T

he Bali police have closed down a Karangasem-based cooperative for allegedly operating a Ponzi scheme.

The Develop Karangasem Cooperative (KKM), located in the regency capital of Amlapura, caught the police's attention after it managed to multiply its capital in a relatively short-time. The business opened in 2006.

The police confiscated the KKM's assets on Friday in an operation involving hundreds of officers, including members of the police's elite mobile brigade (Brimob). The operation was apparently directly ordered by Bali Police Chief Insp. Gen. Ashikin Hussein, who was also present at the scene.

The officers seized Rp 282 billion rupiah (US$23.7 million) in cash, three kilograms of gold and hundreds of automotive ownership titles. Two of the co-op's executives were placed under police custody.

Bali Police Chief Insp. Gen. Ashikin Hussein said they did not have strong enough evidence to charge the KKM's owners with fraud and added that no one has pressed charges against the co-op, as they had enough money to reimburse their investors.

However, he said the police would continue to gather evidence against the KKM, saying that the co-op does not have a permit to run as an investment firm, further citing recent similar cases that ended disastrously for investors.

"This business looks similar to the one that ended up costing the people in Sukabumi, West Java and Medan in North Sumatra dearly. The police did not act quickly enough that time and the public's money could not be refunded," he said Saturday.

"I realize I'm risking much by closing this KKM, but I feel this business may endanger the public's money in the future. We have to secure their money to prevent any losses because this co-op is just not making sense," he said pointing to the 150 percent interest rate the co-op offered its members.

Ashikin disclosed that many civil servants had joined the KKM.

"Many are actually teachers who pawned their promotional papers to invest here. We have to save these people from the worst possibility, which is loosing their money if the KKM collapses," he said.

KKM Director, Gede Putu Kertia, and manager I Nengah Wijanegara, were placed under arrest and named suspect on Saturday.

Officials said he has been moved to Bali Police Headquarters.

Meanwhile, hundreds of investors waited for news in front of the KKM office in Amlapura.

A reported 62,000 investors were unable to get the money back because of the closing.

"Why did the police closed it down? They didn't cost us anything. The KKM can give Karangasem residents a better life," Made Bobby, 26, said in front of the heavily guarded KKM office.

Not everyone was positive. Kadek Andariani, 35, claimed to have lost money instead.

Head of the Bali Cooperatives, Small-and-Medium Enterprises Agency, I Wayan Suasta, added that he had long suspected the co-op.