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Pyramid scheme enrages investors

A collapsed pyramid scheme that cost millions and sent swindled investors rioting in the streets continued to plague southwestern Colombia.

world Updated: Nov 15, 2008 10:08 IST

A collapsed pyramid scheme that cost millions and sent swindled investors rioting in the streets continued to plague southwestern Colombia late on Friday, with two people dead, 13 towns under police curfew and the country's top banking regulator resigning.

A total of 600 million pesos ($270 million) is believed to have been lost by the investment company "Dinero Rapido Facil Efectivo," or "Easy Money Fast Cash" in English, police said. The collapse so far has affected hundreds of investors in small towns and rural areas.

The company offered profits of 70 per cent to 150 per cent a month, Narino state Gov Antonio Navarro said in an interview with Caracol radio.

The yearlong scheme was allowed to flourish because of "naivete, greed and banking regulators' failure to act," said Navarro, whose state was home to the company headquarters.

Authorities had a hard time explaining why they hadn't intervened earlier with at least 240 offices offering absurdly favorable returns.

But Banking Superintendent Cesar Prado resigned Friday night, and the government replaced him with the Finance Ministry's head of financial regulation. Presidential press secretary Cesar Mauricio Velazquez gave no further details.

President Alvaro Uribe told Radio W that his government will look for ways to help the poorest people who lost money, but he didn't say how.

The financial company collapsed on Wednesday as rumors spread that its owner, Carlos Alfredo Suarez, fled the country and investors took to the streets. Police confiscated some 57 billion pesos ($26 million) _ but said most of the money was gone and that Suarez's whereabouts are unknown.

At least 13 towns were put under curfew because of rioting, said Gen Orlando Paez, national police operations chief. Two men shot and killed company security guard Heriberto Taticuan after breaking to his home near the town of Rosas about 400 kilometers (250 miles) southwest of Bogota, said Mayor Jose Roberto Diaz.

He said Taticuan died early on Thursday from wounds to the chest. Another man who was trying to calm upset investors was shot and killed on Wednesday by an unknown assailant in Buesaco, where the town mayor said nearly every family had invested their money in the scheme.

The general said police hadn't taken action before because they weren't ordered to by the Finance Minister or the Attorney General Attorney General Mario Iguaran and Finance Minister Oscar Ivan Zuluaga gave a brief statement Friday, saying they are speeding up their investigations to find out who was responsible. But they declined to answer questions from the press.