BOGOTÁ, Colombia — Colombia’s government readied emergency measures Sunday to appease irate investors who lost tens of millions of dollars in the collapse of pyramid schemes that caused riots, scores of arrests and two deaths.
President Alvaro Uribe vowed to help poor investors regain their savings but said Saturday that wealthier clients should have known better and will “have to take some blows to the chest.” He said the government could boost prison time for people who collect deposits without authorization, now punishable with six years in jail.
Thousands of Colombians, many of them poor people who do not have accounts at formal banks, had invested with unlicensed companies that offered monthly returns as high as 150 percent.
One outlet, known as Proyecciones DRFE, collapsed Wednesday on news that its owner, Carlos Alfredo Suarez, had left the country and wouldn’t repay clients.
The company was thought to have lost 600 billion pesos ($270 million), having collected 400 billion pesos ($181 million) in the first nine months of the year in just four cities, Colombia’s banking regulator said.
Investors stormed and looted local branches in rioting that left 13 towns under police curfew and two men dead: a security guard and a bystander who tried to calm the crowds.
The owner’s whereabouts are unknown, but a man who identified himself as Suarez spoke by telephone to Bogotá’s RCN radio Sunday, denying the company had any links to drug traffickers, paramilitaries or guerrillas in southwestern Colombia, where it was based.
The company had counted 6 million depositors, including high-ranking political and military officials and entertainers, he said.
The man declined to say how the company could offer monthly interest of 70 to 150 percent, but observers called the operation a pyramid scheme, which uses later investors’ cash to pay off those who invest first. Such schemes collapse when the incoming cash flow can no longer cover payments to a growing pool of investors.
Police have seized 92.4 billion pesos ($42 million) in cash from 68 of its offices and arrested 52 employees, according to deputy national police chief Gen. Rafael Parra. The government may use the seized cash to reimburse poor investors, Uribe said.
