#363 – The Expat Files: Navigating Legal, Cultural, and Security Challenges in Latin America

Automatically transcribed from the original recording; names and wording may contain errors.

[00:14] Hello there all you expat wannabes, I'm Johnny Mueller and you're listening to the Expat Files, living in Latin America. The show that tells you just what it's like to live, work, play and or retire down here in Latin America. It's a mix of the good, the bad, the ugly and the great, and it's all right here so let's get started. Okay, now before I get into my usual stream of consciousness, blatherings and rants, or whatever you want to call them, in the last couple of months I've been getting some rather frantic emails from people asking me how they can get their gold and silver out of the country without raising a ton of red flags or getting on a number of lists, or worse, having your gold or silver or platinum whatever confiscated as you're traveling through borders. Now, I know plenty of people who've done it. I know people who've personally walked their gold right through, in a little carrying case,

[01:03] without anyone saying a thing. In fact, I've done it myself, but I wouldn't try it with silver, because these days anyway it's just way too heavy compared to its monetary value. But someday very soon that's going to change and it will be worth it. As for now, it's not a very condensed form of value, whereas gold, platinum or palladium definitely are. Now, I also know a number of gringos and expats who've brought their gold through customs in various countries, and have filled out the reporting paperwork on it too. You know, that paperwork you're supposed to check off and list if you're carrying more than $10,000 in cash or negotiable instruments. Now, you know you're pretty safe when you're carrying Canadian maple leafs, one ounce coins that say $50 stamped right into them, or US liberty gold coins, also one ounce

[01:53] with $50 stamped right on them, so no matter what happens when you're passing through a US border anyway, you just go buy the official US government rate, which is $50 stamped right on them, then add up the number of one ounce gold coins you're taking and multiply it by 50. That means you'd reach that $10,000 reporting limit only when you're carrying more than 200 one ounce gold coins. By the way, whose gold value is about $250,000 today. And I know people who've been asked when they passed their gold through the scanner why they were carrying it. And here's my advice. Carry a coin collector's price guide, usually called a red or a blue book. Or you can carry with you one of those coin collector's newsmismatic newspapers that you

[02:40] can get at big newsstands or at pawn shops. And it always helps to have a printout or a clipping of a local coin show in the area you're visiting. Just do a web search a week or two before you're going to leave. You'll always find a half a dozen or so coin shows that are happening along your travel route. Now, just a word of caution, a few folks who've got your gold in one ounce Chinese pandas or British sovereigns or one ounce South African coup grands, you know, where there is no dollar denomination stamped on the coin, then all bets are off when trying to prove what those things are worth at the border if someone asks. So I suggest you do stick with the US Standing Liberty one ounce coins that save 50 bucks on them or the one ounce Canadian maple leafs that also have 50 bucks stamped on them.

[03:26] Or just sell your gold when you're up in the States and rebuy it at your new destination. And remember if you carry near the limit of that $10,000 reporting requirement, like I said about 200 ounces of gold today, you'll be hauling around with you something that's about a half as big as a bowling ball and equal in weight. Now, personally speaking, I know a few gringos who brought in 50 to 100 ounces at a time, or I should say they've walked that amount out of the US. And so far, so good, no problems. Now, what I really want you to hear is excerpts of a story of a guy who got his gold confiscated, a guy who really didn't have a backup plan and was playing it moment to moment. So do sit back and listen to this tale, which is very enlightening, but pretty long,

[04:13] so I'll paraphrase when necessary. It's in fact a good lesson if you're carrying gold or whatever and bad things happen at the border. And it comes from an interview entitled, How Not to Transport Your Gold Internationally, subtitled, How I Got Jailed in Mexico. Now, the interviewer's name is Dave Galaland. He's from Casey Research and he's interviewing a guy named Tom, a guy who tried to bring a couple of hundred thousand dollars worth of gold coins through Mexico with his final intended destination being Panama. But as you'll see, Tom never made it that far. And Tom starts us out by saying this. There was a Doug Casey conference in Panama about a year ago that I planned to attend. I lived about four hours from Las Vegas and because I had these coins that I wanted to

