The "Economy" news site reported on Friday that Turkish authorities have arrested former central bank official Erkan Kilimci as part of a broader investigation into a Ponzi scheme.
Kilimci served as the CEO of "Tera Financial Yatirimlar Holding," a subsidiary of "Tera Holdings," which was at the center of the investigation.
Kilimci announced his resignation last week, stating that he had only held his position for three months and that it was "unfortunate" to be included in the investigation.
According to a report published by Bloomberg, about 45 people have been arrested in connection with the investigation, including the chairman of "Tera Holdings," Emre Tizmen, along with several board members and executives from his companies.
Tizmen's assets and those of dozens of other executives from the financial companies linked to the scandal have been frozen.
The Ponzi scheme is one of the most well-known methods of investment fraud, based on enticing victims with very high and guaranteed quick financial returns without any real investment or business activity.
The scheme is named after the Italian con artist Charles Ponzi, who implemented this trick in the United States in 1920 and made millions of dollars in a record time before being exposed.
The report revealed that nearly half a million investors were affected by the market collapse that followed the inability of some asset managers, such as the famous "Tera," to meet redemption requests amid massive cash outflows last week.
Some of the involved funds focused their investment portfolios on low-trading stocks, which led to inflated prices and the borrowing of short-term funds using those inflated stocks, according to financial experts who studied these transactions. These funds had achieved exceptional gains of up to three digits annually, sometimes even more, until recently.
Turkish officials began meetings on Thursday to discuss how to proceed with the liquidation of about 131 investment funds.
It is worth noting that Kilimci served as deputy governor of the Central Bank of Turkey from 2016 to 2018 before becoming the vice president responsible for the treasury at the state-owned "Türkiye Halk Bankası."