Thousands of Uruguayan investors have together lost an estimated $350 million after sinking their savings into fraudulent “cow bonds,” according to a report by Reuters following its investigation into the groundbreaking scam.

Newsweek has reached out to Uruguay’s financial intelligence unit, public prosecutor’s office, and livestock ministry via email for comment.

Why It Matters

The livestock sector is of central importance to the Uruguayan economy, accounting for around 15 percent of its overall GDP, while beef accounts for roughly 18 percent of the Uruguayan economy’s exports, according to government data. The “phantom cows” scandal, which has hurt thousands of investors, therefore represents a significant blow to the nation, as well as its similarly agriculture-reliant neighbors, raising concerns about regulatory frameworks and opportunities for financial fraud in the country and the sector.

What To Know

Thousands invested in the scheme, according to Reuters, which allowed individuals to purchase indirect ownership of cows or a stake in the overall enterprise, with promises of stable and significant profits when the cattle were eventually sold by livestock companies.

One investor told the outlet that when she attempted to check on her assets using Uruguay’s official cattle-tracking portal, she was unable to locate the physical cows she had supposedly been sold or match them with the registry numbers she was provided. A lawyer representing 98 victims recounted a similar experience from attempting to verify the existence of the cows at several farms.

After the co-owner of one of the firms involved in the initiative died by suicide in November, Reuters said that several investors began reporting late payments, and that the company soon announced a cash shortfall of nearly $250 million. An investigation following their bankruptcy found that, of the more than 800,000 cattle the company said it managed, fewer than 10 percent actually existed. The firm in question denies the allegations of fraud.

Lawyers for the victims are now questioning whether the cows were ever purchased by the companies involved, or whether these were sold off without the knowledge or consent of investors.

Three of the companies wrapped up in the scheme have gone bust and are currently under investigation by Uruguayan authorities. Reuters reports that these firms lured nearly 6,000 people into the program, which it said resembled similar bovine investment initiatives across South America.

What People Are Saying

Sandra Palleiro, an investor in the scheme, told Reuters: “We don’t know if the cows were ever bought, whether they’re alive or dead. Maybe the cows were fakes, or sold, moved somewhere or their tags were changed.”

She added: “We put in all our savings that cost us a lot of effort. Now we want justice.”

A lawyer for an executive linked to one of the firms under investigation told Reuters that they had fully cooperated with authorities and noted that some investors had already had cattle returned.

What Happens Next?

An investigation into the phantom cows scam and three of the firms behind it by Uruguay’s Prosecutor’s Office for Money Laundering Crimes is ongoing, Reuters reported.