[05:03] take to Panama and stick them in a safe deposit box there, I figured strictly for logistical reasons, it'd be convenient to drive to Las Vegas, fly to Panama via Mexico City, drop off my coins, come back for the conference and drive home. That's why I went through Mexico City. I thought nothing of it. Then the interviewer, Dave asks, how many coins were we talking about? And Tom says, 151 ounce coins. Then Dave, the interviewer asked, so you arrived in Mexico City, then what happened? Tom says, normally when you get on a plane and you need paperwork in the country you're landing in, they give it to you on the plane. In this case, either I wasn't paying attention or the airline forgot to give it to me,

[05:48] but I didn't get the paperwork. Regardless, when you land in Mexico City, even if you're taking off an hour later on another flight, you still have to fill out that immigration form and have it stamped. Well, I didn't have that immigration form. No one gave it to me. So I'm sitting at the gate waiting to board my plane to Panama and I have my boarding pass and my passport. I'm thinking, what else do you need? When I got up to the gate, they said, where's your immigration form? To which I responded, my what? So they showed me one and told me I would have to go downstairs to a certain desk, get the form, have it stamped, then bring it back. So here I am in Mexico City in a pretty big airport with my plane already beginning to board and I don't speak the language and I'm running with a backpack and a front pack

[06:36] through the airport trying to get this silly immigration form stamped and get back in time to catch my flight. I finally find the place to get the immigration form. Fortunately, there was nobody in line. So I went right up, they gave me the form, stamped it, then I ran back to the gate. But unfortunately, just as I got to the gate, they closed the door and refused to let me on and told me I'd have to take the next flight. So normally, at least in the US, if you miss a flight, they can give you a new boarding pass for the next flight right there at the gate. But in Mexico City, you have to go downstairs to the main office of that airline, which means you have to go outside of the secure area. Note that until this point, I never left the secure area. Now I had to do so in order to find that ticket office.

[07:25] As far as I was concerned, it wasn't a big deal. I'm carrying less than $10,000 face value of currency, so I thought nothing of it. So anyway, I leave the secure area, buy my new ticket, then head back upstairs at which point I have to go through security again and the security person wants to see what's in my pack. So I said, okay, that's fine, but let's do it in private because I don't want all these people here to see that I was carrying a lot of valuables. So they took me into a private room and I showed them the coins. Then the officer said, hmm, he had to call his superior and his superior came and she looked at the coins and said, hmm. And so she called her superior and then he came in and they kept ratcheting things up.

[08:12] Nobody knew what to do. So eventually, they decided to take me to the airport jail for a 48 hour hold. Of course, I asked a 48 hour hold for what? But at this point, things were already spiraling in the wrong direction. So they took me to jail where I met the prosecutor who said, in effect, if you really didn't do anything wrong, prove it and you'll get out. Then Dave, the interviewer asked Tom, I saw a picture of you sitting at a table with all your gold piled in front of you. At what point did that happen? To which Tom replied, that was while we were still at the airport in some kind of conference room. I didn't know at the time what was going on, but they must have called in the media to make a big spectacle of it

[08:59] because there were people there with cameras taking pictures and all that and they laid all the coins out and well, you saw it. Then Dave, the interviewer said, well, that may be in an odd way. Having you and all your coins appear in the local media may have worked in your favor because otherwise, they might have just taken you out and killed you for your gold. You know, in a previous business, I did a lot of business in Mexico and it was often asked for bribes. So my initial reaction when I heard you had gone to Mexico with all those coins and gotten into trouble was to wonder why you couldn't have just paid a bribe right there to get the next plane out. Then Tom said, well, you know what's interesting? Nobody ever did ask me for a bribe and I didn't dare offer one. Then Dave added, well, that might have been your big mistake.

[09:46] To which Tom replied, a number of people have told me that I should have offered the guy who had me in that private room at first a hundred bucks and said, look, I've got to get on my plane. Just take this and let me go. In fact, one of the coins would have done just as well. Then he said, I was in the airport jail for about 48 hours. There was only one person in the cell and that was me. It certainly wasn't clean, but it really wasn't disgusting either. There wasn't toilet, but absolutely no privacy. So you have ladies walking around looking in on you while you're sitting on the toilet, doing your thing and such. In any event, it wasn't comfortable at all, but it wasn't disgusting by any stretch. Then Dave asked him, up to this point, had you been able to make a phone call? Did anybody know what happened to you?

