How Ponzi fraudsters are fleecing Nigerians of their billions
In this report, WesternPost looks at how Nigerians have lost their hard-earned money to scammers who pose as investors, fleecing people of their assets
“One-Month Freezing of Confirmed Mavros
“As usual, in the New Year season the System is experiencing heavy workload. Moreover, it has to deal with the constant frenzy provoked by the authorities in the mass media.
“The things are still going well; the participants feel calm; everyone gets paid – as you can see, there haven’t been any payment delays or other problems yet – but!.. it is better to avoid taking risk.)) (Moreover, there are almost three weeks left to the New Year.)
“Hence, on the basis of the above mentioned, from now on all confirmed Mavro will be frozen for a month.
“The reason for this measure is evident. We need to prevent any problems during the New Year season, and then, when everything calms down, this measure will be cancelled. (Which we will definitely do.))
“We hope for your understanding,
This was the message many Nigerians woke up to on December 16, 2016. The message left many in panic as to what becomes of their hard-earned money, they had invested in the Ponzi scheme, Mavrodi Mundial Moneybox, MMM which was one of the most popular in the country.
The MMM operation involved users donating to others and then be entitled to receive their donation and 30 per cent interest after a month.
As the Christmas approached in 2016, many put their money into the scheme, hoping to have enough money to enjoy the yuletide and the new year. That December 16 announcement was however the end of the MMM in the country, with many never recovering from the loss and the huge debts they incurred.
While many have used the MMM experience as a learning phase, many more Nigerians are being duped by the many other investment schemes springing up on a daily basis in the country.
In recent months, many Nigerians have fallen prey to numerous investment scams springing up in the country.
Checks by our correspondent show that many of these investment scams promise investors high returns on their investments from businesses which include agriculture, forex trading, real estates and many more.
Just like MMM, these investment scams pay customers their returns for some months to gain trust and make them bring more people before eventually starting to default and eventually running away with investors’ money, sometimes amounting to billions in Naira.
Notable among these investment scams in the country is Adewale Jaiyeoba’s Wales Kingdom Capital Limited who ran away with over N40bn of investors’ money. Sam Afolabi’s Eatrich which became popular on the social media, also went away with investors funds of over N1bn. Adesoji Adeyemi, a former staff of Liquified Natural Gas also fleeced hundreds of millions from investors after failing to deliver on their investments at his ADECO farms.
In May 2021, investors stormed Christ Embassy, Port Harcourt, asking the church to compel its biggest donor for two years straight Maxwel Odum to refund their money. Odum who reportedly donated N1bn to Christ Embassy defrauded investors to the tune of over N171bn through his company MBA Forex & Capital Investment.
Most recently pronounced is Imu Ovaioza Yunusa who was arrested by the Police after duping investors to the tune of over N3bn through her Ovaioza Farm Produce Storage Business.
Also, in March this year, over 4,000 investors accused Chief Executive Officer of Chinmark Group, Marksman Ijiomah, over unpaid funds invested in the company running into billions of Nigeria. This was after the Securities and Exchange Commission had declared his operations illegal.
Debt recovery expert, Nnamdi Chife in April, released a list of over 15 Ponzi scheme operators that security intelligence company Chive GPS is following up on towards retrieving funds of investors and getting the operators to face the law.
As exhibited by Ovaoiza, many of these investment scam operators have the same thing in common; they often display their new opulent lifestyle on social media especially Instagram. They then go ahead to buy citizenship of Caribbean Island countries like Vanuatu, Dominican Republic etc, where some of them run to with their families when their fraud is exposed while leaving their investors in pain and anguish.
According to Olajide Abiola, CEO of Kiakia, a Fintech company, Nigerians have lost over N400bn to investment scams in the country, while another N120bn are still left as unclaimed investments.
Speaking with WesternPost, investment expert Bimbo Ajinibi says the major factor for Nigerians falling for the investment scams is greed. According to him, the idea of forgetting whatever glaring risks involved at the opportunity of making unimaginable returns makes Nigerians fall cheap to investment scams.
He said: “Greed will top the chart on why people fall for that scam, you want a quick return or assuming the market is even doing well, the kind of returns they promise in Ponzi schemes is not realistic. So, it is only greed that will fuel people’s desire to go for such, when greed sets in. You are not even looking at the risk any more, and of course, you know the maxim, the higher the return, the higher the risk.
“So, when the return is crazy, then you should know that you stand the possibility of losing your principal and then the interest. So, when people allow greed to becloud them, they only look at the return, they don’t look at the risk. And because the promoters of the scheme undertand our psyche, they understand that once people allow greed to becloud their reasoning, they don’t look at that risk any more, they just focus on the return. Basically, that is what is really causing these schemes to thrive.
“And the truth is that it will continue. People are still trying to recover from Ovaioza, if tomorrow, another person comes to the market, they will fall for it. The truth is that people don’t learn. They allow greed… you have two categories of people; for some, it is greed, for others, it’s just to do better than what the market is doing.”
He also added that apart from greed, the bad state of the country’s economy has opened the door for these investment scams to thrive
“What really costs the Ponzi schemes to thrive when return on investment is generally low, that’s in a regulated market, when rates are very low, equity market is not doing well, so, people don’t even go there. Now, there is a wide margin between inflation and the interest rate in the market.
“For instance when you have inflation of about 17 or 18 per cent and you are having return on deposit of as low as five per cent, you can see that that gap is so wide. So it is that desire to look for a return that will close them up, that will make them close to inflation, it is that desire that push people into all those scams,” he added.
On what Nigerians must look for before going into any investment, Ajinibi said: “When you have an investment offer, the first thing is for you to consult your broker or investment adviser, credible people that will advise you appropriately. Even when you see some of these prospectuses, there is a caveat that please, consult your broker, investment adviser or your solicitor.
“So, the idea is that get them to do due diligence to ensure that the investment is a kind of investment that you can do. And then, you can also easily confirm from SEC. You can walk up to them and make an enquiry whether a fund is registered with them or not.
“Another thing you should also know is that when you have this offer, you need to know the people behind it or those running it; how long have they been running it, what is their pedigree, what have they done in the past? Because historically, they should have a past record. You should also visit their website, but when you get there and you start seeing funny funny things, you will just know. The most important thing is that when you are not clear, get stock or investment advisors to advise you. But easily, you can confirm with SEC whether the fund is registered or not.”
While he praised the SEC for their efforts in ensuring Nigerians get the right information about investment safety, he added that they still have to do more.
“I can tell you that SEC has been doing very well in terms of sensitisitising the public. At every point, I see them issuing statements. At every forum, they keep mentioning it on the need for people to be aware of these Ponzi operators, even the ones they know, they go after them. But these people operate iunder an environment, they are not licensed, so you can’t really track them. The best SEC is doing now is to continue to sensitise the public to let people know that they should be aware of some of the schemes and let them know some of the channels of knowing the credibility of some of these Ponzi schemes or some of the so-called wonder fund managers,” he added.