Panama 'holds Colombia scam boss'

Protests in several Colombian cities left at least two people dead

The authorities in Panama have arrested a Colombian man suspected of running a pyramid finance scheme that collapsed last week, local media reports say.

Colombian prosecutors say the company, DMG, was a front for money-laundering, and has requested the extradition of its main shareholder, David Murcia.

He fled to Panama when the scheme failed, prompting deadly protests by investors who had lost money.

It is not yet known if Panama will extradite him. DMG denies wrongdoing.

DMG had promised investors returns of up to 150% a month on their deposits.

It was among several finance firms whose sudden closure prompted violent protests in a number of Colombian cities, in which at least two people died.

International warrants

Colombian prosecutors have ordered the arrest of seven DMG bosses and the authorities are investigating possible links between the firm and Colombia's multibillion-dollar cocaine trade.

"They founded and promoted the business with illicit resources," said Mario Iguaran, Colombia's attorney general.

Many people put their life savings in the investment schemes

A lawyer for DMG denied the allegations and said the company's managers were ready to cooperate with the investigation.

On Monday, Colombia's government announced four emergency decrees and declared a state of "social emergency" under which police could seize money from firms accused of illicit activities to reimburse investors.

Police sealed the offices of most of the 240 pyramid schemes they had tracked down, which between them had collected well over $200m, correspondents say.

International arrest warrants were issued for the heads of the pyramid schemes, but many are believed to have fled the country, taking hundreds of millions of dollars with them.

Colombia's President Alvaro Uribe has vowed to help poor investors recover their money after many of them lost their life savings.

He said police had already seized some $40m (£27m) held by pyramid schemes and that some of the finance companies had begun returning money to investors.

The emergency decrees set out new procedures to intervene in financial firms operating without authority and to seize their funds.

The decrees also aim to ease the return of funds to depositors.