Brazil prosecutors serve warrants on lenders PicPay, BRB in payroll fraud probe

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Public prosecutors in Brazil served search and seizure warrants on Friday on digital lender PicPay NASDAQ:PICS and state-run lender BRB BMFBOVESPA:BSLI3 as part of a probe into an alleged payroll fraud scheme involving government employees in the Federal District.In an initial statement, Brazil's Federal District public prosecutors' office said warrants were served on PicPay, but it did not mention BRB. It later confirmed that the state-run lender was also targeted.The office did not provide more details on the probe.Local outlet G1 reported that the fraud scheme involved improper payroll deductions, with more than 80 million reais ($15.6 million) withdrawn from employees' payslips.PicPay said in a statement that it does not acknowledge any irregularities in the transactions and it rejects the allegation of improper charges.BRB said its role in the probed transactions is limited to processing deductions, adding it does not participate in the contracting and is not responsible for determining the deductions.It also claimed the investigations were focused on the activities of BRB Servicos, a company that is part of the BRB conglomerate but has separate functions from the lender.BRB has recently been under scrutiny after it attempted to address losses tied to allegedly fraudulent credit portfolios bought from now-defunct Banco Master. BRB's Sao Paulo-traded shares fell more than 1% on Friday.($1 = 5.14 reais)

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