[10:33] Then Tom said, while I was still in the airport jail, they asked me if I wanted to call the US embassy to which I replied something like, you've got to be caning, of course. Again, I don't speak Spanish and they didn't speak much English at all. So even getting that message across was kind of a challenge. But eventually a guy from the US embassy came over to the airport jail and he gave me some stuff to read about surviving life in a Mexican prison. Nope, it was not very encouraging at all. And the guy from the embassy told me if any attorney came to see me in the Mexican prison, they would ask me for a fortune and promised me the world. Lo and behold, when they transferred me to the main prison, the first attorney that got there promised me the world

[11:19] and wanted an $80,000 US retainer and my bail was less than three grand. Say what? An $80,000 retainer for a $3,000 bail does not make a lot of sense. So it was pretty much right in line with what the guy from the embassy told me to expect. Of course, I turned him down and then Dave asked him, did you post bail and get out of jail at that point? Then Tom said, well, what's interesting is that I had something like $3,500 cash in my fanny pack. And because my bail was less than three grand, you think I'd be okay. But there was more to it than that. First off, according to Mexican law, you're supposed to see a judge within 48 hours,

[12:05] which I did, along with a public defender, though he didn't speak English either. Fortunately, the judge spoke a little English, so I was able to explain to him what happened and he said, okay, we'll give you bail. But then came the problem of how do you get bail? I don't know anybody in Mexico City, not a single soul. And my cash is at the airport jail. So how do I get my cash back to pay that bail? It was a real challenge, but eventually I got out or at least I thought I got out. Instead of walking out free on bail, they sent me to an immigration detention center for a week. And guess what they told me they needed at the immigration detention center? A copy of my passport. Well, my passport is at the airport jail. So how do I find someone in Mexico City to run that errand for me?

[12:54] So what about those slugs at the good old U.S. embassy? Well, they did give me that nice report on how to survive in a Mexican prison, but that was about it. Basically, those guys are useless. Then Dave asked, well, did you explain all that to the judge? What did he have to say, tough luck? Then Tom said, they do have a process by which they will get to the airport jail, get a copy of your passport and bring it to the immigration detention center, but that doesn't take just a few hours. The process takes about a week. So I was there for a week. And the conditions in that prison? God awful. Have you ever seen that TV program locked up abroad? Well, if you get a chance, watch it. But because I wasn't American, I got special treatment.

[13:41] So there were only two guys in my cell. Then Dave asks, how did the other prisoners act toward you? And Tom says they taunted me. They would poke at me trying to get my ire. So I basically stood back and tried to be as unobtrusive as possible. And then I tried to learn how to fit in by watching how they interacted with each other. I realized that what I'd learned in some of my psychology classes was true. I had one guy say, hey, you have pretty lips. Another guy said, hey, my buddy over here is gay. And I just said, well, good for him and ignored him as much as I could. But I was the only Caucasian guy in the prison of about 8,000 guys. Other than that, the fact is they think you have money and they want it. In fact, there are kidnappings right inside the prison.

[14:28] The worst thing you can do if you're in a Mexican prison is let anybody know your family's phone number. Because there are pay phones in the prison. And what they do is call your family if they get the number and say, hey, you either put $1,000 in my wife's account or I'll kill your husband. And they do it. There were three or four murders a week in that prison. As for me, in total, I was in Mexican jails about two weeks. After three or four days, I forget I was taken to the immigration detention facility where I stayed for a week while they got my passport and such. Meanwhile, a friend of mine from Panama who was expecting me called somebody he knew in Mexico because when I didn't show up, he figured I had some kind of problem in Mexico and he was right.

[15:15] Then, some guy out of the blue came to visit me at the prison and gave me the cash. And with that, I bought a phone card and called everybody I knew in the little town that I live in who had passports and might be able to get down to help me. I begged and pleaded for them to get down there and help me, but not one single person was willing to do anything. I couldn't believe it. I guess that shows you who your friends are. Then Dave asked him, So you made bail. What did you do next? Did you get out of town or stay there to deal with the gold? Tom says it was all very strange. I mean, they opened the doors and let you walk out. And you quickly realize you have no idea where you are. Fortunately, I had befriended a guy who worked at the immigration jail who spoke some English. He wasn't supposed to do this, but as I walked out the door, he said,

[16:04] Just wait a minute. In about 15 minutes, I'll walk out the same door because I'm off work and just follow me and I'll take you to where you need to get a cab to a Radisson Hotel. And he did. Then Dave asked, Weren't you concerned he was just trying to scam you? And to that, Tom said, Yeah, but he was all right. He didn't. In fact, the first thing we did was go to a mall where I bought a cell phone. Then I went to a Radisson Hotel. And from there, I started sourcing lawyers. I was there for about a week interviewing lawyers before I went home. Then Dave said, So in the end, you found a good lawyer and ultimately were able to get your coins back. Though the whole thing did take several months. So you got on the plane that day with a couple hundred thousand dollars worth of gold.

