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When It Comes to Scammers in Costa Rica; It’s Not The Ticos You Have to Worry About

Over the years at the Costa Rican Times, we have been contacted by various people that have been scammed or defrauded. They have had real estate and of course money taken from them by people that know how to use the inefficient legal system in Costa Rica to their advantage. They know that they can work the system to steal from those that don’t know how to ensure that their investments are safe.

costa rica scamsAfter having $3000 stolen from me in a business investment in Costa Rica, I went to see a lawyer to ask if there was anyway to get my money back. His response and I quote was “unless you have over $10,000 stolen from you it is not worth the time or money to try to take it through the Costa Rica legal system.” At least he was honest, in many cases you will have a lawyer that tells you that it is worth pursuing and after you are out more than what you lost you end up out your legal fees as well as the money or property you had stolen.

In my case it was recoverable, $3000 is not as much as some people that have been taken for much more.

Although you hear from time to time a Costa Rican using the system to their advantage in most cases it is a foreigner that is scamming the large amounts. In many cases they are able to do this because foreigners trust foreigners. ”Why would someone from my country want to steal money from me?” is a question asked by many an expat investor in Costa Rica. The answer to the question is easy; they know the inefficient system and the loopholes that allow them to run their scams and defraud thousands of dollars from the uninformed.

We recently sat down to interview Jason Ray Waddell in the Jaco beach area of Costa Rica. We performed an interview with Jason to find out more about the situation he was going through with his investment and problems with his partner Vince Formosa.

Jason is the part owner of the restaurant Kokomos and the gentleman’s club Centerfolds in Jaco, Costa Rica. He was lured into investing into the business by his partner Vincent Marte Formosa (Vince Marte Formosa Sr) of Florida. Over the past year since his investment and his partner has tried to sell the business to other investors as well as not held up his end of the business contract signed with Mr. Waddell. Although Mr. Waddell has started the legal proceedings to try to remedy the situation, this has cost him more time and more money with nothing be accomplished in the Costa Rica court systems. To go along with this through his research he has found that Vincent Formosa has a bit of a rap sheet (VINCE MARTE FORMOSA SR – Comprehensive Report – 2015-11-18) dating back to 1986. This is not the first time we have heard of scenarios like this and will not be the last.

Expats coming to and investing in Costa Rica need to be wary of scammers and those out to take their hard earned dollars. Many of these expats have found a way to use the Costa Rica politics and the legal system to steal and they have made a good business out of these scams. The legal system in Costa Rica is very difficult to traverse and to get a judgement in your favor. Quality lawyers will cost you a pretty penny to take it through the process and in many cases you will not get a judgement in your favor in the end. These scammers know this and after those that were defrauded find out how much time and effort it takes to try to get their money or property returned they give up.

Another scenario to watch out for is those that are cooking the books. Many of the scammers in Costa Rica will use inflated numbers and pay a CPA under the table to make a business or real estate investment look better than it seems. Although it may show a 20% ROI per year on paper the actual numbers could show a loss. A property owner may claim that his rental has an occupancy rate of 70% when in reality it is closer to 30 or 40%. There are no regulations that these scammers follow and no commission to ensure that they are telling the truth. After investment “but he said” does not work as a way to get your money back and taking it through the legal system can be time consuming and costly.

Some tips on avoiding scams in Costa Rica are the following:

– All legal documents will be in Spanish. If they are in English, there is also a Spanish version double check to make sure they are identical and the buyer knows what they are signing.

– Have due diligence performed on a property before putting any non-refundable deposit down or purchasing the property. This can be performed by a credible lawyer or title company.

– Avoid using the same lawyer as the seller. Buyers need to have someone who is un-baised working for them and them alone. The lawyer needs to examine the property with a microscope to make sure there are no hidden risks.

– Always pull and ask for the persona juridica when buying an already established business in Costa Rica

– Never count on anything from a verbal agreement and a handshake, things do not work like that here in Costa Rica, if it is not on paper it never existed.

– Remember you are not in Kansas anymore! That’s right you are in a third world country that operates under a different system of laws and culture. You have heard in the past that “possession is nine tenths of the law”, in Costa Rica possession is 100% of the law. This covers everything and everybody.

– Prior to making a decision on anything in Costa Rica, take the time to do some research.

– Most of all be highly suspicious of the information you received from other expats living here. You will soon learn that many are fugitives from justice and are part of the fraud system here. Some of the largest frauds with real estate, investments and other scams originate with expats, particularly from South Florida.

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