More than one expat has been reduced to poverty because he or she entrusted money to a lawyer, and the lawyer simply kept the cash.
This seems to be the easiest way for expats to lose their funds, because Costa Rica does not have a specific law establishing so-called trust accounts.
One lawyer is now a fugitive because he offered expats a way to make a return higher than the paltry amount from a bank deposit certificate. One expat says he lost $1.4 million.
Not everyone has access to that kind of cash. Some apartment owners are upset because some light-fingered rental agents have been keeping deposits instead of passing them on to the legitimate owner. This is small-time theft.
In these situations, the amounts are small enough so that judicial investigators are likely to shelve the file. The same people who complain about crooked employees or agents are quick to point out that there are plenty of honest persons in the real estate and rental businesses. The problem for a newcomer is to know the difference.
One gray area are those free online ad sites where advertisers post their own offers. There is no oversight by site operators who can spot the frauds.
A.M. Costa Rica receives fake ads every week from sources that are generally called the Nigerians, even though most scamsters do not live in Africa.
One repeating ad offers teacup Yorkies either for free or a cheap price. A reader initially alerted editors that these were scam ads. The would-be posters generally have a Gmail or Yahoo account that cannot be traced easily. One scamster last week tried to place an ad offering to give away an expensive racing bike. No doubt there were plenty of fees, taxes and shipping charges up front for the mythical bike.
The more local apartment frauds are more direct. Those involved in the rental business point out that some suspect individuals use photos of other properties or sometimes those taken from magazines. A big mistake would be for someone coming to Costa Rica to mail or transfer a deposit on the strength of photographs. Once here, someone renting an apartment or house would be wise to do a little detective work at the Registro Nacional or to make a short-term agreement with a credit bureau. Credit agencies have detailed lists by name of ownership, court actions and work histories of nearly everyone. A.M. Costa Rica has written about such agencies HERE!
Renters would be well advised to sign a contract only in the presence of the owner who can provide clear identification, like a government-issued cédula.
An even bigger mistake would be to transfer large sums of money to a lawyer’s account for the eventual purchase of real estate. A.M. Costa Rica receives complaints several times a year of lawyers who kept the money. Some simply considered the cash a loan and offer to pay the money back a few dollars a month. Local law seems to support that view.
The lawyer who is a fugitive, Rafael Medaglia Araya, accepted money for Costa Ricans and expats with the promise of using the cash to purchase properties. In one case, he presented to investors a man who was said to have the power to sell the property. That turned out to be an incorrect statement, said investigators.
One expat who says he was a scam victim notes that he had a long-term business and personal relationship with the lawyer. People tend to lower their guard with someone who is a family friend. Of course, not all family friends are crooks, but many crooks strive to be family friends. That is a lesson offered repeatedly to investors and expats in Costa Rica.
Expats frequently are frustrated at the bank when a teller examines in detail every piece of paper money, every deposit slip and every identity document. That’s because there is a lot of fraud on both sides of the teller window.
Expats need to be just as picky as a bank teller in business situations. And when a bank teller says that no receipt is needed for a large cash deposit, as one told an editor last month, the expat needs to insist on a receipt and examine it carefully for date, amount and account number.
Expats are easy victims because they do not understand the way business works here. One absentee owner expat gave a lawyer a power of attorney to handle day-to-day management of his property. The lawyer sold the property and kept the money. The judge eventually said that was legal because the expat unknowingly had given the lawyer that power.