In mid-2021, Emeka’s optimism led him to Agropartnerships, a crowdfunding company that appeared to offer a promising opportunity to grow his hard-earned savings and yield significant returns.
Eager to invest, he committed his entire N2 million savings without a second thought.
Unlike the multitude of fly-by-night crowdfunding platforms, Agropartnerships had a seemingly impressive track record, dating back to 2012, with a history of successful investments and satisfied investors who had received their returns punctually.
However, as time passed, Emeka’s initial enthusiasm was shattered by a harsh reality. Months after making his investment, he anxiously awaited his first return, only to be met with disappointment as it failed to materialize.
Doubt and concern gnawed at Emeka as he questioned the reliability of Agropartnerships. The company’s lack of communication and consistently delayed payments left him feeling frustrated and uncertain about the fate of his hard-earned money.
- “It began with an excuse of a system glitch, as the company claimed. Then they shifted to manual payment processing, while still promising to pay week after week.
- Eventually, they stopped responding to my emails. I later found out that their office in Lekki had closed down. They blamed it on COVID-19, even though this was in January 2022 when the world had moved past the pandemic,” Emeka recounted with regret.
- “I knew then that I had fallen victim to a scam. I can’t forgive myself for investing in this fraudulent crowdfunding scheme,” he added.
Titi’s experience mirrored Emeka’s ordeal, albeit on a smaller scale. She invested N200,000 in September 2021, anticipating the promised returns by December. As the payout date approached, Agropartnerships repeatedly postponed it until they eventually became unreachable.
The frustration and disappointment in Titi’s voice were palpable as she shared her story. Not only did she lose her capital, but she also convinced two friends to invest, only to see their money trapped as well. Agropartnerships’ office had vanished, contact numbers were disconnected, and emails went unanswered.
- “I haven’t received my capital, let alone the promised returns. My biggest regret is involving my friends in this mess.
- “Their money is also trapped, and I feel guilty about it. We only hope the government can help us recover our funds. The company has vanished, and they’re unresponsive,” Titi said, her voice filled with anguish.
- “This type of scheme is criminal and must not be allowed to continue without consequences. The fund managers are walking freely and living lavishly because they believe they can escape accountability in a country with a flawed justice system.
- “This must stop, and I’ll explore every avenue for justice. They must return my investment,” she asserted firmly.
The promise of return that never comes
Agropartnerships’ case exemplifies a dark underbelly of the crowdfunding industry, where dishonest companies prey on unsuspecting investors, leaving shattered lives and financial ruin in their wake.
As crowdfunding continues to gain popularity as an alternative investment avenue, it becomes essential for regulators and authorities to step up and protect investors from fraudulent schemes like Agropartnerships.
The company is just one name in a growing list of agric-focused crowdfunding platforms that have collapsed, leaving billions of investors’ funds irretrievable.
From Farm Power and Payfarmer to Goldvest, Emerald Farms, Vestpay, HO Corn, FarmKonnect, Farm Sponsor, and numerous others, these platforms offered investment opportunities where individuals could contribute small amounts via the internet to fund agricultural projects or ventures, with the promise of attractive returns on investment (ROI).
In 2020, Harrison Osemwengie’s agric crowdfunding platform, HO Corn, garnered significant attention with a bold promise of a whopping 50% ROI in just six weeks for investors in the company’s corn farm.
Capitalizing on extensive publicity across traditional and social media, HO Corn raised billions of naira from eager Nigerian investors.
However, the elation was short-lived as the venture turned into a bitter experience for investors who neither received their capital nor the promised returns.
By July 2020, discontented investors began voicing concerns about the non-payment of promised ROIs, casting doubt on the legitimacy of HO Corn.
In response, the company swiftly attributed its failure to make payments to the pandemic and subsequent lockdown, assuring investors that they would receive their money by August.
But as August approached, HO Corn vanished from its third-floor office at the Africa Reinsurance Building in Victoria Island, Lagos, shattering the hopes of its investors entirely.
In February of the following year, Interpol declared Harrison Osemwengie wanted for his involvement in the multi-billion-naira fraud executed through the HO Corn crowdfunding scheme.
Sadly, the story of FarmConnect mirrored the fate of HO Corn. Positioned as an Agribusiness Company facilitating connections among stakeholders, including investors, farmers, consumers, and agro-allied producers, FarmConnect collected money from investors only to disappear without fulfilling its promises.
