Authorities said the agencies' operations fit the classic definition of pyramid or Ponzi schemes, with promoters promising sky-high profits to attract cash that was then used to pay existing investors and line the pockets of company officials.

One collapsed investment house, known by the initials DRFE, for "Fast, Easy Cash Money," promised profits of up to 150% per month before its founder, former parking lot attendant Carlos Alfredo Suarez, fled the country last week. He is wanted for questioning.

"I knew there was a huge risk. Who can really expect a 70% return?" DRFE investor Jesus Bravo, 56, of Popayan told Reuters news agency. The musician fears he has lost the $5,000 he invested with the company, "but the temptation is equally huge when you see your neighbors raking in millions of pesos."

Much of the alleged pyramid investment activity was concentrated in the southwestern state of Nariño, where rampant drug trafficking has generated a steady flow of disposable cash.

The government has no estimate of how many investors are at risk, though the number is thought to be in the thousands. Total sums invested are also unknown. Uribe apologized during a popular radio program Friday for not taking action sooner but said he had been told the matter was "being investigated."

No one in government can claim the operations were clandestine. In recent months, long lines regularly formed outside some of the investment shops in Pasto and Popayan.

Pyramid scams also have a long history in the U.S. One of the more notorious was the 1980s scandal involving the La Jolla-based J. David & Co. investment house, in which Jerry Dominelli was convicted of bilking hundreds of well-heeled clients out of millions.

In recent years, pyramid scams have also ensnared investors in Albania, Russia and Costa Rica, the latter case involving dozens of U.S. retirees.

Source: latimes.com