The two defendants, according to the courts, were moving millions of reais by selling “investment packages” that cost between US$200 and US$18,000.
Two former leaders of a financial pyramid have filed a habeas corpus against a decision handed down this year by the Court of Justice in São Paulo. On that occasion, the Court had ordered that both be remanded in custody. The STJ (Superior Court of Justice), which examined the application, denied it.
The STJ denied the freedom of the alleged “pyramiders” Rodrigo de Souza Kagaochi and Adriano Machado Mendes. The two were part of PayDiamond, a recognised financial pyramid which claimed to invest in diamonds.
In the decision, published on Monday (26), Minister Ribeiro Dantas accepted the position of the Sao Paulo Public Prosecutor’s Office and the Sao Paulo Court of Justice. Both bodies had suggested that imprisonment was necessary to maintain public order, given that PayDiamond had generated much damage.
“The precautionary segregation is sufficiently based on the need to guarantee public order, given the modus operandi of the criminal organization in the form of a pyramid, and the patients, as narrated, moved millions of reais in the sale of ‘packages’ of investments, ranging from US$200.00 to US$18,000.00 and the adhesion of new people to the business, whose credibility was based on the sophistication of the criminal association,” said the minister in the decision.
International repercussion and victims across Latin America
According to the minister, the arrest is necessary because of the repercussions of the scheme. This is because, he said, the victims are spread throughout most of Latin America.
Finally, the magistrate also said that the two accused have already been involved in other scams. Both were part of alleged frauds involving cryptomorphs and even horse racing.
Kagaochi and Mendes, also according to the minister, were part of Ympactus Comercial S/A. The company, whose fantasy name was Telexfree, was considered a financial pyramid by the courts.
What did the São Paulo Court of Justice say?
The São Paulo Court of Justice, in a ruling cited in the STJ’s decision, said that the actions of the accused also impact the economic order.
“In a country that is strongly devastated by bad government management and successive economic crises, in which a large part of the population lives off the informal economy, such promises (of easy gains) fully affect an undervalued portion of the population that is not very well versed in the dynamics of investment,” it said.
According to the Court, the victims who believed in the promises of fast, guaranteed profits ended up getting bogged down in debt and losing what little they had earned.
“The volume of people affected by the continuous stimulus to regiment new ‘partners’ is capable of causing severe setbacks not only in the individual sphere, but in the national economy, with retraction in consumption,” the Court concluded.
PayDiamond, a financial pyramid founded in 2016, sold investment packages with promises of profits of up to 240% per month. To pay the surreal returns, the company said it was active in the diamond market.
As often happens in financial pyramids, investors have not been paid. In March of this year, the São Paulo public prosecutor’s office denounced the leaders of the scheme.
Rodrigo de Souza Kagaochi and Adriano Machado Mendes were active advertisers. Kagaochi, for example, was the commercial expansion leader of the scheme. He used to travel the world to give lectures and attract new victims.