Castillo Pleads Guilty in PCI Case

Jorge Luis Castillo, 61, pleaded guilty in U.S. Federal Court this week for his role in the defrauding of U.S. companies of some $670 million. Castillo, a New Jersey (US) resident is Costa Rican who functioned as "outside" auditor for Provident Capital Indemnity Ltd. (PCI).

Terms of the plea agreement are unknown as this is written, but Castillo faced U.S. Federal Judge John Gibney in Richmond, Va., Monday, charged with seven counts of conspiracy, wire fraud and mail fraud. (See previous articles.)

Castillo's plea agreement shields him from a jury trial. The accusations first surfaced last February when the U.S. Securities and Exchange Commission (SEC) filed a criminal complaint against PCI, Castillo and Minor Vargas, the latter also Costa Rican and the company CEO.

The SEC said its complaint was to halt a "massive ongoing fraud" of companies trusting in PCI's financial guarantees.  PCI claimed it would protect investor interests in life insurance policies by promising to pay the death benefit should the insured live beyond his estimated life expectancy.

The SEC charged that PCI began its operation in 2003 and from 2004 to March, 2010, issued 197 bonds. The SEC charged that the two PCI executives misrepresented auditing of assets and financial statements, its credit rating and the existence of reinsurance to cover PCI bonds.

Vargas, the CEO, is scheduled for trial in February.