Colombian authorities scrambled today to recover hundreds of millions of dollars lost in pyramid schemes and offered to help poor Colombians who lost their shirts in the massive scam.
The collapse of the pyramid schemes has sparked riots, looting and worries over the impact on a slowing economy.
At least one person has been killed in violence triggered by the collapse around the country of illegal agencies such as DRFE or "Quick, Easy, Effective Cash", which allegedly lured thousands of small investors with promises of returns of up to 150 per cent.
One man reportedly took his own life after selling his home to invest in a scam that promised to double his money.
"The government has to find ways to recover all the money poor Colombians have deposited," President Alvaro Uribe said on local radio. "This is a fantasy that has ruined a lot of people."
Police recovered just $16 million in cash after raiding pyramid agencies, but angry victims have burned offices, attacked employees and looted buildings as they clamor to get back money they invested for homes, schooling and retirement.
Get-rich-quick scams have sparked violence in other developing countries. The collapse in 1997 of pyramid agencies in Albania caused losses of $2 billion and led to about 3,000 deaths before an Italian-led European force restored order.
Colombian authorities were still hunting for the founder of DRFE, who until recently had sold snacks on the street and looked after parked cars, local residents said.
Government officials blamed each other for allowing the schemes to flourish and dupe mainly poor Colombians in a country where high fees make bank accounts unpopular.
Business leaders have called on the government to declare an economic emergency to help deal with the fallout.
No official figures exist about how many illegal agencies operate in Colombia, but police say they have detected at least 200 pyramid schemes around the country. The schemes flourished until the swindlers began making off with deposits.
Authorities said this week one agency alone handled $171 million over the last four months. Analysts are warning about the impact on economic growth, which the government already sees slowing to as low as 1 per cent next year.
Reuters