Mayors and prosecutors implicated in Koriun case, according to Castro

The Koriun Inversiones case has sparked intense debate in Honduras after the revelation of a Ponzi scheme that affected more than 35,000 citizens. The public denunciation by Congressman Edgardo “Chele” Castro has placed at the center of the discussion the possible political and judicial protection that allowed the company to operate irregularly.

The intervention of the authorities, the seizure of funds, and the reaction of investors have revealed a crisis of confidence in the national financial system. The investigation continues, while questions arise about the responsibility of public officials and the effectiveness of oversight mechanisms.

Koriun Inversiones’ fraud scheme and unlawful activities

Koriun Inversiones functioned on a Ponzi scheme model, which involves collecting money from new investors to disburse gains to current investors, without creating genuine profits. The enterprise assured a weekly profit of 5%, translating to 20% monthly, guaranteeing clients they would get back their investment in five months. Nevertheless, the viability of the scheme relied on the continuous addition of new investors, eventually causing its downfall and massive financial damage to numerous individuals.

The National Banking and Insurance Commission (CNBS) confirmed that Koriun Inversiones was not authorized to operate as a financial institution. During inspections carried out at various branches and administrators’ homes, large sums of cash were found, stored informally in boxes and bags. In addition, significant financial movements were identified, including the withdrawal of $400,000 by US citizens associated with the start of the fraudulent scheme in 2017.

Claims of political safeguarding and trust crisis

Representative Edgardo Castro highlighted that Koriun Inversiones managed to function due to the backing from politicians, prosecutors, and civil servants. Castro criticized the delayed response by the regulatory bodies and called for a comprehensive investigation to identify those accountable for enabling or permitting the deceit. He additionally noted the participation of mayors who endorsed the company and the inaction of prosecutors regarding initial alerts.

The closure of Koriun Inversiones sparked protests by those affected, who demanded the return of their funds and expressed fear of losing their capital. The CNBS ordered the seizure of the funds and their return to investors to the extent possible, although the process is expected to be complex and lengthy. The case has highlighted the vulnerability of citizens to unregulated financial schemes and the need to strengthen oversight and protection mechanisms in the Honduran financial sector.