NEW YORK ATTORNEY SEEKS LEGAL ACTION AGAINST ROBERT VESCO

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP09-00956R000105640047-8
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 6
• Document Creation Date: December 23, 2016
• Document Release Date: August 1, 2013
• Sequence Number: 47
• Publication Date: March 1, 1973
• Content Type: MISC

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COSTA RICA
NEW YORK ATTORNEY SEEKS LEGAL ACTION AGAINST ROBERT VESCO
Charges Filed Alleging Fraud
jrticle by S. A.; San Jose, La Nacion, Spanish, 1 March 1973, p 47
This morning, Simon Nusbaum, an attorney from New York City
who represents thousands of investors allegedly cheated by the
mutual fund firms controlled by Robert Vesco, will appear before a
San Jose penal judge to ask that legal action be taken against
Vesco and his firm. Several deputies will be witnesses.
In the course of his presentation before the legislative
commission that is investigating the activities of the mutual fund
firms and Vesco in the country, attorney Nusbaum insisted that imme-
diate action should be taken against Vesco on behalf of the thousands
of persons involved and in the interest of Costa Rica's prestige
abroad, inasmuch as it is thought that civil action in the United
States could be delayed due to the unique attitude taken_by_Vesco
and his firm before the SEC (Security floaleassi and the
group of lawyers advising him. EXc Hieing coAvviv
Refusal To Testify
Nusbaum took a firm stand, saying that one of the ways in
which Vesco was paralyzing the action of the SEC consisted of re-
fusing to testify before that body, basing his refusal on the Fifth
Amendment of the Constitution of the United States, which allows a
person not to answer legal questions if he believes that his testi-
mony may suk-j-ect him to a criminal trial. Anticipating that things
might "get hot" in the United States, Vesco fled to Costa Rica in
case the matter should go to the criminal courts, attorney Nusbaum
said.
Grounds for Action
The legal representative of the persons whose OIS 5ic, pre-
sumably IOS; expansion unknown] investments are involved told the
members of the commission that they should immediately accompany
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him when he appeared before a local judge tomorrow, because after
that it might be too late. "I only want you to be present when
I present the evidence I have against Vesco and his firm."
When Deputy Jorge Solano Chacon told the attorney that here
no judge could initiate legal action concerning a crime committed
outside of the national jurisdiction, Nusbaum said:
"That aspect has been duly examined and studied; there are
grounds for believing that one can proceed. Mr Vesco has a Costa
Rican passport. Consequently, this is not -a 'one-way street.' Further-
more, some of the things of which he is accused and of which I have -
evidence were committed by his associates in this .country and they
have injured persons in Costa Rica. Everything seems to indicate
that we do have legal jurisdiction for proceeding," he said.
Three Deputies
During a brief discussion, the investigating commission
agreed to appoint legislative members Dr Longino Soto Pacheco, Rafael
A. Valladares Mora (chairman), and Angel E. Solano Calderon to accom-
pany attorney Nusbaum at his private appearance before the judge to-
day.- "I am informing Vesco of my intentions, but these are risks
one must run instead of allowing this country to become- an inferno
if measures are not taken against these investments," he said.
-2.5 Billion Dollars
After complaining that the SEC and the lawyers representing
persons harmed by "Vesco's empire" had not taken joint legal action
in the United States, prompted by the belief that the SEC "had its
own methods that were more effective," Nusbaum said, speaking
through his interpreter Mario Ulate, that "after Vesco took control
of the IOS...in 1969, he had control...of 2.5 billion dollars, but
that sum dropped to 750 million. Due to the means...he used, Vesco
cannot make use of those holdings in Costa Rica or in any part of
the world, no matter how powerful he might be."
, Banking Commission in Luxembourg
"In order to give you an idea of Vesco's special system of
operation," Nusbaum added, "I might cite the case of a banking com-
mission in Luxembourg, which is working to move 120 million dollars
back into that country, money which was transferred from a bank
there to the Bahamas. The problem is that the bank also belongs to
Vesco."
?
He later pointed out that the groups of lawyers he repre-
sented had an advantage over the SEC because that organization only
has jurisdiction in the United States, while they could initiate
action in many countries whose citizens had been affected. "While
-
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I try to protect the interests of my clients, I shall also try to
help them to avoid similar dangerous situations with respect to
certain investments made abroad," Nusbaum said.
Friends Here
? In another part of his presentation, the investors' legal
counsel said that before accepting the invitation from the investigat-
ing commission to appear before it, he considered at length the con-
sequences of that type of public appearance, "especially," be said,
"because many of my plans go beyond the information to Vesco himself.
I believe that the decision or decisions made by this commission
may have influence on the attitude taken in the United States, since
this is a democratic country, a legal paradise as well, and they
know that there. Consequently, I do not believe that Vesco will be-
gin to move money already here, since he would disillusion his friends
and he does have friends here."
Evidence
"The evidence against Vesco and his group, of masterminds fills
20,000 pages," Nusbaum said, "and many of those pages are already In
your hands. I do not believe that any judge from a democratic coun-
try can ignore this. Consequently, I firmly believe that legal action
taken here will help to get criminal action started in the United
States, since the SEC civil court is paralyzed by the constitutional
aspects of the Fifth Amendment which I mentioned. It will also help
to prevent Vesco from transferring here half of the IOS resources
still in the Bahamas." Following his appearance, attorney 'Nusbaum
spoke privately with members of the commission.