The outrage of defrauded investors prompted the Nigeria Police to declare Oluwole Azeez Saheed, the founder of FarmKonnect Agribusiness Nigeria Limited, wanted for his involvement in an investment fraud worth over N50 million in September of the same year.
However, in response to the Police declaration, a law firm representing Oluwole maintained that he was not evading authorities, asserting that FarmKonnect remained a viable Agrictech company facing temporary business crises that were being addressed in efforts to revive and stabilize the venture.
Why Nigerians continue to fall, victims
Despite the repeated failures and fraudulent activities of multiple crowdfunding schemes in Nigeria, a relentless search for promising investment opportunities continues among Nigerians, fostering a persistent market for such schemes.
Industry experts shed light on the reasons behind this phenomenon, highlighting the role of human behaviour, economic factors, and regulatory deficiencies.
Dayo Ayeni, the Chief Innovation Officer at BusinessPlus Ltd., emphasizes that many Nigerians fall prey to fake and fraudulent investment schemes due to their failure to recognize warning signs.
Factors such as the high rate of inflation, economic hardships, and greed create an environment where some individuals are susceptible to fraudulent schemes. Fraudsters seize this opportunity by promoting enticing advertisements on social media, targeting those seeking quick ways to multiply their meagre incomes.
Ayeni stresses that to avoid becoming victims of investment fraud, individuals must conduct thorough due diligence. It is imperative to check whether the investment company is registered with the Securities and Exchange Commission (SEC) and regulated appropriately.
Spotting investment scams can be facilitated by being alert to pressure tactics employed by unscrupulous firms, such as limited-time offers, timed gifts, or rebates. Ayeni advises Nigerians to maintain a healthy level of suspicion toward any investment opportunity that promises exorbitant returns with little or no risk.
Interestingly, Ayeni observes that despite the knowledge that some investment schemes offer unrealistic returns and are fraudulent, certain individuals still participate, driven by the hope of earning profits before the scheme collapses.
This phenomenon suggests that many Nigerians are willing to take risks, even when they are aware of the potential dangers.
The persistence of this behaviour underscores the need for improved investor awareness and education on prudent investment practices.
Individuals must understand the potential risks associated with high-return schemes and be cautious about investing in ventures that seem too good to be true.
Mr. Patrick Ilodianya, the Chief Executive Officer of SFS Financial Services, a leading investment management firm in Nigeria, sheds light on the allure of investment schemes offering huge returns, not just limited to Nigerians, but as a common trait of human nature.
Ilodianya explains that there is an inherent element of risk-taking in human behaviour, which transcends cultural boundaries. He compares this inclination to gambling, stating that almost every individual is willing to allocate a certain portion of their portfolio for speculative ventures.
- I think it’s just general human nature. And the truth is that even I have been asking myself that question, why do people fall for the Ponzi schemes? I think for a lot of human beings, Nigerians especially and younger ones especially, there is this thing in them that they do not mind gambling.
For instance, when schemes like MMM emerged, people often participate with a small amount they are willing to lose, akin to gambling.
Ilodianya points out that even responsible individuals may allocate 1% to 3% of their money to such speculative activities, emphasizing that gambling itself is a highly lucrative industry, with some of Nigeria’s wealthiest individuals involved in gambling and sports betting.
- “So, there is always a particular portion of people’s portfolios that every human being is okay to gamble with. So, most of the time when people like MMM come, people just go and, in their minds, they just put a tiny amount that they’re willing to lose.
- “So many times, most people, even those responsible, feel okay to allocate 1 or 2 or 3% of their money to gambling. I mean, gambling is one of the most successful businesses; three of the richest people in Nigeria are into gambling and sports betting.
However, the problem arises when individuals perceive gambling as investing, leading to greed and irrational decision-making.
After a scheme works successfully once or twice, participants become emboldened and may allocate a much larger portion of their portfolio, disregarding the inherent risks.
This behaviour can lead to significant losses and financial troubles.
- So, the issue is that by the time you see gambling as investing, people start to get greedy. They did it the first time, and it worked; they did it the second time it worked, and they forget that when you are gambling, you should use only 1% of your portfolio and they will now allocate 30% of their portfolio then it becomes a problem,” he said.
