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Crackpot Investment Scheme

The voice at the end of the line is slow and foreign. “I wish to speak with Filipo,” it croaks. “That’s me.” “You are looking for information about the Brothers, yes?” Yes, yes. I don’t know much about the Brothers—Osvaldo and Luis Enrique Villalobos—except that they may have ties to Oliver North and Contra comandantes, and until recently they ran a crackpot investment scheme out of Costa Rica worth an estimated billion dollars. I’ve come to Costa Rica to settle a little score, something I hope the man on the phone can help me with: Fifteen thousand of that billion was mine. Last October one of them walked off with it, and I aim to get it back.

So how did the deal work? You “loaned” the Brothers a minimum of $10,000, and they paid you three percent interest—monthly. Thirty six percent annually. Forty two if you let it compound. Investments of more than $100,000 were common, and a couple of yahoos invested a million or more. I didn’t meet one gringo in Costa Rica who wasn’t involved. The scam had been going on for an incredible 20 years, which is why I trusted it.

But all good things come to an end, and the scheme was eventually busted by the federales. Turns out an unrelated investigation into drug money by Canadian authorities led to a currency exchange run by Osvaldo, who was eventually arrested. Enrique is still on the lam but pops up, Osama-like, in e-mails to the press. The Costa Rican government took over the investments and have managed to recover only a small percentage of the total money. I figure if I can find Enrique, maybe I can get paid. But where to start?

Tour Rides There’s a con for every country. Damn foreigners! Thailand A well-dressed local chats you up at a Buddhist temple. He says he’s in town to buy cheap gems at a wholesale jewelry convention. He can sell ’em back in the States for three times the money. Want in on a buy? After you hand over the cash, that’s the last you’ll see of him. The only jewels you’ll have are your own sorry nuts. England Eager to see some British dirty, you track down a “live sex” show in London’s Soho. After ordering a Coke, you wait for the action. It never comes. Two large limeys bring you a bill for $100 (the fine print on the menu, which you never read, indeed says a Coke is $100). Unless you want your ass kicked, you’d better pay up, mate. Spain While kickin’ back on the beach, you’re given a scratch card and win a free holiday travel package. To claim it you just have to attend a short presentation on holiday discounts. Three hours later you buy into three years of vacations at prices so low it’s unbelievable. Too bad none of the packages exist, you stupid gringo. Egypt Ah, land of the pharaohs!—and camels. But who wants to pay $50 for a ride? Little Rasheed offers one for “free,” but an hour later and halfway to Sinai, you realize you ain’t gettin’ off the bad-tempered beast until Rasheed makes it stop and kneel… and that costs $80. You just got humped!

The loan ranger

I set myself up with a rented cell phone in a hotel outside San José and put out word that I’m looking for information on Enrique. The phone begins to ring immediately as innumerable gringos crowd the line, each wanting to tell me his story of life with the Brothers.

The business was run out of a shopping mall in San Pedro, a suburb of San José. There were very few requirements. Principal was to be invested for at least a year. Investors were to speak rarely, if at all, about the Brothers, and new customers had to be vouched for as trustworthy and discreet. Across San José, scrotums wrinkled at the “in with the locals” exclusivity of the scheme.

Officially, Enrique ran the investment side of things while Osvaldo ran a licensed currency exchange next door. Once a month a line of investors would collect their dividends. An entire shadow economy had sprung up around them. With almost 6,300 investors, the Brothers handed out a minimum of nearly $2 million in interest every month.

I wasn’t alone in my blind faith. Incredibly, nobody seemed to have any idea how the house made money. Theories ran rampant, everything from straight financial genius to latter-day Iran-Contra shenanigans. One popular notion involved some creative diddling with Latin American currency exchanges: A money-changer in Colombia busied himself handing out Colombian pesos for dollars and Deutsche marks, then air-freighted the hard cash to a bank in the U.S., land of the minimally fluctuating currency. From these accounts, the Colombian money-changers drew pesos from ATMs in downtown Bogotá and sold them back to tourists. Somewhere in there, sieved through the whims of currency supply and demand, emerged massive profits that were split with investors. Until now.

