Milanes negotiates for three years’ home detention

When Luis Milanes, San Jose’s casino king, goes to criminal court today, he will have fewer problems.

Gregory Kearney

Most of the investors in his failed Savings Unlimited high-interest operation have chosen to make a deal with him. Now only a handful of persons are continuing to press the criminal case, and lawyers for Milanes are expected to make another deal today with all but one of the victims.

Gregory Kearney Lawson said that only he, two other lawyers and the Defensa Civil de la Victima have clients who chose to reject formal conciliation and continue with the
criminal case. But, he said, nearly all of these individuals are ready to accept a second, better offer.

The second deal, just like the first, involves the sale of a Milanes property. Kearney said the casino owner has come up with a home said to be worth $1.2 million. Kearney said he thinks that the property might bring less in the current market. The lawyer said that this second deal will be handled in conjunction with a proposed abbreviated legal process in which Milanes pleads guilty and receives three years’ home detention.

The remaining few investors must agree to this deal, and Kearney said that all but one person, his client, has said they will go along. Those who agree will see a high percentage of their money returned but probably not 100 percent.

The only obstacle to Milanes putting this legal battle behind him is the single Kearney client who did not accept conciliation and who is not accepting the second effort at a payoff, the lawyer said. Kearney said he is confident that Milanes will agree to pay his client about $100,000, the investment loss plus interest, to make the case go away.

Meanwhile, those who accepted the original conciliation are struggling with changes in the rules. Milanes was supposed to pay $100,000 a month to offset expenses of the transaction. In a message to the court Sept. 2 Milanes said that he has suffered financial reverses and that he sought to pay only $30,000 a month. He noted he already had paid $354,000 into a trust that was set up to handle the transactions.
Milanes turned over 10 properties he estimated to be worth $10.4 million to the trust. Kearney said Wednesday that he believes all liens have been cleared on the properties and that they have been transferred successfully to the trust. Kearney said he has four or five other clients who accepted the conciliation offer. He said he gave his clients a choice.

The trust is supposed to sell the properties and remit the proceeds to the many investors who have signed on to the deal. Included in the transfer is the downtown Hotel Europa, where Milanes rents space for one of his casinos.

Other sources said that Milanes also is asking a five-person committee made up of three lawyers and two investors to split the cost of rewiring the hotel. The electrical contract is about $80,000 said the source. The five-person committee is supposed to direct and approve the actions of the trust.

In addition to the investors who accepted conciliation and those who are likely to accept the newest deal, Kearney said there was a long list of investors who could not be contacted. They may be unaware of the developments in the case or dead.

Savings Unlimited investors lost an estimated $200 million when Milanes closed the office and snuck out of town in November 2002. He was gone until June 2008 when he returned after making a deal with prosecutors. He spent a night in jail.

Others are accused in the case, but Milanes is the principal figure.

He claimed that an associate stripped him of his money and fled to Europe.

Investors who accepted the conciliation agreement never got a financial statement from Milanes, so they do not know what possessions he has. That is how he could come up with another property estimated at $1.2 million.

They also did not get a profit and loss statement form the Europa Hotel, the cornerstone of the conciliation. Nor did anyone look into the profitability of the Milanes casino properties, here and elsewhere.

The casinos are not included in any of the deals, although the one in the Hotel Europa is paying $12,500 a month rent to the trust.

Kearney called the hearing today the turning point in the case. And he described himself this way: “I am the rock in Milanes’ shoe.”

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