The Economic and Financial Crimes Commission (EFCC) has received an average of 1,000 letters filed against Ponzi scheme operators every month in the last three years.

This was disclosed by a source in the anti-graft agency to Nairametrics over the weekend.

According to the source, who preferred anonymity, these complaints come from the regional offices of the agency and most times, more letters are received from rural areas across the Southern and Northern parts of the country.

What you should know about victims’ complaints

“We get more than 1,000 letters per month because there are thousands of victims who are ignorant of the fact that they are supposed to report such cases to the EFCC. 

“We get more petitions/complaints against some alleged Ponzi schemes operators from across the country but more come from suburbs in Lagos, Ogun, Oyo, Osun, Sokoto, Adamawa, Kano, and Rivers among others.

“We have found that several couples are involved in the menace. While some of them are already in the net of the agency, others are on the run but we are closing in on them and they will be arrested sooner than they expected,” our source in the EFCC told Nairametrics.

Why are more Nigerians falling victim?

If over 1,000 Nigerians write to the EFCC monthly to complain about being scammed by Ponzi Scheme operators, there is an indication that not only could there be more victims than those willing to speak up, but also, that more people could still fall victim to these shady entities that parade themselves and investment experts.

Analysts at the Nairametrics Clubhouse Series hosted by the founder, Ugo Obi-Chukwu, on Saturday, 23rd October 2022, observed with dismay, the rising cases of Ponzi scheme-related frauds in recent times. They also warned Nigerians to steer clear of suspicious ‘investment opportunities’ that sound too good to be true, noting that such schemes tend to be rampant when most developing nations go through an economic lull.

They further stated that ignorant investors fall prey to Ponzi schemes during economic recessions, especially when there are job losses and rising cost of living.

Wale Okunrinboye, CFA, explained that more Nigerians fall victim to Ponzi schemes due to the state of the economy and the fact that rates on other investments are low.

“Nigerians go for such schemes because they are desperate due to the state of the Nigerian economy. 

“Also, investment opportunities that would have been available for people are not so attractive because the government has kept their interest rates low. With the rising inflation, people are looking for ways to double their money.

“Even at that, these are not reasons for people to fall victim to such schemes because, at the end of the day, the money that is not enough will be lost to the Ponzi operators,” Okunrinboye cautioned.

Though not a participant at the Clubhouse event last Saturday, another financial analyst, Ope Dapo-Thomas told Nairametrics that the nation is witnessing a rise in Ponzi schemes because there is money out there and people do not know where to invest.

He said, “In most cases, they would have loved to invest in other forms of investments like Treasury bills but the rates are quite low, and they don’t want to get negative real returns, as inflation is higher than investors’ returns.

“People are looking for where to put their money and this is the right ingredient for Ponzi scheme operators,” he said.

Can Ponzi schemes be spotted from the get-go?

Speaking to Nairametrics on ways to spot Ponzi schemes, Dapo-Thomas cautioned that to avoid being a victim, an investor has to look at the time frame of returns.

“If an investment is offering 40% in 3 or 6 months, that is a red flag,” he warned, citing as an example, the XMP investment, which many people try to mirror and which gives 10% in a year. He wondered why people would believe a person offering a 40% ROI in 6 months, with no experience working in Wall Street or anywhere else for that matter.

“Such high returns are not impossible but there has to be a specific business or opportunity backing such claims. When a scammer is making it look like it’s a guaranteed investment, investors should watch their backs. Verify the offices, claims on the businesses or farms or other facilities they claim they have. Most are not regulated by SEC, so there is no point in transacting business with someone without any license,” Dapo-Thomas advised.

Olumide Adesina, another financial expert, said, “The easiest way to avoid Ponzi scheme players is empowering yourself with investment education and knowing when to contact the Nigerian SEC or a regulated financial entity for advice.

“Also, before an investor considers putting funds in any scheme, one should check the historicals of that entity, background checks should be done on founders to verify whether they are legit. Finally, an investor should not be overly exposed to investments that carry substantial risks.”

Is the EFCC doing enough?

A source in the Public Complaints Commission (PCC), based in Rivers State, told Nairametrics that the EFCC is not being proactive enough in the fight against Ponzi scheme operators.

He said, “EFCC needs to evolve more drastic strategies in tackling the menace of Ponzi scheme operators across the country. In most cases, the agency relies more on information provided by victims to take action when it was supposed to work more with the SEC to come up with more preventive measures and not curative measures.

“Nigerians are groaning under the yoke of fraudulent practices of Ponzi scheme operators and only the EFCC can save the day. 

“The issue of Ponzi scheme is a perennial problem in Nigeria and Rivers State in particular. The EFCC should be more drastic in handling it. We know EFCC has the capacity to do this. You can blame people for getting involved in the scheme but the truth is that many of them are deceived by the operators. EFCC should help those getting involved by cracking down on the operators.”

In case you missed it

Nairametrics reported that the EFCC had 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. 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)

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.

The Map

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 had been experiencing difficulties in paying investors their return on investment as promised. As expected, anger and impatience grew amongst investors who could neither receive 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 from the company 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.”

What does the law say?

According to the law, the defendants’ actions are illegal, as the offences committed are contrary to and punishable under sections 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 the Nigerian Correctional Services (NCoS), pending when their bail application would be heard and determined.