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Around 6 investors were harmed by a fraudulent scheme that involved promises of profits in the livestock sector!
An unprecedented financial scandal in Uruguay is leaving about 6 thousand investors in a serious loss situation, with losses totaling approximately $300M monthly.
The case, known as bull blow, involves three companies – Livestock Connection, Livestock Republic e Larrarte Group – which, over 25 years, captured around $500M monthly promising attractive profits in the sector livestock.
However, these companies are now facing bankruptcy protection, leaving a trail of distrust and frustration.
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The collapse of livestock companies
The beginning of the collapse of the scheme occurred amid the 2022/23 drought, which caused losses to the Uruguayan agricultural sector exceeding $1,7 billion, according to official estimates.
This drought severely affected food production and herd health, resulting in a decrease in the supply of livestock and, consequently, in the profitability of companies.
In addition, rising global interest rates following the pandemic have made the business model of companies more expensive, as they rented out grazing land at high prices.
A Livestock Connection, founded in 1999 by the Carrasco and Basso families, was the main one involved.
Initially managing a few thousand head of cattle, the company managed 125 thousand animals, but a report indicated that it should $384M monthly to your 4,2 thousand investors, while possessing only $158M monthly in assets.
The social and economic impact
The scam mainly affected middle-class investors, many of whom had invested all their savings in promises of returns reaching 10% per year. “This is a social crisis.
There are people who have put all their savings into these companies,” he said. Maria Laura Capalbo, partner at the Bragard law firm and president of the national association of lawyers in Uruguay, in an interview with Bloomberg.
The loss of confidence resulting from this scandal not only hurt savers, but also exposed the weaknesses and lack of regulation in the investment sector. livestock, one of the pillars of the Uruguayan economy.
The social repercussions of the coup are visible in the affected communities.
Entire families who have invested their savings in search of financial security are now facing hardship, with many having to turn to support and solidarity networks.
The situation is especially critical in a country where the livestock is traditionally seen as a safe haven in times of crisis, leading to a feeling of betrayal among investors.
Comparisons with historical frauds
The case of bull blow in Uruguay echoes historic frauds in other Latin American countries, such as the scandal of Farms Gathered Fat Ox in Brazil, which deceived 30 thousand investors in the 1990s, resulting in an estimated loss of $ 6 billion.
As happened in Brazil, the Uruguayan fraud reveals the vulnerability of investors attracted by traditional sectors and promises of guaranteed profits.
These schemes tend to thrive in periods of economic uncertainty, when people are more willing to look for alternatives to ensure a secure return on their investments.
Reactions and regulation
The crisis has already begun to have repercussions on the job market, resulting in layoffs in companies linked to the funds, although sources in the livestock sector say that the impact on the production chain will not be significant, since the majority of investors did not belong to the agricultural sector.
However, the scandal has sparked a call for greater regulation.
From 2018, the Central Bank of Uruguay opened 11 surveys on livestock investments and issued warnings about the lack of regulatory coverage for such contracts, but many believe the response came too late.
Authorities are now under pressure to implement reforms that protect investors and increase transparency in the sector.
The fragility of the regulatory system was exposed, leading to a broader discussion about the need for stricter oversight of investments related to livestock.
The future of injured investors
For those who lost money, the trauma is palpable. “We have to look to the future.
We can't get sick even though they took a lot of our money,” said an investor, who is organizing a victims' group.
As the legal proceedings progress, confidence in the Uruguayan livestock sector, which is a pillar of the national identity, has been deeply shaken.
The case serves as a warning for Latin America, where combinations of traditional sectors and promises of quick profits continue to seduce – and sometimes deceive – thousands of savers.
While the future of those involved remains uncertain, many are coming together to seek justice and reparations.
The emotional and financial impact of this scandal is profound, and recovery could take years.
O bull blow not only represents a significant financial loss, but also prompts reflection on the need for investor protection and the importance of more robust regulation to prevent future fraud in the investment sector. livestock and other markets.
The role of the media and awareness
Media coverage of the case also plays a crucial role in raising awareness of the risks associated with investing in seemingly solid sectors.
Reports have not only highlighted the details of the scandal, but also educated the public on the importance of conducting due diligence before investing.
Raising awareness can help prevent similar scams from occurring in the future, promoting a more informed and cautious investment culture among citizens.
Ultimately, the story of bull blow is a reminder that even in traditional sectors like livestock, surveillance and regulation are essential to protect investors and ensure market integrity.
SOURCE: POLITICAL PANEL
