Tailored to each victim: this is how the Malaga man arrested for alleged pyramid scheme scam operated

Paco 'el Bueno' (the good) or Paco 'el Gestor' (the accountant) as he was popularly known in Vélez-Málaga on the eastern Costa del Sol, led "a high standard of living" and invited his clients to important events including music festivals, which allowed them "access to other social circles".

This was confirmed by the National Police, who arrested him on Tuesday 29 July in Logroño (La Rioja), together with his wife, where the couple had fled after the first complaints began to arrive for an alleged pyramid scam that had been going on for at least 15 years from his investment fund consultancy and management company in the Axarquía town.

The National Police is still investigating the "mass" scam that already amounts to at least more than five million euros. The main suspect, who was considered "an excellent investor", received large sums of money in cash from individuals and business owners with the aim of investing them in "fruitful businesses".

To date 80 victims have come forward although investigators are aware that this number could increase considerably due to the magnitude of the scam. In order to facilitate and focus all the information that those affected can provide, the National Police has provided the following email address: velez.judicial@policia.es to which they can contact and from which they will be given the guidelines to be followed by officers.

Following the complaints and initial investigations, officers have confirmed the existence of a pyramid scheme, "in which the income was used to pay dividends and to attract new clients, carried out by the main detainee and his partner, with which third parties would also have benefited," according to the police force in a statement.

The investigation started in June with Vélez-Málaga's Local Police force, which has been joined by Malaga's provincial economic and fiscal crime unit and police in La Rioja. To date, the investigators have taken more than 80 statements in which those affected have reported the investments made "without any of them having obtained the promised benefits or recovered the capital delivered".

Thanks to his reputation in Vélez-Málaga, Paco attracted clients for investment in insurance companies by receiving cash, to whose "investors" he issued a receipt without telling them how and where he was handling the money. Amounts which were directly controlled by the suspect and for which he did not give an exact account of what he was doing with them.

This was a common method, but it was not the only one; he also allegedly resorted to investments in property projects, requesting contributions of 30,000 euros and upwards for investments in Vélez-Málaga or to purchase flats in other locations. A third method consisted in the direct purchase of properties that the arrested person claimed to have bought or to be about to buy "well below the market price". However, those affected never acquired any rights and the money was never used for this purpose.

Following the investigators' enquiries, it was found that the detainees used a different method depending on the profile of their victims; offering a financial product or investment fund from an insurance company to a small saver profile and property investments to a more business profile that they did not own and which they accessed thanks to their extensive network of contacts.

All of this was the result of his reputation as an "excellent investor, his high standard of living and a certain generosity", through which he attracted new victims with invitations to large events, with transport included and expenses paid, "which was forging him a reputation that was spreading even outside the locality. All this had a knock-on effect in attracting new clients and allowed them to gain access to social circles and thus continue to expand their network of contacts," the investigators said.

Three searches were carried out in Vélez-Málaga and one in Logroño, where the detainee was reportedly hiding with his family. In recent weeks and after numerous complaints, the suspect had disappeared from the Axarquía town, which slowed down the operation.