Indictments issued in $670M fraud case

The company, its president and primary owner, Minor Vargas Calvo, and Jorge Castillo, the firm's independent auditor, were all the targets of superseding indictments for one count of conspiracy to commit mail fraud and wire fraud, three counts of mail fraud and three of wire fraud. Vargas was also charged with three counts of money laundering, the department said. Vargas and Castillo were arrested in January and are awaiting trial scheduled to begin in February. The indictments charge the firm with misrepresenting its ability to pay claims due on guarantee bonds issued by PCI. The bonds were issued to companies that sold life-insurance-backed securities and these companies then used the bonds to claim there was no risk to the investor if the original contract holder lived beyond his or her life expectancy, as this was supposed to be covered by a reinsurance policy, the department said. "PCI sold approximately $670 million of bonds to reinsurance companies located in various countries," the department said. These, in turn, were sold to "thousands of investors around the world," the Justice Department said in a statement. If convicted, the individuals could receive up to 20 years in prison on each fraud count and 10 for each money laundering count. The Justice Department is also seeking reimbursement of $40 million.