On the other hand, Mr. Nnamdi Chife, the Managing Partner at Chive GPS, attributes the failure of many crowdfunding platforms in Nigeria to regulatory deficiencies and the challenging macroeconomic environment.
He calls for the government to impose stringent conditions on crowdfunding platforms and ensure strict oversight to weed out fraudulent operators and promote market transparency and accountability.
Chife also advises investors to be proactive and cautious before investing their money in any scheme.
He suggests asking critical questions to gain insights into the investment opportunity, such as the character and experience of the founder, the underlying asset of the venture, the company’s age, its financial capacity, the type of licenses they hold, and the insurance coverage they provide.
- “Questions to ask include what is the character and experience of the founder? What is the underlying asset? How old is the company? What is their financial capacity? What type of license are they practising with? What type of insurance?” he said.
By asking such questions and demanding transparency from crowdfunding platforms, investors can protect themselves from falling victim to fraudulent schemes and make more informed decisions about their financial ventures.
What SEC is doing?
In the quest to protect investors from fraudulent crowdfunding schemes, the Securities and Exchange Commission (SEC) took a significant step in January 2021 by issuing comprehensive guidelines for the conduct of crowdfunding businesses in Nigeria.
Prior to this, crowdfunding platforms operated without any regulatory oversight, leaving investors vulnerable to scams and deceitful operators.
With the introduction of the SEC guidelines, a much-needed regulatory framework was established, offering a glimmer of hope in the fight against fraudulent crowdfunding schemes.
Under this new regulation, crowdfunding can only be conducted through online portals operated by SEC-registered intermediaries.
These intermediaries are required to possess a minimum paid-up capital of N100 million and maintain a current Fidelity Insurance Bond valued at 20% of the paid-up capital.
Furthermore, the SEC mandates crowdfunding operators to provide sufficient disclosure to investors regarding the purpose and use of funds.
This level of transparency is crucial in ensuring that investors are well-informed and protected from operators with dubious business models or questionable activities.
The guidelines also include penalties for defaulters, which should act as a deterrent to those seeking to exploit the crowdfunding space for fraudulent purposes.
By imposing fines on non-compliant entities, the SEC intends to foster a culture of accountability and integrity among crowdfunding operators.
However, while these guidelines are a welcome development, the fight against fraudulent crowdfunding is far from over.
Continued vigilance and cooperation between regulators, investors, and other stakeholders are vital in maintaining market integrity and preserving the interests of the investing public.
As the dark world of crowdfunding faces regulatory scrutiny, the hope is that these measures will pave the way for a brighter future, where investors can confidently participate in legitimate crowdfunding opportunities without fear of being ensnared in deceptive schemes.
Why do you refuse to state the name Crowdyvest that started off as Farmcrowdy? This company has also defrauded many of us – in my case N2,250,000. We were not enticed by unreasonable returns, as we invested in touted farm schemes that would yield between modest 6-12% returns over a 12 month period. Yet they ran off with our funds. I had given you details more than a year ago but you refuse to mention the company’s name.
My brother, it’s 3 million I lost to Crowdyvestng. As I read the article, was also wondering why they weren’t mentioned them. I actually invested with crowdyvestng because I saw the article nairametrics.com made about them. It’s so unfortunate I fell victim to the scam, because the ROI was very low.
A whole lot of them are roaming freely thinking they have beaten the system and escaped retribution. Adama J Adama with his ViableX, Farm4Me etc, also defrauded unsuspecting Nigerians. The man even wanted to be a Senator of our Federal Republic after the Super Steal. What impudence!
All the agric crowdfunding crooks must be made to vomit the Loots.
I still have my N3,000,000 to tied-up in AgroPartnership through my subscription to one of their farms. They made severally promises to refund our monies while packing their load to vanish in the background. It must be mentioned that only ThriveAgric has been able to “sink” and survive to pay off all their subscribers. To my knowledge, they were the top of the pack. Unfortunately, I never invested in them.
All the criminally-minded individuals involved in making people lose funds, lives and livelihoods must be made to face the law, whether lawfully or unlawfully.
I lost over N1m to Crowdyvest. I knew that something was wrong when their business model transition from Agritech to Fintech. I’m here in the US and can’t make sense of why my people are doing this to their own. What a sorry ASS nation !!!