over property said to be worth $10 million but might be worth much less in today’s market. Trouble arose right away when the committee found out that liens had been filed against the properties by unhappy former Milanes employees. Milanes had been given a deadline to clear the titles, but it is not certain that he was able to do so. That aspect probably will come up at the Sept. 21 hearing.
None of the lucrative casinos owned by Milanes is included in the conciliation deal. In fact, some investors have complained that the judiciary has not really determined exactly what Milanes owns and how much he is worth. A number of corporations are involved.
Other investors question the value of the cornerstone of the conciliation deal, the Hotel Europa and an adjacent office building in downtown San José. By now the conciliation committee might have an idea of the monthly cash flow from the property but that information has not been made public. An appraisal ordered by the courts did not address the cash flow of the property but based the evaluation on the estimated replacement cost less depreciation. Businesses usually are valued based on how much money they bring in. The Milanes casino in the hotel is just a tenant, as is he.
Casinos appear to be good business. In July the publicly traded Thunderbird Resorts Inc. said in a financial report that its Fiesta Casino in Costa Rica made $1.5 million in June.
The conciliation is based on an aspect of Costa Rican law that lets the accused buy their way out of a criminal case by compensating the victims. Savings Unlimited had about $200 million in its investor accounts when Milanes closed it down in November 2002.
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 and spent just a night in jail.
There are an estimated 500 investors into the Milanes operation that paid up to 3 percent interest a month. It was one of several high-interest schemes operating at the time. There is no clear understanding how any of the businesses made enough money to pay that kind of interest, although Milanes was widely believed to be putting the money into his casinos.
The negotiations over the conciliation have been going on for most of the year.