By LARRY O’DELL

RICHMOND, Va.

A former Costa Rican insurance executive charged in a 0 million fraud scheme testified Thursday that he was unaware that the financial statements he used to lure clients had been falsified by his company’s accountant.

“I was not dealing with the financial statements in detail,” Minor Vargas Calvo said in U.S. District Court. “I just had them as a marketing tool.”

Vargas, 60, is charged with conspiracy, mail fraud, wire fraud and money laundering. He was the final witness to testify on the fourth day of his jury trial, which will resume with closing arguments Monday.

Vargas was president of Provident Capital Indemnity Ltd. The company sold bonds guaranteeing funding for life settlement companies, which buy life insurance policies from insured people at less than face value and collect the benefits when those people die.

Prosecutors say Vargas lied to investors about Provident’s financial assets, stability and credit rating. Vargas denied lying, saying the company had substantial “intangible assets” the government was not counting. He said he believed he was telling prospective clients the truth when he said Provident was protected by “reinsurance contracts,” even though he had never seen them and they turned out to be nonexistent.

Vargas also denied knowledge that an accountant cooked the company’s books to attain a top credit rating, despite what Assistant U.S. Attorney Jessica Brumberg described as “frantic emails” from the accountant to Vargas as regulators and investigators started to demand more information about Provident’s finances.

“You are the only one who knows the real truth,” the accountant, Jorge Luis Castillo of Hackettstown, N.J., said in one of the emails.

Castillo, who testified against Vargas, pleaded guilty last year to conspiring to commit mail and wire fraud. He is scheduled for sentencing Sept. 5 and faces up to 20 years in prison.

During his nearly three hours on the witness stand, Castillo said that before he was arrested he was working with two other businessmen who wanted to take over Provident and infuse it with .2 billion in new capital. Brumberg said Vargas wanted to unload the company “and disappear into the night.”

“Oh my God, never. Never,” Vargas said.

Brumberg also said that while the company was failing to meet its obligations and Vargas was looking for new capital, he was transferring more than million from Provident accounts into other entities he controlled, including the Brujas professional soccer team. She suggested Vargas, who has a doctorate in economics and formerly worked for the Central Bank of Costa Rica and for the U.S. Agency for International Development, was using Provident money to maintain his status as a big shot in his home country.

“You don’t know me,” Vargas protested. “I am a Christian.”

According to prosecutors, Provident sold bonds with face value of 0 million based on fraudulent financial statements from 2004-2010. The company agreed last week to plead guilty to a single count of mail and wire fraud conspiracy and faces a fine of 0,000 or double the amount it collected from any victim of the offense, plus full restitution. Sentencing is set for Sept. 5.

The Securities and Exchange Commission also filed a civil complaint against Provident last year, and a judge froze the company’s assets and enjoined it from doing business.

One of Provident’s major customers was Houston-based life settlement company A&O. Seven people affiliated with A&O, including its three principals, have been convicted in jury trials or pleaded guilty to a 0 million fraud that claimed 800 victims in three dozen states and Canada. Two of those people testified against Vargas, who seemed mystified that the United States could prosecute him.

“I just do not see how the U.S. government is judging me,” he testified. “I was in Costa Rica.”

Brumberg asked Vargas if he had felt immune from extradition in his homeland.

“I have not done anything wrong, so I don’t see why you ask me,” he said.

The Provident and A&O cases were brought in Virginia because that’s where some of the victims and transactions were located.

SHANGHAI (Dow Jones)–China shares ended flat Thursday, as heavyweight financial companies dropped following China Life Insurance’s lower-than-expected first-quarter net profit, offsetting gains in metal companies.

The Shanghai Composite Index ended down 2.11 points at 2404.70 and the Shenzhen Composite Index fell 1.62 points to 943.03.

“The market is likely to be stuck in a range bound trading pattern after recent gains,” said Everbright Securities analyst Zeng Xianzhao. The Shanghai index has risen 6.3% since the start of this month.

Huatai Securities analyst Li Wenhui said uncertainty about the outlook for listed companies kept investors from chasing the market’s rally. Trading volume in Shanghai totaled CNY104.82 billion, down from CNY113.07 billion Wednesday, indicating investors remain cautious.

However, “overall, I think the odds for the upside in the broader market are still big because of low valuation of blue chip companies,” he said.

Analysts expect the benchmark Shanghai Composite to trade within a 2400-2450 range in the short term.

Insurance companies fell after China Life said late Wednesday its first-quarter net profit fell 29% from a year earlier to CNY5.63 billion. Analysts had widely expected the country’s biggest life insurer by premiums to post higher net profit in the first quartet.

Barclays said the main driver of the profit decline was a worse-than-expected impairment loss of CNY7.7 billion in the January-March period.

“We are somewhat surprised by the size of this impairment charge given the A-share market increased 3% in the first quarter. The company may need to book additional losses if the equity market doesn’t recover significantly in 2012,” Barclays said.

China Life dropped 1.1% to CNY18.32, New China Life fell 2.2% to CNY34.16, and China Pacific Insurance slid 0.5% to CNY21.81.

Banks fell on profit-taking. China Construction Bank fell 0.4% to CNY4.79 after having risen 1.7% in the previous two sessions and ICBC ended 0.7% lower at CNY4.39 following a 0.7% gain over the same period.

Metals-related counters gained, on expectations for higher demand as the second quarter is traditionally a peak season for the construction sector.

Yunnan Aluminium surged by the 10% daily limit to CNY6.74, Sino-Platinum Metals added 3.9% to CNY19.12 and Zhongjin Lingnan Nonfemet gained 1.2% to CNY9.60.

-Rose Yu and Chao Deng contributed to this article, Dow Jones Newswires; 8621 6120-1200; rose.yu@dowjones.com