The Economic and Financial Crime Commission (EFCC) has arrested and is prosecuting about ten Ponzi scheme operators who have allegedly fleeced Nigerians of over N12 billion between October 2020 and August 2021.
This was confirmed from data obtained from the website of the anti-graft agency by Nairametrics. Nairametrics also found that most of the operators of the schemes promised their victims attractive returns on investment (ROI) as high as 55% after their first month of investment, a bait swallowed by thousand Nigerians who have since got their fingers burnt.
Some trending Ponzi schemes in EFCC’s net
Wales Kingdom Capital
WKC is allegedly owned by Adewale Daniel, who is currently on the run. He allegedly collected about N1 billion from several unsuspecting investors after promising to invest their funds in forex, real estate, and automobiles among others. The offer of 55% ROI after one month of investing across these sectors was enough to lure his victims into suspending common sense in pursuit of some quick bucks. Some early investors in the scheme also earned more returns for bringing others on board.
Soon enough, Daniel and his team started to put up motivational posts on Instagram with statements like, “We might make detours but the goal remains the same.” While some investors remained gullible, a few discerning ones, suspecting that the bubble was about to burst, pulled out their cash.
Yinka, one of the investors who got out early told Nairametrics that he chose to invest in the scheme after the operator convinced him that most of the funds will be invested in real estate across developing areas in the South Western part of the country.
According to him, he had to exit when Daniel started talking about investing in other undisclosed sectors. He said, “I had to pull out when I began to see signs that he was looking at other undisclosed sectors and started preaching ‘detour and goal remains the same.’ After I left, he started preaching patience then I knew that the bubble has burst.”
While Daniel remains on the run, his parents, Mr and Mrs Emmanuel and Victoria Jayeoba, are cooling their heels in EFCC’s net. Contrary to the arguments of some critics on the arrest of the parents, findings from EFCC revealed that while Emmanuel, who is a Director in Wales Kingdom Capital, operates five bank accounts and had received a sum of N18, 397, 913. 67 before his arrest, the second suspect, Victoria, operates six bank accounts through which she received fraudulent transactions to the tune of N916, 607, 715. 48.
Quintessential Investment Company
Quintessential Investment Company limited was run by 22 years old Joshua Adeyinka Kayode, who allegedly defrauded 170 people of the tune of N10.8 billion. While some of his victims are relieved that the long arm of the law has finally caught up with the youngster, others wonder if they will recover their funds.
One of them, Tobi, told Nairametrics that though he is happy that Kayode has been apprehended, he was unsure of the chances of victims getting their funds back as he had been reliably informed by an inside source that the operator would rather go to jail than refund his victims.
He said, “I fell for the scheme because I felt the promised 25% ROI/month was not outrageous like others. It is good he has been caught but I am certain the guy will not release the funds because I have been reliably informed that had invested the funds in crypto and he is ready to go to jail with the conviction that he will be released someday to spend the money.”
Tobi’s fears may come to be, as Kayode was granted bail by Justice Nicholas Oweibo of the Federal High Court, Lagos, for the sum of N2 billion with two sureties. Justice Oweibo also ordered that each of the sureties must own a landed property within the court’s jurisdiction and must depose to an affidavit of means. The judge also ordered that the two sureties and the defendant must deposit two passport photographs with the Court’s Registrar and that the defendant must also deposit his international passport with the Court’s Registrar.
While adjourning the defendant’s trial to November 10, 2021, the judge ordered that the prosecutor must verify all the bail terms and that the defendant be remanded in the custody of the Nigerian Correctional Services (NCoS) till he perfects his bail terms.
Kayode and others, who are now at large, allegedly committed the offences between July 2020 and March 2021, as they allegedly defrauded the victims under the pretence of false multiple returns on investment.
The CEO of Themap.ng, an investment platform that specializes in logistics, virtual reality and real estate, Mr. Ayanso Mma, has also been detained by the EFCC in Lagos.
Before he was arrested, Themap.ng has been experiencing difficulties in paying investors their return on investment as promised. As expected, anger and impatience grew amongst investors who could neither received their ROI nor their initial capital.
In a desperate attempt to salvage a deteriorating situation, Mma proposed a meeting with investors to discuss ways in which money can be refunded. A source told Nairametrics that, “An agreement could not be reached with investors. We had received a warning from the Securities and Exchange Commission on the 7th of October, advising us to desist from collecting money from investors under the guise of investments which they termed illegal.
“But the greed in the CEO resisted and went ahead to market with CRMI, a new promo for an investment product when he knew he had no intentions of paying investors. He tried to move N800 million into one of the most capitalized banks when the bank raised a flag and that led EFCC to invite him and effect his arrest.”
