Mississippi Litigation Review & Commentary : Mississippi Personal Injury Lawyer & Attorney : Phillip W. Thomas Law Firm : MS Litigation Review & Commentary

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Last week the Costa Rican bond company Provident Capital Indemnity and its owners were indicted in federal court in Virginia for mail and wire fraud. Here is the indictment.

Provident Capital gained attention for defaulting on the bonds that were supposed to guarantee the A&O Life investments.

Here is a Bloomberg article on the indictment. Here is another article about the indictment. Here is a link to the DOJ's press release.

According to the DOJ's press release:

  An indictment unsealed today in U.S. District Court for the Eastern District of Virginia charges Costa Rica-based Provident Capital Indemnity Ltd. (PCI), Minor Vargas Calvo, 59, and Jorge Castillo, 55, each with one count of conspiracy to commit mail and wire fraud, three counts of mail fraud and three counts of wire fraud.  The indictment also seeks forfeiture of more than $40 million from all three defendants.  Vargas was arrested on Jan. 18, 2011, at the John F. Kennedy International Airport, and Castillo was arrested earlier today in New Jersey.

“PCI is accused of lying to investors across the globe to sell more than half a billion dollars worth of ‘guaranteed’ bonds which turned out to be worthless,” said U.S. Attorney MacBride. “This case is another example of how the members of the Virginia Financial and Securities Fraud Task Force are working to detect, deter and punish financial fraudsters who target investors throughout Virginia, the nation and the world.”

        “These defendants allegedly sold $670 million in bonds by making numerous false representations, which were disseminated to thousands of investors,” said Assistant Attorney General Breuer.  “They stand accused of defrauding victims at home and abroad.  As these charges show, the Justice Department is committed to rooting out investment fraud wherever we find it.”

The U.S. Attorney's office from the Eastern District of Virginia is responsible for both the Provident Capital and A&O Life criminal investigations. Hats off to the lawyers, investigators and other members of their team for bringing to justice the perpetrators of a massive financial fraud on good people who were duped by these companies.

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Costa Rican bond company Provident Capital Indemnity was involved in the collapsed A&O Life Investment Fund. According to the SEC, Provident is now involved in another collapsed life settlement "investment."

Here is the SEC's Complaint filed in Texas against American Settlement Associates, Charles Jordan and Kelly Gibson. The complaint alleges that the defendants sold fractional ownership interests in a viatical policy and then did not use the investors' money to cover future premium payments on the policy. Instead, the defendants used the investors' money to support defendants' lavish lifestyles.

 The complaint alleges that defendants raised over $3.7 million from more than 50 investors in 10 states. The defendants promised a fixed rate of return of between 42% and 48%.

How in the world could anyone believe that they could get that kind of guaranteed investment return? If someone promises you that kind of return, then you need to hold onto your wallet and run.

 As in the A&O debacle, the defendants assured investors that the investment was protected by a bond issued by Provident Capital. The complaint alleges that Provident Capital is unreliable, has a checkered regulatory history, and is banned from California.

In all likelihood, this is another life settlement investment scheme that will leave insurance agents collecting large premiums and investors holding the bag.