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Colombia acts on pyramid scheme collapse

  • Story Highlights
  • Colombia declares state of emergency after pyramid schemes collapse
  • About 3 million people are estimated to have lost $200 million
  • Officials can use emergency powers to take over the companies
  • Government says the companies were defrauding their clients
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BOGOTA, Colombia (CNN) -- The Colombian government declared a state of emergency Monday, allowing officials to take over businesses that used pyramid schemes to steal millions of dollars from 3 million investors.

The government immediately took over 60 branches of a company called DMG and shuttered its doors.

Officials hope to liquidate some of its assets to repay investors who were defrauded.

Colombians deposited their life savings in the schemes after being promised short-term returns of as much as 150 percent.

The government says the businesses defrauded the public by purporting to offer a sure investment.

The emergency decree also stiffened penalties for anyone found guilty of fraud.

Speaking about the emergency measures, Interior Minister Fabio Valencia decried "the Mafia-like mentality" of those "who want to obtain easy money."

"I want to reiterate to all Colombians that these measures -- precautionary and administrative -- that this emergency has dictated are only and exclusively to benefit and protect the well-being of Colombians, who incurred this in a practice that we should abolish -- all Colombians -- that is the belief that fast riches should be an element of our society," Valencia said in a televised statement.

Public outcry and unrest over the fraud led to three deaths last week, including one investor's suicide.

Officials say the pyramid schemes raked in at least $200 million from 3 million people. In the past five years, authorities believe, the businesses took in $1 billion.

All About Colombia

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