CR Company, Officers Charged with Fraud

Final indictments have been handed down in U.S. District Court in Richmond, VA, in the case of a Costa Rica company, its president and auditor charged with wire fraud, mail fraud and money laundering,

The indictments specify that Minor Vargas, 60, and accountant Jorge Castillo, 56, bilked customers in the United States and abroad of $670 million. The charges also seek indemnity of $40 million from the company, Providential Capital Indemnity Ltd. (PCI) and the two defendants.

The trial of Vargas and Castillo has been set for Feb. 13, 2012. Vargas was arrested Jan. 19 at John F. Kennedy International Airport in New York City and Castillo in New Jersey the next day. If found guilty, the pair could face up to 20 years in prison for each fraud count and 10 years for money laundering.

PCI claimed to be an insurance and reinsurance company and was registered with the Commonwealth of Dominica. According to the indictment, Vargas, a Costa Rican citizen, is president and majority stockholder in PCI while Castillo, a New Jersey resident, was an independent auditor with the company.

Federal prosecutor Neil H. MacBride and Assistant Attorney General  Larry A. Brewer say that PCI misrepresented its ability to pay claims on the financial guarantee bonds PCI issued. The company sold the bonds to companies that sold life settlements to investors.

According to the charges, the misrepresentations and omission presented by PCI misled investors into thinking that the main risks had been removed from investing in life settlements. PCI bonds were bought by life settlement investment firms in the United States, Germany, Canada and the Netherlands.

(See previous article.)