The brains behind the biggest Ponzi scheme in Colombia’s history has been sentenced to 30 years and 8 months in prison for money laundering and illegally receiving money.
David Murcia Guzman, who created DMG Holdings S.A, was sentenced by the High Court in Bogota on Thursday. He is currently serving a 9-year sentence for money laundering in the United States.
Hundreds of thousands of Colombians lost their life savings investing in DMG, which allegedly stole more than $400 million from investors.
The sentence came after an appeal lodged by Guzman’s lawyers was dismissed by the court. Guzman claims that the evidence against him was tampered with.
“There is no evidence of the incongruity that [the defence] mentioned,” a magistrate said. “The facts were not altered.”
The court also ordered Guzman to pay reparations to the victims of DMG, some of whom have been waiting 5 years for compensation.
“Some 1,923 victims will receive on average 55% of what they invested in DMG,” confirmed the lawyer representing the victims, Fernando Ruiz. “In other words, those who invested 10 million will get 5 million back.”
In December 2012 over $2 million held in US bank accounts previously owned by Guzman were seized and presented to the Colombian government. A year earlier, DMG was ordered to pay 73,000 victims reparations of $11.7 million.
In an article published 3 months before Guzman’s arrest in Panama, November 2008, newspaper Semana explained the “magic formula” of DMG. They reported that clients would buy a prepaid card for a minimum of $700 and could then begin spending money on a variety of goods and services available at DMG subsidiaries, from a shirt to a television to plastic surgery or even a house.
After 5 or 6 months the client would receive between a 70% and 150% return from their investment, the amount depending on how much more they had invested and how many new customers they had introduced to DMG. As well as money, the rewards would come in the form of goods and services. It is this, that the returns were not necessarily monetary, that made DMG difficult to identify as a Ponzi scheme.
The money was so easy to come by that many Colombians sold their properties and withdrew all their savings to invest in DMG. In the South of Colombia many quit their jobs. Semana mentions the case of Mocoa in the Putumayo department, the birthplace of the company. There businesses complained that it was difficult to find workers, because people could make more money through DMG “without lifting a finger” than they could through formal work.
Guzman was seen as a savior, helping the country’s poorest people while the government did nothing. DMG became “Dios Mio Gracias” (Thank you God) and “Dinero Monton Gratis” (Loads of free money). Indeed, when Guzman was arrested in Panama thousands of his customers took to the streets to defend him.
Now he is seen in a less favorable light.
Guzman listened to the latest verdict of the court via teleconference from his cell in the United States. He was extradited to the US in 2010 after buying two properties in Miami, Florida, with money which was obtained illegally.
- Tribunal de Bogotá confirma condena contra David Murcia y ordena reparar a las víctimas (Caracol Radio)
- Tribunal Superior dejó en firme condena a David Murcia Guzmán (El Espectador)
- Capturan a financista colombiano (BBC News)
- El faraón de DMG (Semana)