In an official announcement, The Map.ng, stated, “contrary to expressed views and social media rumours, the company hasn’t gone under, neither did we scam you of your monies. We are still available and willing to kick off operations as soon as possible to meet our obligations of paying back CRMI refunds and weekly ROIs.”
Aside from the schemes mentioned above, others that are allegedly owing their investors are RackSterli, MyBonus2u, Inks Nation, and Pinkoin among others.
What does the law say?
According to the law, the defendants’ actions are illegal, as the offences committed are contrary to and punishable under section 8(a) and 1(1) (a) (c) of the Advance Fee Fraud and other Fraud Related Offences Act 2006.
But where the defendants deny the allegations and plead not guilty to all the counts, the court may remand them in the custody of Nigerian Correctional Services (NCoS), pending when their bail application would be heard and determined.
What experts are saying about Ponzi schemes
To curb this menace, commercial banks and other financial institutions have been tasked to support investment clubs. Tomie Balogun, founder, The Green Investment Club (TGIC) is one of the investment experts who has called for more support to curb Ponzi schemes in the country.
She told Nairametrics at one of the TGIC’s event that the economic fallout from events such as the global market crash, economic recession and COVID-19 pandemic has pushed young Nigerians into the Ponzi camp.
She said, “The economic situation and the high incidence of these fraudulent schemes show an urgent need for financial education. The quick money syndrome will not help both the youth and the nation because the end is always disastrous. We need to learn from history and avoid all errors of the past. On our own part, TGIC is working to bridge the financial literacy gap among young people in Nigeria through our products and services.”
Another financial expert, Dr. Sola Owoeye, explained that every investment carries some degree of risk, and investments yielding higher returns typically involve more risk. He however tasked Nigerians to be highly suspicious of any “guaranteed” investment opportunity with overly consistent returns.
He said, “Investments tend to go up and down over time, be skeptical about an investment that regularly generates positive returns regardless of overall market conditions. Unregistered investments and Ponzi schemes typically involve investments that are not registered with the SEC or with state regulators.
“Registration is important because it provides investors with access to information about the company’s management, products, services, and finances. Federal and state securities laws require investment professionals and firms to be licensed or registered. Most Ponzi schemes involve unlicensed individuals or unregistered firms, secretive, complex strategies. Avoid investments if you don’t understand them or can’t get complete information about them.”
What SEC is saying about the menace
SEC has once again, bemoaned the proliferation of fraudulent investment outfits in the capital market, urging investors to desist from patronizing such illegal operators.
The Director-General, SEC, Lamido Yuguda, while speaking at the second post-Capital Market Committee (CMC) virtual media briefing, tasked Nigerians to stay away from fake financial experts who promise to double their money within a short time.
According to him, the commission would intensify efforts to clamp down on promoters of these illegal investment outfits in the capital market, in addition to its commitment to zero tolerance for infractions, adding that the commission has adopted multi-level engagements with media platforms and regulators of publicity agencies to curb the activities of these illegal operators.
He said, “While we continue our activities to resolve the complaints that have been forwarded to the commission through the official channels, it is important to reiterate to the investing public to be wary of unscrupulous schemes that promise unrealistic returns on investment.”
He assured investors that the commission will not hesitate to deal decisively with any operator who carries out any activity outside the function(s) approved for it by the regulator. Yuguda described ponzi schemes as a threat to market development, stating that the pervasiveness of ponzi schemes impacts negatively on investors’ confidence.
“Every month, every day, many of our citizens lose huge monies to ponzi scheme operators and the commission has adopted a variety of measures including putting up the list of the authorised operators on our website so that interested investors will check our website to confirm that the scheme they are intending to invest in is through a registered operator by the SEC.
“But unfortunately, many of these ponzi scheme operators give mouth-watering promises and entice many gullible investors. In the end, monies are lost and these investors start flocking to our offices to complain.”
The SEC boss said the Commission’s efforts in addressing Ponzi scheme challenges are aimed at protecting investors and preserving market integrity, stating that the Nigerian capital market should be a safe destination for investors. He assured that the SEC would continue to apply innovative measures to combat the activities of Ponzi schemes while seeking the cooperation of relevant stakeholders.
The activities of Ponzi schemes operators have been on the increase in Nigeria, especially since the COVID-19 pandemic hit the nation. Several young people have fallen victim to these scams. Also, the nation’s worsening unemployment problem and widespread poverty are partly to blame for making Ponzi schemes fashionable.
Nevertheless, investors are expected to wear their discernment caps, especially if returns are too good to be true.