Quatloos! > Investment
Fraud > Financial
Planning > Costa
Rica Property Scam
Every few years, Costa Rica floats to the top of the
offshore charts and then falls back down again. Well, those of you
who dont already know it, Costa Rica is again all the rage.
We have had countless calls from folks who are interested in setting
up structures in Costa Rica for tax and other purposes, and who
claim to have friends who have been successful with these structures.
They all want to set up a Costa Rica structure to avoid taxes and
use the proceeds to purchase Costa Rica property -- and thats
where the scam comes in.
No doubt, Costa Rica is a beautiful place which abounds in opportunities
and it appears to be one of the leading jurisdictions for U.S. expatriates
to settle down in. Unfortunately, too many of these expatriates
are expatriates because they were caught in the U.S. committing
some sort of scam or fraud, or committing tax evasion. And so, it
is a notoriously corrupt little country, with at least as many scammers
as Belize, Antigua and Nevis.
So, faithful readers, let me chronicle here the infamous Costa
Rica real property scam, a scam which seems to occur most often
in Costa Rica, but happens with varying frequency in other countries
throughout Central America.
This starts with successful American businessmen who think they
know it all. From their point of view, it is pretty simple -- form
a Costa Rica company with bearer shares and deposit a lot of money
with an offshore bank. Then, use the Costa Rica company to go buy
a beautiful piece of Costa Rica real estate at bargain basement
prices. At retirement, you simply cash out of the United States
and go to Costa Rica to live happily ever after.
Unfortunately, in the words of fellow Oklahoman the late Will Rogers:
"It aint what you know, its what you know that
Here, the aint is adverse possession law and squatters rights.
Most of the visiting Americans blindly assume that Costa Rica has
adverse possession laws which are roughly similar to those of U.S.
states, which typically require 10 years or longer to establish
any meaningful rights. Unfortunately, it aint so and directly
to the contrary Costa Rica has elaborate laws which give squatters
immediate and immovable rights, and there is simply no way to get
them off the property once they are on, except to pay them to agree
to move off.
Lets look at this from the viewpoint of the Costa Rica real
estate salesman, which is radically different. For him, its
easy: Simply get a bunch of wealthy Gringos to come to Costa Rica.
Show them some beautiful (and vacant) Costa Rica property, and get
them to pay you big dollars for it. Then, as soon as they get back
on the airplane, move some squatters onto the land. When the Gringos
show back up again, they own beautiful property that they cant
use because of the squatters. Thus, the Costa Rica salesman approaches
the Gringos and tells them that it is unfortunate that the squatters
showed up on the property, but there is nothing either he or the
courts can do to get them off. However, out of the kindness of his
heart he will purchase the land back at some nominal sum, say 10%
(which the Gringos take because the land completely worthless with
the squatters on it). Then, the salesman moves the squatters off
the land, once again leaving it vacant, and repeats the process.
The local economy and the salesman are much enriched by this transaction,
and the Gringos go back the States wishing to hell that theyd
never heard of Costa Rica.
This scam has been around for as long as we can remember, and fades
in and out as people remember or forget it and others get the word.
It hasnt made headlines anywhere lately, so it is back to
booming again. Doubtless, there are a bunch of folks back here in
the U.S. who are dreaming of finally retiring to their new property
in Costa Rica. Unfortunately, for many these dreams will be nightmares.
This is big business in economically-distressed Costa Rica, just
like the Nigerian Central Bank letter is the 3rd biggest industry
in Nigeria. Be careful not to be a part of this particular international
financial aid program.
Letters From Folks
19 November 1998
|Dear Jay --
Just read your Costa Rica property scams page. That seems
like what has happened to me and my business partner, although
we're really not sure what has happened and may never know.
Wish I had read your page first.