Determined to insulate Nigerians from the onslaught of illegal financial operators whose activities are spreading like wildfire in recent times, the Central Bank of Nigeria, with support from the Economic and Financial Crimes Commission and the Securities and Exchange Commission, is leading a coordinated sensitisation campaign against the activities of the scammers.
For the second time within 30 days, the Central Bank of Nigeria (CBN), last week cautioned Nigerians against the activities of unlicensed financial operators (IFOs), who lure and defraud unsuspecting members of the public with unrealistic returns on investments.
The apex bank advised the investing public to visit the websites of the central bank, Securities and Exchange Commission (SEC) and other relevant member agencies of the apex bank’s Financial Services Regulation Coordinating Committee (FSRCC) to verify the registration and licence status of such companies and schemes before investing in them.
The CBN, which raised the red flag last week had similarly, in March, cautioned Nigerians to distance themselves from purveyors of such dubious financial deals which have sent thousands of Nigerians to bankruptcy and early graves.
The Jalingo Branch Controller of the CBN, Mr. Idris Dagona, who stood in for the bank’s Corporate Communications, Osita Nwasinobi, at an event in Jalingo, wondered why Nigerians have continued to fall victims to unlicensed financial entities. The CBN, according to him, successfully refunded N95.2billion to customers in 2021.
The CBN further expressed worry over the increase in the activities of IFOs which it stated portends grave risk to public confidence and the stability of the Nigerian financial system.
Falling for scams
Information gleaned from the websites of the Economic and Financial Crimes Commission (EFCC) showed that the spread of the activities of these fraudsters is not peculiar to one particular zone of the country, as thousands of victims are left to nurse their wounds while the criminals keep smiling to banks.
For instance, in March last year, the Ibadan Zonal Office of the EFCC arrested 43-year-old Amos Olugbenga Olaniyan for allegedly defrauding people of over N128,000,000 in a fraudulent investment scheme.
According to the EFCC, Amos Olugbenga Olaniyan was arrested following a series of petitions by victims, who alleged that Amos through his company, DHIL Nigeria Limited popularly known as Crime Alert Security Network Investment, persuaded them to invest in a network scheme that offered a monthly 30 per cent returns on investment. According to some of the victims, they were persuaded to invest after listening to the suspect’s weekly radio programme.
However, after investing their monies they neither received the promised interest nor get a refund of their capital since 2020.
The commission said it discovered that the suspect operated a classic Ponzi scheme and had defrauded hundreds of people, some of whom reported orally to the commission. It also discovered that DHIL Nigeria Limited, the vehicle used by Amos to scam his victims, was not registered with the Central Bank of Nigeria as a financial institution.
In Kaduna, the state Zonal Command of the EFCC on March 14, 2022, secured the conviction and sentencing of one Ekuma-Ezeogo Fabian Tochukwu before Justice Darius Khobo of the Kaduna State High Court, for criminal misappropriation.
Trouble started for the defendant when he created a fake Facebook account using the name, Ogboi Ijeoma to defraud victims and lured one Duniya Precious Theophilu and her friends into investing N170,000 in an online Ponzi investment scheme called Jian Investment. After the payments, the defendant blocked the complainant from further communication.
On March 8, 2022, the EFCC secured the conviction and sentencing of a notorious Ponzi scheme operator, Umanah Umanah before Justice Agatha Okeke of the Federal High Court sitting in Uyo, Akwa Ibom State.
Umana’s nightmare started in 2020 when he was arrested by operatives of the EFCC following a petition by one of his victims, who alleged that Umanah swindled him over N2.9million and subsequently issued him a N500,000 cheque, which was dishonoured by the bank because the account was not funded.
During investigation, the commission discovered that the defendant lured his victims through bogus promises of return on investment of up to 50% in seven days through his company, No Burn Global Limited with a network in several states of the federation.
Similarly, the Lagos Zonal Office of the EFCC last year arrested a couple for allegedly defrauding unsuspecting victims in a N935million Ponzi scheme.
The suspects, Emmanuel and Victoria Jaiyeoba, who were arrested at their residence in Ibadan, Oyo State, are parents to Adewale Daniel, Marketing Director, Wales Kingdom Capital Limited.
According to the EFCC, the suspects, in complicity with their son, who is still at large, allegedly operated a Ponzi scheme in the guise of forex trading to defraud their unsuspecting victims.
The CBN had in April 1994, undertook to facilitate a formal framework for the co-ordination of regulatory and supervisory activities in the Nigerian financial sector by establishing the Financial Services Coordinating Committee (FSCC) to address more effectively, through consultations and regular inter-agency meetings, issues of common concern to regulatory and supervisory bodies.
What experts say
But experts believed that the only way to frustrate the activities of illegal financial operators is to develop the stock market and other legitimate investment platforms in a way to attract potential investors.
This was the position of Prof Uche Uwaleke, a Professor of Capital Market, Nasarawa State University. He believed that Ponzi schemes tend to flourish during periods of economic downturn and are prevalent in societies with high rates of unemployment and poverty.
He said this is because these conditions render a lot of people vulnerable to money-doubling tricks fraudulently packaged to escape economic hardship.
“It was not surprising therefore that the MMM scheme spread like wildfire during the period of economic recession in Nigeria. It was a scheme that was promising investors as much as 30 per cent return monthly or 360 per cent per annum in an economy where the average annual return on investment was around 16 per cent at the time,” Uwaleke was quoted as saying.
He advised the investing public to be wary of any investment scheme with highly attractive propositions and mouth-watering returns.
Uwaleke argued that any rational investor should probe further if any investment offering is appearing ‘too good to be true.’
In addition, he said the advice of experts should be sought before taking any investment leap where possible.
SEC to clampdown on unlicensed schemes
On his part, 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 public 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.
One expects other stakeholders to join efforts with the CBN in exposing the illegal activities of sponsors of Ponzi schemes as frustration and harsh economic climate push unsuspecting members of the public into the arms of these fraudsters.
