For US Man Jailed in Bolivia Uncharged for 580 Days, Nightmare Continues

SANTA CRUZ, Bolivia Jan. 2, 2013— -- It's been 580 days.

Jacob Ostreicher, an American small businessman, a father of five and grandfather of 11, was arrested in Bolivia and detained for 580 days in Santa Cruz's Palmasola Prision, one of the toughest and strangest prisons in the world.

Bolivian authorities accused him of being a money launderer involved in Bolivia's vast drug business. "Nightline" first met Ostreicher in prison last May. He has maintained his innocence since his arrest in June 2011.

"Absolutely, 100 percent innocent," he told "Nightline." "And the prosecutors know that I'm 100 percent innocent."

Ostreicher languished for a year and a half, among the murderers, rapists and pretty drug criminals locked up in the bizarre and dangerous place, where prisoners run the prison and guards rarely enter. He was never charged and no evidence was brought against him.

He said he was desperate.

"It's an absolute nightmare," Ostreicher said. "I feel all alone. I am begging the American people to try to help me."

Then last month, thanks in part to "Nightline's" investigation into his case, there came a stunning breakthrough. Ostreicher was released after 13 government officials, several of them involved in Ostreicher's case, were arrested and charged with corruption and extortion.

The scandal has engulfed Bolivia, but Ostreicher is not free to go home yet.

"I feel like I'm in a twilight zone," he said.

Under house arrest in Bolivia and suffering from Parkinson's disease that came on while he was imprisoned, Ostreicher told "Nightline" today his life may be in danger.

"You have to understand what happened here with this exposure, with this corruption," he said. "As of today, there are 13 people in prison and those are very high government officials. When I actually went to the hearing from my clinic, they didn't allow me to leave without a bulletproof vest and a helmet because of certain threats that came in to my lawyer."

It is the latest twist in a Kafka-esque tale.

Ostreicher is a 53-year-old flooring contractor from Brooklyn. In 2008, as the construction business in the United States collapsed, he invested $200,000, his life savings, as a very junior partner in a $25 million rice growing venture in Bolivia.

It was a good business with nearly 40 million pounds of rice in the first harvest and 200 Bolivian employees. Then in 2011, Bolivian police arrested one of Ostreicher's former employees and accused him of being involved with drug criminals. Ostreicher said he cooperated fully with police -- and then was arrested himself.

Ostreicher and his defense team say his successful rice business was the reason he was targeted.

Retired FBI agent Steve Moore advocated for the release of Amanda Knox when she was charged with murder in Italy and he has been investigating Ostreicher case for free. According to Moore and the rest of Ostreicher's defense team, this is a case of an old-fashioned shakedown: Bolivian officials are demanding money.

"Here's a guy they see coming in from New York, who has got probably a lot of liquid cash or represents a lot of liquid cash, and they saw an opportunity," Moore said.