RICHMOND, Va. (AP) – A former Costa Rican insurance executive charged in a $670 million fraud scheme testified Thursday that he was unaware that the financial statements he used to lure clients had been falsified by his company’s accountant.
“I was not dealing with the financial statements in detail,” Minor Vargas Calvo said in U.S. District Court. “I just had them as a marketing tool.”
Vargas, 60, is charged with conspiracy, mail fraud, wire fraud and money laundering. He was the final witness to testify on the fourth day of his jury trial, which will resume with closing arguments Monday.
Vargas was president of Provident Capital Indemnity Ltd. The company sold bonds guaranteeing funding for life settlement companies, which buy life insurance policies from insured people at less than face value and collect the benefits when those people die.
Prosecutors say Vargas lied to investors about Provident’s financial assets, stability and cre dit rating. Vargas denied lying, saying the company had substantial “intangible assets” the government was not counting. He said he believed he was telling prospective clients the truth when he said Provident was protected by “reinsurance contracts,” even though he had never seen them and they turned out to be nonexistent.
Vargas also denied knowledge that an accountant cooked the company’s books to attain a top credit rating, despite what Assistant U.S. Attorney Jessica Brumberg described as “frantic emails” from the accountant to Vargas as regulators and investigators started to demand more information about Provident’s finances.
“You are the only one who knows the real truth,” the accountant, Jorge Luis Castillo of Hackettstown, N.J., said in one of the emails.
Castillo, who testified against Vargas, pleaded guilty last year to conspiring to commit mail and wire fraud. He is scheduled for sentencing Sept. 5 and faces up to 20 years in prison.
During his nearly three hours on the witness stand, Castillo said that before he was arrested he was working with two other businessmen who wanted to take over Provident and infuse it with $1.2 billion in new capital. Brumberg said Vargas wanted to unload the company “and disappear into the night.”
“Oh my God, never. Never,” Vargas said.