Loan Sharking Grows in Costa Rica by Piggybacking on Drug Trafficking

Costa Rica’s economic crisis and its strategic position along drug trafficking routes have created the perfect storm for a new type of extortion to take root: loan sharking.

Referred to as “gota a gota” (drop by drop) in much of Latin America, loan sharking has become firmly entrenched in Costa Rica. Authorities now face a new challenge in this illicit market imported by foreign criminal groups.

Dozens of flyers pop up every day on the streets of Costa Rica offering credit. They feature a phone number and promise large amounts of money, beckoning passersby with the promise that their cash flow problems can disappear with a single call.

*This article is part of an investigation on various types of extortion in Central America and was carried out by InSight Crime as a joint project with the Global Initiative. See the rest of the series here.

Within just 15 minutes of making a call, an envoy will show up at a meeting point offering to lend up to $15,000 or more. All the lender needs is the ID and address of the person seeking the loan, and the only condition is that the recipient will pay the interest charged.

Although this practice is most widely known as loan sharking, authorities have classified it as a type of extortion, and one that has been gaining ground among criminal markets.

According to Steven Sánchez, an investigator with the Judicial Investigation Agency (Organismo de Investigación Judicial – OIJ), these types of loans come from “people with no connections to financial institutions.” It might even be someone who simply loans out their personal savings at very high interest rates.

“They give you $100 and ask for $25 a week, but it gets worse. As you start to fall behind, they charge more … Then, if you don’t pay, they tell you they’re going to kill you, they go to your house and send debt collectors. That’s where it turns into extortion,” Sánchez said.

Figures from the Attorney General’s Office show that there were 107 reports of this type of extortion from January 2017 to July 2018. But there is little incentive for victims to denounce these crimes: the loans are conducted illegally without contracts, and victims fear physical and psychological reprisals if they go to the police.

Semi-Organized Networks

In early 2017, the OIJ began investigating a loan sharking network in the district of Escazú, near the capital city of San José. The group loaned out large sums of money, the payment of which is enforced through violence. Two brothers, Ziad and Elías Akl, ran the criminal enterprise.

Of Canadian-Lebanese origins, the Akl brothers had fled to Costa Rica to escape drug trafficking charges brought against them by Canada’s Department of Justice.

The Akls’ modus operandi for collecting due loan payments was brutal and simple: they severely beat their victims in a gym they owned, reportedly with golf clubs or their bare knuckles. They would lend between 100,000 and 1 million colones (approximately $175 – $1,700) in cash, without intermediaries, and on the sole condition that the borrower would return the money with interest.

The moneylenders would approach unofficial taxi drivers, people who already had existing debts or who wanted to buy a car or house with the hope that their loan would be faster, according to OIJ Director Wálter Espinoza. Such hopes were swiftly dashed, however, when the loans led to family members being threatened or borrowers harshly beaten.

On May 15, 2017, Elías Akl was murdered in a school in Escazú, apparently in a personal settling of scores. At the time, at least 18 extortion complaints had been brought against him. Days later, his brother Ziad was arrested as he attempted to flee the country.

“The structure was completely dismantled,” after the Akl brothers fell, according to Espinoza, who added that “while it is possible people are using their name to obtain new loans, such cases are isolated, and the group no longer functions as an organized gang.”

Criminal Mutation

Authorities believe that the Akl brothers, already accused of drug trafficking in Canada, used drug proceeds to partly fund their loan sharking endeavors in Costa Rica.

While loan sharking or extortion may be a calling card for some national gangs, the practice did not originate in Costa Rica and was copied from international organizations in contact with Costa Rican criminal structures, according to officials.

Daniel Calderón, head of Costa Rica’s security forces, said that extortion is linked to other criminal activities like drug trafficking, and the money these crimes produce is used to make the loans.

He explained that loan sharking “is an accessory activity, but they do it because it’s been very lucrative for them and allowed them to keep control over certain areas by compromising certain people in the community.”

According to intelligence that security forces have received from other institutions, loan sharking originated in Colombia, and some of these operations in Costa Rica are run by Colombians.

Additionally, cells from the Sinaloa Cartel and Iranian groups have been found incorporating loan sharking into their catalog of criminal activities, according to the Attorney General’s Office.

The development of extortion in Costa Rica can be directly tied to drug trafficking, which makes sense given the country’s strategic location in a major transshipment corridor. But what was once seen as a supplementary means for criminal groups to diversify their illicit income has quickly become a major concern for authorities, who may face an uphill battle as loan sharking continues to increase in tandem with drug trafficking revenues.

*This article is part of an investigation on various types of extortion in Central America and was carried out by InSight Crime as a joint project with the Global Initiative. See the rest of the series here.