New Investment Scam Surfaces In Costa Rica

by Mike Godfrey, Tax-News.com, Washington

14 January 2003

According to a report from the AM Costa Rica news service on Monday, the US government has filed a civil fraud case against a Costa Rican company which purported to offer 'prime bank debentures' to unwary investors.

However, the news service revealed, the unusual aspect of this case is that the company, Asset Recovery and Management Trust, targeted investor victims of previous investment scams by claiming to be able to help recover the stolen funds, then luring them into further dubious investments.

Citing a Securities and Exchange Commission statement released last week, AM Costa Rica reported that:

'The defendants (Frank R. Johnson, Milton E. Vaughn, and Carlos Fernandez Alfaro) promised exorbitant returns on investments in...trading programs, claiming that they would have access to international trading banks, the mythical 'prime banks' which they represented typically were available only to a select few with millions of dollars to invest.'

It continued: 'The Commission alleged that the individuals engaged in a number of misrepresentations including saying that the investors' funds would be used to trade debt instruments known as 'bank debentures' and 'standby letters of credit' through 'world trading banks'. Investors were told falsely that these instruments would provide returns of between eight to fifteen times the principal invested, with complete safety of principal.'

The SEC is seeking an injunction against the three men, and the return of all funds 'invested' with Asset Recovery.

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