[16:50] And after a long and tortuous experience, you have them back. So in the end, Tom, what did this little misadventure cost you? Tom says, 60 grand. And he's suing the Mexican government to try to recoup the 60 grand. Then Dave asked him, What are the most important lessons you derive from this experience? For example, what would you tell someone who's thinking about transporting their gold across borders? Tom says, I would recommend against it. There are organizations that have that service available now. But as far as Mexico goes, the biggest problem in Mexico is that the burden of proof is on the accused, which is just the opposite of the US. To which Dave disagreed. He said, The state of New York once tried to done me for residency related taxes.

[17:40] And when I told them I never lived in New York, they just said, Prove it. And I was forced to prove it, which seems to blow that theory. Anyway, Tom said, The Mexican law was supposed to have been changed starting in January 2012 to reverse the principle of burden of proof. Supposedly to bring it in line with the US court system. But Tom says, When I was in the immigration detention facility, I met a couple of prisoners from the states, one of which was a dive master for a resort. He said he had been accused of rape and was in prison for five years before he could prove he was innocent. In his case, he found the girl who accused him and then she said, Oh, he's not the one. So even though the law has supposedly been changed,

[18:26] the burden of proof was still on him. Then Dave asked him, So would one lesson be to stay out of Mexico? And Tom said, At least until they changed that law. Then Tom said, After all I've been through, the Mexican government has put me on a Smugglers watch list, an international Smugglers watch list. So when I flew back to the states, the guy in custom says, Hey, you want to explain to me what happened in Mexico? And later I took a trip to Belize and they saw the same list and took me off to the side and opened up my computer, turned it on, looked at everything they could find in there. And of course, they searched my baggage. And fortunately, they didn't go in for any proctology. Then Dave said, Another lesson one might derive from your experience

[19:13] is that if you're going to be doing anything at all that could get you in trouble, it would be a good idea to make sure you've got a network of contacts in place that can help should the need arise. Clearly, you did not have a support network in place. Okay, so I'm sure you all get the gist of that interview. So what do I have to say about it? Well, first of all, note this guy didn't seem to have any trouble at all getting his gold through US customs. Secondly, he didn't follow the good advice to always have a spare copy of your passport on a little flash drive, maybe hanging off a little chain on your neck. Those things are so damn small, you could easily just have one in your pocket or even on a key chain attached to your belt buckle loop. In Tom's case, something as simple as that

[19:59] would have saved him a week of jail time. And another thing, who doesn't travel with at least a paper backup copy of their passport? And that point about having a Latin lawyer way ahead of time. If you've been listening to this show any length of time, you know that's number one on my list of recommendations. In fact, at my Latin American seminars, that's the first thing we do at our meet and greet. I introduce you to some very smart and trustworthy Latin professionals, including legal advisors, lawyers. And believe me, down here in Latin America, finding a good honest lawyer can be one of the toughest things you'll ever do. And that's why when you come to my seminar, I make sure we take the guesswork out of that. Anyway, just think of what Tom went through. He says he spent a whole week

[20:46] in a Radisson hotel in Mexico City just interviewing lawyers. Come on. If he'd had his own Latin lawyer contact, none of that would have happened. In fact, he probably would have been out of the place in 48 hours. And just a word about that prison. He said he was the one gringo out of about 8,000 prisoners. Now, that should be a signal to all of you guys and gals out there who think that in Latin America, gringos are targets for trumped up charges. And that many of them end up wasting away in medieval prisons like that. Well, if you just look at those numbers, you see that it's absolutely not true. Because statistically in Mexico, there are about one million gringos and expats either retired, working, or owning property there.