Judge Throws Out Legal Action Against Vesco
LTrticle by S. A.; San Jose, La Nacion, Spanish, 2-March 1973, p 47
Yesterday, first penal court judge Atilio Vincenzi rejected
the accusation against Roberto Vesco presented that same day by Simon
Nusbaum, the attorney representing a group of allegedly cheated in-
vestors. The judge said there was a lack of legal grounds and the
legal office was immediately notified of the same.
The decision was based on Articles 6 and 8 of the Penal Code,
which state:
Article 6. ? Legal action may be instituted in the case of pun-
ishable acts committed abroad and Costa Rican law may then be applied
when:
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1) their results occur entirely or partially within the na-
tional territory;
,2) they were committed by persons in the service of Costa
Rica and not tried where committed due to diplomatic or functional
immunity; and.
3) they are perpetrated against Costa Rican citizens or
their rights.
Article 8 says:
"In order for the crimes mentioned in Article 5 to be prose-
cuted in Costa Rica, only government action is required. With re-
spect to crimes included in Articles 6 and 7, the criminal must be
within the national territory..
"In addition, in the cases included in Article 6, action is
taken on the basis of the complaint of the defendant, and in the
case of Article 7, penal action may only be initiated by the compe-
tent organs."
Article 5 speaks of crimes committed outside the territory
and Article 7 pertains to international crimes.
Attorney Jose Roberto Steiner, representing the public prose-
cutor, said that "due to the fact that the resolution rejecting the
accusation is well-founded, no appeal is possible.' In view of this,
and since a simple accusation is involved, the matter will be closed."
Attempt To Stop Activities
In the opinion of legal advisers intimately linked with the
American attorney Simon Nusbaum, by presenting his accusation against
Roberto Vesco in the first penal court of San Jose, Nusbaum had hoped
that if the accusation were -accepted and when the court once had
very broad power, it could paralyze Vesco's activities in the country,
Which is deemed to be the first positive step of the thousands of
persons allegedly cheated and now represented by Nusbaum.
Budding Political Disagreement
The accusation was presented by attorney Nusbaum at 1000 hours
yesterday morning before the clerk of the first penal court, Gerardo
Calvo Picado, and witnessed by members of the press. The commission
investigating the activities of the mutual funds firms in the coun-
try and Robert Vesco had, on Wednesday afternoon, appointed,a,group
to accompany attorney Nusbaum at his appearance. Out of the five
members of the legislature appointed, Attorney Guillermo Jimenez
Ramirez, Dr Longino Soto Pacheco, Rafael A. Valladares Mora,
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? attorney Edgar Arroyo Cordero, and Angel E.-Solano Calderon, only the first
three, who represent different opposition groups, were present at the hear-
ing.
Unofficial sources contend that with respect to the "Vesco case," a
political disagreement was brewing, and it was said that the absence of
legislators Arroyo Cordero and Solano Calderon, who represent the National
Liberation majority wing, had to do with a preconceived position relating
to the affinity between certain mutual fund officials and official sectors
or ones close to them because of joint investments in the country.
Thousands of Victims
In the course of his accusation, which was made verbally and which,
was recorded by court clerk Gerardo Calvo, New York attorney Nusbaum said
.that he "was making it on behalf of hundreds of thousands of victims all
-over the world."
Loan
Nusbaum said in his presentation that "in the loan that Vesco made
out of IIT iveopows'ittakvi funds to the San Cristobal Industrial Agri-
culture Company for 2.15 million dollars, a so-called commission of 150,000
dollars was paid to a middleman who had brought Vesco to Costa Rica. He
gave it to Clovis McAlpin-, who in turn presented it to important-persons who
own the San Cristobal company. I am leaving written proof of the so-called
loan in the form of photostatic copies that I am attaching to the original,
and I am also providing proof of payment of the...150,000 dollars. This
proof is a sworn confession of a Mr R. P. made when he was questioned by
the SEC (Securities Exchange Commission) in New York. When .the SEC inves-
tigator asked R. P. the amount he was paid, he said 150,000."
Money to Local Companies
Continuing with his charges, Nusbaum said that "the most important
part of the operation in Costa Rica was the formation of six companies and
the transference of very large sums of money to these companies, in addition
to Vesco's action to establish residency here. One of his attorneys, Howard
Cerny, told the SEC in sworn testimony that Vesco is trying to establish
the center of his operations in Costa Rica and Cerny came to this country
to set this up with the law office of Facio-Fournier-Canas."
Operations in Costa Rica
-;
Nusbaum said that the "detailed, allegations concerning the opera-
tions of Vesob and his group in Costa Rica are contained in charges filed
before the New York Federal Court and they are shown in even more detailed
form in the civil charges of the SEC (he turned over the respective docu-
ments). The operations in Costa Rica have also been described in detail
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in the most respectable financial newspapers in the United States, inclu-
ding the Wall Street Journal and others.
"The situation is changing," Nusbaum continued, "because the SEC has
indicated that instead of closing the civil case, it will probably submit
it to a criminal court immediately."
Vesco May Disappear
The New York attorney said that "due to the fact that many of the
assets mentioned are here, and due to the great danger that Mr Vesco might
disappear from the United States and Costa Rica, since there are still
large sums in the Bahamas and most certainly in other countries as well,
we ask the court to aid the victims by taking immediate protective action."
11,464
CSO: 4200-S
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