Easy money scams ensnare rural Colombians

Mon Nov 17, 2008 8:10pm EST
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By Hugh Bronstein

POPAYAN, Colombia (Reuters) - The lure of easy money was too tempting for thousands of Colombians who lost life savings in pyramid schemes across rural areas already blighted by poverty, rebel violence and cocaine trafficking.

Riots erupted last week in places like Popayan, a colonial-era mountain town in southern Colombia, when bilked depositors stormed the offices of bogus finance agencies whose managers had disappeared with suitcases full of cash.

As companies with such brazen names as "Money, Fast, Easy and in Cash" failed to deliver up to 150 percent in promised interest, the scams exposed the vulnerability of long-neglected rural areas where people shy from opening savings accounts due to high banking costs.

Like the rest of Colombia, with its culture of easy riches that stems from being the world's No. 1 cocaine exporter, people dream of a quick escape from poverty in Popayan.

"I knew there as a huge risk. Who can really expect a 70 percent return?" said Jesus Bravo, 56, a local guitar player who invested and lost 11.8 million pesos ($5,000).

"But the temptation is equally huge when you see your neighbors raking in millions of pesos. My wife was even doing it. She earned 80 percent," he said.

The pyramids grew through last year until exploding in a wave of bankruptcies this month. Victims nationwide range from poor farmers to big-time politicians.

President Alvaro Uribe, who acknowledges he was caught off guard by the scandal, chastised police officers and senators for setting a bad example by investing in the schemes. He appealed to schools to teach children to reject a "Mafia culture" of quick riches and opt for honest work instead.   Continued...