[21:32] And thus, given the population of Mexico, the percentage of gringos in jail should then be about equal to their percentage in the general population, which is one in 150, which would mean in a prison with 8,000 inmates, there should be at least 50 gringos there. Not, as Tom reports, only one gringo in the whole place. So in effect, the statistics are skewed drastically in the opposite direction. Meaning, gringos statistically are 50 times less likely to end up in a Mexican prison than your average Mexican, which is very good news unless you're stupid enough or unlucky enough to land there. So for gringos and expats, simply the fear of ending up in one of those wretched Mexican prisons

[22:18] should never be a reason for you to avoid that country in general. Though there are, as you know, dozens of other reasons to stay away from the place. And when I say that, I know some of you are thinking, well, what about the rest of Latin America? The jails and such and the conditions must be just as wretched too. Well, yes and no. For one thing, in Mexico, you have no gringo advantage. And though you might think you have because it seems like you're getting preferential treatment, but that's only because, like Tom says, you're thought to have money and people want to get it from you. But as soon as you get south of Mexico, even if you do end up in a skanky jail or prison, which is even less statistically likely than it is in Mexico, I guarantee not only will you get favored treatment,

[23:03] but most everyone will want to buddy up to you and be your friend, including, get this, the guards. And yes, the common criminals will try to extort money out of you if you let them. But in other cases, I've heard prisoners actually protect gringos. Because again, where gringos are rare, like south of Mexico, it's a feather in the cap of even a criminal to have a gringo as a friend. Well, the fact is, I know a few gringos and expats who've made it to jail somehow in various Latin countries south of Mexico. And it usually works out like this. Once you hit the cell block and everyone sees that you're that rare gringo, the first thing that'll happen is the big cheese in the cell block, the guy who's running things will try to cut a deal with you.

[23:49] And believe it or not, he'll seriously want to be your friend too. But not for nothing. Seems like when you're talking about prisons and jails south of the Mexican border, to have a top-tier position in the Latin American prison society, which is where you want to be, will cost you about $250 a month paid directly to the big cheese. Which of course means you're going to have to have a few contacts on the outside to somehow pass him or his friends that money. Yet another reason to develop an early relationship with a lawyer. The fact is, in my 20-something years down here, I have known gringos who've ended up in jail for one thing or another. And every one of them who had previous connections with a lawyer, you know, to set up an SA corporation or open a bank account or whatever, guys like that

[24:35] with their lawyer's phone number in their pocket, never seem to spend more than a day or two in the lockup. Even the expat Colombian guy I mentioned about a year ago in his show who got set up by his own landlord on a pot-growing charge only spent about less than a week in jail and that was a serious charge. Why? Because he already had a good relationship with a local lawyer before all of that went down. Now, that interview you just heard happened to a guy who had no contacts in the country he landed in, nor did he know any Spanish. Remember that. Oh, and by the way, you heard right when you heard Tom say his lawyer was going to try to sue the Mexican government for that $60,000 he lost on the way to gaining his freedom. You know, false imprisonment and the severe run-around

[25:22] he got and all that. Well, here's what I say. Fat chance. He's never going to win that. If he's not smart enough to cut his losses and drop the suit, he's going to drop some more of his money into the toilet on legal fees again. The fact is down here in Latin America, there's absolutely no point in suing the government. And even if you do go through all the hassle and get a judgment in your favor, whatever some, the court awards you, I'll bet you 10 to 1, the check'll bounce. Now, since we're on the topic of crimes and prisons and such, I think on the next show or maybe the one after, we'll talk a bit about the present state of crime and security down here in Latin America. And again, we'll leave Mexico out because that's just a total basket case.

[26:08] So stay tuned for that. Oh, and by the way, before I forget, there's still time to sign up for my Expat Wisdom seminar coming up in July. Just go to www.expatwisdom.com, click on the seminar link for all the details. And for any questions, just send me an email at theexpatfiles at gmail.com. I'm sure you won't regret it. And I'll introduce you to some expat and Latin professionals that are pure gems. The kind of people it took me years to stumble on myself. Anyway, just go to expatwisdom.com and check it out. And now one little bit of technical news. You might have heard of that encryption program called TrueCrypt. It's used to encrypt your whole hard drive or parts of it on your computer. I use it myself.

[26:55] Now, you might have heard just recently this week, in fact, that it's been compromised. Well, note that there are various versions and version 7.1, the one that came out a couple of years ago has not been compromised and can't be because it's open source. But if you download and use version 7.2, the very recent version, I've got it from very good sources that has a back door for the NSA. In fact, it seems like version 7.2, the recent version, was created because the NSA and other government agencies could not crack version 7.1. You've been listening to The Expat Files, living in Latin America, coming to you

[27:40] twice a week from somewhere south of the border. Email me, theexpatfiles at gmail.com. And don't forget to check out expatwisdom.com to sign up for your free reports on Latin America. See you next time. Nos vemos.