Sat, Nov 15, 2008 - Page 7 News List

Pyramid scheme collapse leads to riots in Colombia

AP , BOGOTA

At least one man was killed in rioting over the collapse of a pyramid scheme that offered 70 percent returns and fleeced its mostly poor investors out of millions of dollars, Colombian authorities said on Thursday.

The victim was shot dead on Wednesday evening in a southern region where angry investors were demanding their money back from a company called “Dinero Rapido Facil Efectivo,” or DRFE.

The name means “Fast Money, Easy Cash” in English.

Authorities seized 66 company offices and confiscated 14 billion pesos (US$6 million), according to national police director General Oscar Naranjo.

He said no arrests had been made but authorities were seeking DRFE’s owners.

On Tuesday, the Finance Ministry ordered DRFE to return deposits to investors.

It calculated the company took in 400 billion pesos from January through September.

Finance Minister Oscar Zuluaga told reporters that authorities were investigating whether DRFE was involved in laundering drug money.

Reporters could not confirm media reports that the company’s owner fled the country.

The man killed on Wednesday night, Byron Santander, was a public official who was trying to calm upset investors in Buesaco when he was shot by an unknown assailant, Mayor Jose Maria Moncayo said in a telephone interview.

“We don’t know who did this or why,” Moncayo said, adding that nearly every family in Buesaco, population 22,400, had money in DRFE.

Most of the rioting occurred in the southern province of Narino, a cocaine-producing region.

Authorities imposed curfews in Buesaco and at least two other towns.

According to the Finance Ministry, DRFE offered 70 percent returns on investments, charging a 1 percent handling fee and 16 percent tax.

Payment depended on the amount of cash deposited. Returns were promised within 23 days on investments of up to 5 million pesos.

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