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Property Thieves Target Costa Rica Corporations

by rpetersen

For decades property theft in Costa Rica has been a problem which the authorities have not done enough to curtail.   The typical property theft occurs when a Costa Rican Notary Public and their accomplices fraudulently transfer your property out of your name into the name of a third party who is part of the theft gang.  The third party then either sells your property or mortgages it to an unsuspecting buyer or financial institution.    In recent years a variation of this scheme has surfaced which targets Costa Rican corporations.   In this newer version the criminal organization will target an individual that has properties registered in the name of a Costa Rican corporation.   Once they have identified their target they then proceed to fraudulently remove the President of the S.A. or the Manager in an LLC and they replace those positions on the Board of the Corporation with their own accomplices or fake names for which they have created fraudulent identities as well.   All it takes to complete this fraud is a crooked Attorney / Notary Public that will certify that they have seen a shareholder minutes resolution changing the board of directors.  Since the Notary Public in Costa Rica has public faith the corporate recording office will record that change based on the statement of the Notary Public.   Once the criminal organization has been able to remove you from your corporation and put themselves in control they can do whatever they want with the assets of that corporation.   The typical move they make is to either sell or mortgage the property to obtain the cash and complete the fraudulent operation.   In one case the thieves managed to take over a condominium property titled to a corporation by removing the owner from the board of the corporation and then mortgaging the condominium unit to a local financial institution.  Generally the local financial institutions rely on the certification of corporate standing issued by the National Recording office to verify the authority of the corporate officer to bind the corporation.  Since the underlying document is provided by a licensed Notary Public the recording office does not question it and records it.  The system then certifies it which is essential for these criminal organizations to commit the crime.

In the past to avoid property theft we have recommended to clients that they place a mortgage on their own property in the form of a mortgage bond (cedula hipotecaria) to act as a deterrent and make the property less appealing for the property theft gang.   With this new modus operandi of the criminal organizations there is the added risk that by taking over the corporation they could also lift the mortgage lien as well.   Despite this twist we feel that having the mortgage lien protection is still better then having nothing on the property.   It is also very important that you have your corporation books in custody and well guarded.   The reason for this is that your only defense will depend on showing your original corporate books to prove that the shareholder meeting which removed you from your corporation was fraudulent.

When either form of this crime happens the only recourse you have is to file a criminal complaint with the Organismo de Investigation Judicial (O.I.J.).  That initiates a criminal investigation.  You should also retain your own criminal Attorney to follow up and obtain a court order to freeze the property before additional damage is done.   The legal process is tedious and lengthy.  If your property is stolen you can expect years to go by before you will get it back.   The criminal organizations that are behind this now the legal system well and they play it in all forms to ensure that the process is dragged out as much as possible.

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