El Salvador Authorities Shut Down Alleged “Gota a Gota” Loan Shark Network Run by Colombians

El Salvador public security forces have detained more than 100 people for allegedly running an illicit loan shark ring that they claim was made up mostly of Colombians who entered the territory posing as tourists before charging exorbitant interest rates to small businesses and people in need of fast cash.

Rodolfo Delgado, the Central American nation’s general prosecutor, stated in a press conference that authorities had captured 110 Colombians, three El Salvadorians, one Argentine, and one Guatemalan involved in the network that allegedly loaned out money with 20% interest and threatened those who did not pay back the money according to their severe terms. Some loan recipients had their bank identities stolen in order to empty out their accounts, according to officials.

Photo: El Salvador authorities publicly present the case against 110 Colombians and others allegedly involved in the “Gota a Gota” loan shark operation. (Credit: General Prosecutor Office of El Salvador, @FGR_SV)

The illegitimate resources came from drug trafficking, and the scheme served the purpose of laundering money, according to Delgado. He added that the group has sent at least $20 million USD to Colombia since 2022 while carrying out its “Gota a Gota” operation, an infamous lending practice well known throughout Colombia and Latin America.

In the bust, local police officers and prosecutors raided the properties of the Colombian detainees looking for evidence. They seized IDs, vehicles, business cards, commercial papers, and other items that will strengthen the law’s case against the offenders, which include former military and police officers.

Through his Twitter account, El Salvadorian President Nayib Bukele sent out a warning to Colombians who arrive with ill intentions: “Colombians are our brothers, but as in any society, there is always a small percentage who wants to take advantage of others; some of them have come to commit crimes in our country. These people will have to face Salvadoran justice, whoever claims.” 

The statement raised eyebrows, especially given that Bukele and Colombian President Gustavo Petro had a public dispute on Twitter a few months ago, which was detailed by Juan David Rojas in Americas Quarterly and concerned the Salvadorian leader’s plans to build a mega-prison and secret negotiations between the government and the top gangs (Los Maras).

The Regional Scourge of Gota a Gota

The “Gota a Gota” (“drop by drop”) practice emerged as a response to the requirements that banks stipulate for the customers who need fast credit (including credit records, wage certification, minimum amount of income, and multiple guarantors). Local loan sharks, to the contrary, give out money immediately without these formal requirements, often within a few hours — but they include other stipulations that can come with grave consequences.

Recipients face serious danger if they do not pay the daily “drop by drop” fee and may receive intimidating phone calls, find debt collectors at the doors, and face threats to their lives or family members. More than lenders, they often act as extortionists.

With sky-high interest rates, people often end up paying more than five times the original loan. Because of the margins to be made, large Colombian drug cartels — including Los Rastrojos, El Clan del Golfo, Los Triana, and Los Cocuelos — are active in this illegal business, according to a feature article on the practice in Portafolio,

Those unable to pay, or who are simply late to repay, may also be recruited as drug couriers. That way, the criminals establish a link between their illegal operations. On one hand, they launder the dirty money and increase incomes; on the other, they expand the reach of their routes and add more people into their service.

The tentacles of the “Gota a Gota” spread throughout South and Central America, from Mexico to Argentina, with prevalent networks known throughout Colombia, Bolivia, Chile, Peru, Brazil, Panamá, Guatemala, and El Salvador. For Latin American governments, it’s a regional phenomenon that is very complex to attack and very hard to fight.

This concern has been at the core of discussion in recent years at multilateral summits with general attorneys and prosecutors. The issues on the table for finding an agreement were the information exchange between nations and the migration controls inside the borders.