According to investigators, the “Big Money” investment and lending scheme busted last week in Quevedo is only the tip of the iceberg. “There are dozens, probably hundreds of these pyramid and money laundering operations working around the country,” says banking regulator Gustavo Ramos. “Because people are desperate these days, more are opening up every day.”
Among those borrowing at high interest rates from the unlicensed financial operations are families sending members to the U.S. illegally who need money to pay coyotes for the trip through Mexico, Ramos says. “You see their advertisements on Facebook and WhatsApp,” he says.
“Invest and earn 20% per month on your capital,” one Facebook notice says. Another on WhatsApp reads, “With us, your investment earns 15-20% monthly, or more than 200% per year. What are you waiting for?” Other advertisements promise “money now” for those who need to borrow. One operation has 62,000 followers on Facebook.
According to Ramos, most of the operations are classic pyramid schemes that also lend money at usurious rates. “They depend on people’s greed and desperation,” he says. “It is our suspicion that most of those that work in the coastal provinces are laundering drug money. When we investigate, we are usually unable to determine what products and services they offer or how they intend to maintain their business in the long term.”
Following the raid on Big Money offices last week, the Superintendecia of Banks has received hundreds of complaints of other unlicensed financial operations. Ramos says that investigators are working mostly on line, where services are advertised, to put together lists of the investment and lending contacts. “Before we commit police to raiding the offices and making arrestrs we need to have solid cases and must carry out operations with maximum force since we are dealing with dangerous people, criminal gangs and drug financiers.”
Ramos adds that many of the financial operations in Ecuador are connected to larger ones in Colombia, Peru, Mexico and Brazil and have ties to the illegal drug trade.
On Monday, five men died in a shootout near Big Money headquarters in Quevedo and police say the violence was linked with that operation. In the Big Money case, hundreds of local residents attacked investigators who raided the organization’s office, burning three police vehicles and chasing some of the investigators out of town with a motorcycle brigade. The owner of Big Money, Miguel Nazareno, or “Don Naza”, is considered a hero in Quevedo, delivering big investment profits to residents and donating medical equipment and food to the needy.
“Don Naza” is typical of those who run the larger operations,” says Ramos. “He wins the support of the local population not only by returning high interest on investments but by being involved in the community. He has sponsored a number of charity events that are popular with the locals.
One picture on social media shows Nazareno lifting an elderly woman into a new wheelchair. What the people don’t realize is that one day, when he can no longer repay the investors and collect his loans, he will leave town and they will realize they’ve been scammed.”