May 20, 2009 (LBO) – A man who ran an illegal Ponzi-style ‘investment’ scheme in Southern Sri Lanka, offering high interest rates until its collapse last year when he failed to repay investors, has been shot dead, police said. Piyadasa Ratnayake, from the southern Sri Lankan township of Hungama was abducted in the early hours of Wednesday, by an identified group that came in a pick-up truck, police spokesman Ranjith Gunasekera said.
The underlying business of the Ponzi operator does not generate enough returns to pay the interest promised.
In a typical Ponzi scam, the operator will pay attractive return and repay earlier investors with deposits taken from later ones, in the style of ‘robbing Peter to pay Paul.
Ratnayaka who was popularly known by the alias Danduwam Mudalali had at first operated a successful money lending business. But later people had come in droves and given him money.
But he was later arrested and charged with financial fraud after he was unable to repay ‘depositors’.
At the time of his abduction, Ratnayake was on bail.
Police said his body was discovered in the Puswella area of Kuruwita.