Swampland Anyone !

Remember the Teak projects? Thousands of investors have found since investing heavily, that high value teak stands require more than 30 years to mature, even in tropical rainforests, not the mere 8 years promised by some project developers. How about the fruit and nut investments? And, if somebody out there is enjoying the high rate of annual rental income and growth in asset value promised on Villas by the various Beach Resort projects in the early 1990s, please let us know.

The Costa Rican investment climate is reminiscent of the Wild West, or Florida in the 1960s and 70s. For every person who has struck it rich there are dozens of people left behind to tell the sad story of a lifetime’s worth of savings, and with it, their retirement dreams, “down the drain”.

he harsh reality is that wherever there are people with money there will be other people thinking of new ways to prey on them. In an unregulated environment, it is extremely easy to hang up a shingle and bill oneself as an investment “professional”. Unfortunately, Costa Rica also seems to be the republic of choice for fugitive investment promoters from North America and other jurisdictions. In the absence of enforcement of the regulations governing the sale of securities and financial products, the local investor is left to use his own devices to decide what is or is not legitimate.

The following are a few tips on how to “remove the rose-colored glasses” that many investment “professionals” in Costa Rica will invariably want you to wear.

Don’t be afraid to ask questions - even those you think are stupid.

Many people walk into an investment meeting or seminar and immediately feel intimidated. An intimidated investor is not an inquisitive investor and some in the investment business count on this very thing.

Remind yourself that the salesperson you are dealing with has a lot to gain from your business and you have the right to ask anything and everything. No question is too stupid considering that you are trying to protect the money you’ve worked so hard for. Also remember that no one is an expert; anyone who knows all the answers isn’t being asked the right questions.

Even with equity investing, one needs to be informed - do your homework! The former manager of Fidelity’s Magellan fund, Peter Lynch, says in his book “Beating the Street” that the best equity investment is made by buying only companies you know and understand. It stands to reason if you’re going to sink your whole life savings into some exotic biotech company, for example, you should first do the research. Also seek an independent, unbiased second opinion before investing.

Another big part of doing your homework is investigating both the organization and individuals you are dealing with. Please take advantage of the Internet(1) to explore background on the types of investment offerings, e.g. Offshore Trusts, Prime Bank Note schemes and the like. One may even find background on individuals and/or organizations, who are in some of these businesses.

Knowledge is the key to not being led astray !

Because of the widespread nature of illegal schemes and scams, US Government agencies have become much more proactive. For example, the IRS has been working aggressively to investigate and prosecute people who offer tax evasion schemes, and their clients. In 1996, they had no convictions in this area. By the end of 2000, they had 87. A couple of the US agencies have also recently been in Costa Rica to investigate suspect investment people and schemes. Two organizations have already been closed as a direct result and they are working on a third.

A number of schemes and scams that have shown up in Costa Rica over the last year are outlined below:

Real estate scams (a continuing problem)

The Nigerian advance deposit/bank scam (again)

Anderson Ark and Associates (an American Prime Bank Note scheme)

The ELFINDEPAN pyramid scheme

The Tri-West Investment Club (a former Canadian “virtual office”
Prime Bank or Pyramid scheme)

Other Trust investment groups now being reported upon in the recommended websites.

Everything in life is a process of checks and balances. Investments are no exception. There are some risks associated with every opportunity. But, it is the real long-term risk that should be carefully considered. For some, the greatest risk is that they will not take any risks, and they could end up in the golden years, active but poor.

Honest potential investors who do their due diligence including checking references and who stick with registered investment instruments should be just fine. We also should remember to spread our risks by not “putting all our eggs in one basket”.

Finally - If you wouldn’t do it back home, don’t do it here.

Too many people have come to Costa Rica and made investments they never would have made or been able to make in North America. And remember, instincts are only a good thing if you follow them. But, when greed gets in the way this can be a very difficult thing to do.

Do not forget the old adage, “if it sounds too good to be true…it probably is”.

For more information go to the best all-round fraud information sites which are:

www.quatloos.com

The Offshore Alert Newsletter site - www.offshorebusiness.com and

www.worldwidescam.com

© El Residente ARCR Administración S.A. San José, Costa Rica N.B. Like all information on the internet, this article may currently be incorrect or out of date.