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

PHOTO: Jacob Ostreicher has been sitting in Palmasola Prison in Santa Cruz, Bolivia, for almost a year, uncharged, but accused by Bolivian authorities of money laundering.ABC News
Jacob Ostreicher has been sitting in Palmasola Prison in Santa Cruz, Bolivia, for almost a year, uncharged, but accused by Bolivian authorities of money laundering.

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.

Ostreicher's wife Miriam Ungar has made the 4,000-mile trip back and forth to Bolivia more than a dozen times. She said she knew what was going on and that she was scared for her husband. The little ones, their grandchildren, don't understand and wrote him letters asking him to come home.

"The justice system, the corruption there…it doesn't look like they are going to release him anytime soon," Ungar said.

Ostreicher's life in Palmasola was terrifying and he said he would do anything to get out – except one thing.

"I told Miriam... if they would make me sign a document that I have done something wrong and then admit to something that I've never done, I will never do that," he said. "I'm an American. I am not going to say that I have done something wrong when I have done nothing wrong."

Ostreicher has lost 40 pounds while in prison. On one of her visits, Ungar said she was worried about her husband nearing a mental breakdown.

"I feel like I'm abandoning him," she said. "The pain of watching him watch me leave, he stands behind the gate and I just stare at him and I walk backwards, because I don't want him to see my back when I walk out the door. He sees my anguish and he runs in to make it easier for me to leave."

Ostreicher has been vindicated, but still the Bolivian government keeps him under house arrest.

Ostreicher still wears a bulletproof vest because his defense team fears they cannot protect him in Bolivian courthouses. And so, the nightmare continues.

"It's time for them to cut me loose and let me go home to my family," he said. "They have done enough damage and now that everybody knows this has to do with a massive extortion ring, it's time for them to let me go home and go back to my country."

ABC News' Lauren Effron contributed to this report