A Scam to End All Spam This Internet prankster turned the tables on the scammers. Ever get a desperate e-mail from some African dude asking for help in moving millions of American dollars out of his country? Suckers have made the Nigerian Letter scam, also called the 4-1-9 scam (after section 4-1-9 of the Nigerian penal code), into Nigeria’s largest criminal enterprise. But one prankster turned the tables on a con who claimed to be Timothy Sese-Seko, son of Zaire’s former president Mobutu Sese-Seko. Posing as “Wendy Willcox,” part owner of the Swollennutz Development Corp., the joker agreed to help Tim move $144 million. Over more than 75 e-mails, “she” cajoled her way into meeting Tim’s partners in Amsterdam, promising $15,000. She even e-mailed Tim her butt-ugly photo, which the schemer wrote was “beautiful.” The scammers, of course, had no idea that Wendy’s proposed meeting spot fell in full view of a Web cam. At home “Wendy” watched two confused cons looking for her, then later posted screen grabs on her Web site. She e-mailed the address to Tim, along with a farewell message: Kiss my ass.

O brother, where art thou?

I’m giving up for the day, heading into San José for a drink, when the phone rings. It’s the Voice. The owner prefers to remain nameless but divulges that he is the former ambassador of a country in the Axis of Evil. “I have many interesting stories to tell you,” he hints.

We arrange to meet in the lobby café of the Gran Hotel Costa Rica, in downtown San José. The Voice turns out to be a tiny man of around 80; he wears a white hat and smokes a pipe. He pencils his name on my notepad before proclaiming, “Napoleon has said that before every battle, you must do one thing: take a leak.” He gets up and is gone for what must be 20 minutes. Waiting, I watch the other gringos check out the prostitutes ambling by.

When the Voice returns he sadly informs me that he “wouldn’t want to know” where Enrique is hiding. On the plus side, he does know where Saddam has his weapons of mass destruction…he’s been e-mailing Donald Rumsfeld about it, but the bastard never replies! The whole scene would be funny if it weren’t for two facts: (1) My $15,000 is still missing and (2) the beach, where I could be surfing and enjoying that drink, is a mere two hours away. Instead, I’m sitting here wondering how the Voice got hold of Rumsfeld’s e-mail address.

A sure thing

San José is now crawling with lawyers and private investigators as well as expats. One endless afternoon at a T.G.I. Friday’s, a stubbly former PI from Arizona assures me he will “bring Enrique to justice” using mobile command centers, night-vision goggles, that sort of thing. He just needs high-dollar “sponsors.” He says, “This is not some bad Clint Eastwood movie.” Yeah. It ain’t a good one either.

Trekking around this beautiful country with its beaches, cheap plastic surgery, legalized prostitution, and surfeit of pretty women, it’s easy to understand why 41,000 North American expats—taut-faced retirees, dazed trust-funders, bong-loaded surfers—now live here. The Brothers made life in the sun possible for lots of them.

I powwow with operatives from groups that want to sue the Cost Rican government, others who hope to force it into an international court of arbitration under the auspices of the World Bank, and loads of folks who are happy simply to wait for Enrique’s return, perhaps on a bank of clouds from which he may once again shower his riches. The only certainty is that Enrique—whether he’s in Baltimore or the Bay of Biscay—ain’t coming back, and neither is my money.

Thoroughly dispirited, I finally do what I should have done on day one: head for the beach. The guy who rents me a surfboard asks me what I do. I tell him I’m investigating a financial scandal that’s messing with a lot of people here. He laughs: “The Brothers, huh? Yeah, I know about them. Dude, the stories I could tell you about the Brothers…” I’m happy to have contributed to Central American folklore, but I sure would’ve preferred getting my money back. As I paddle into the ocean, I ponder how much better it feels getting soaked this time around.

Billion Dollar Dupe. . October 2003.

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