Many fraudulently minded persons posing as “entrepreneurs” have devised a means to swindle individuals of their money. It is a wave of ponzi-scheme that has been around for some time. Many Nigerians have fallen prey to these schemes. These fraudsters actually register their businesses and companies with the CAC, and that’s one of the baits they use to get their victims. Their major target is the greediness of their victims. Once they capture your greed for money, the rest is history.
How it works
First, they make sure that they register a company in Nigeria with CAC and create a website for online presence. Once that is done, they create impressive and huge business plans in profitable business sectors of the economy, such as agriculture, real estate, oil and gas, maritime, to name a few.
Afterwards, they advertise for investors. They use high interests as baits to attract investors. They offer monthly ROIs (return on investments) of 10 to 20 percent of moneys invested, including a 100 percent return of your principal investment. So that if, for instance, you invest N100,000 for 6 months at a monthly interest rate of 10,000 per month, at the end of 6 months you will get 160,000 (made up of N60,000 interests for six months and the N100,000 you originally invested).
These schemes succeeded. It always follows the same pyramid pattern. The early comers usually get the best returns, while the late comers nearly always lose their investment plus interest. In most cases nearly everyone loses their principal investment.
Beware of their Marketing Techniques
These fraudsters have great marketing skills. All they need to promote their fraud is the first set of individuals to invest in their business. Like a typical Ponzi or Pyramid scheme, they will endeavour that these first few investors reap the full benefits of their investments. Then, there is always a benefit for referrals of other investors, usually a percentage of the money invested. These people then introduce more people, who also begin to reap benefits. These new inductees then introduce more people, who then introduce more people. And the scheme grows.
Another marketing technique is their use of a robust and attractive profile and business plan, usually presented on their websites. In summary, the profile tells you how they are a business that was registered with the CAC some 5 to 10 years ago and are into high interest generating businesses such as oil & gas, transportation and agriculture. They tell you how supporting their business would be one of the greatest investments you’ve ever made, as you could benefit more than 100% of your investment in the shortest possible time. They tell you how magnanimous they are and how they would like to share their massive earnings with you with just a token of investment from you.
Their websites are automated to receive your data and your investment payment. They also offer you some percentage of money for people you refer to them. They tell you they have offices in at least three states in Nigeria, particularly in Lagos and Abuja. They tell you big companies and individuals that they are affiliated with. They tell you, and even “show” you their track records, including “testimonials” from some of their investors. They even warn you not to lose “this rare opportunity” to make enormous money. In short, it is a great sales pitch.
But your objective mind keeps nagging at you that these whole presentation sounds too good to be true. You know at the back of your mind that it took you, who are a very seasoned and hardworking businessman or employee, several years before you broke even in your business, and even several more years before you started making profit.
At that point, you have the option to dump the whole thing.
But they have played their game well by allowing the first, and possibly the second, set of investors to reap all their benefits. So they have real testimonials and unrelated people who can and would vouch for them. Those are their baits for other (innocent) investors to get into the scheme.
And so, against your better judgement you decide to get into the game.
Because you’re still sceptical of the scheme, you decide to invest the smallest possible amount of investment that the business allows. Surprisingly, and as promised, you get your interests paid into your account for the first few months at the due date without fail. You’re immediately enamoured and overjoyed at the fulfilment of their promise to you. You become completely sold out.
So, you not only invest more into their business, but also begin to sincerely advertise the scheme to your friends, associates, family members and anyone you come in contact with. And again, as promised, you get a percentage for the referrals that you make to the company. This further convinces you that these people are just good and true. It is a good deal. You are happy. Your greed is hyped. You have hit it.
But some questions keep rising in your mind, but you keep silencing them: Is it that easy to really make profit? If it’s that easy, why don’t they want to keep it for themselves? Is it that their business never experience downturns like every other business does? How come their own kind of business yields profits (huge profits) every month? What kind of oil and gas or agric business are they into that yields profits all year round?
And then, the bubble begins to burst.
You are 3 months into your second or third wave of investments, with your highest investment ever, and you get a memo from the company that due to some challenges with their bankers or some on-going investigations by government, the company would not be able to make the present monthly instalment on time. They appeal to you that the issue will be resolved within a few weeks, and that their team of lawyers and accountants are working with the relevant authorities to resolve the matter. Since they have never disappointed you, and since the letter was a general memo addressed to all its investors, you surmise that the problem would soon be over; after all, every business faces challenges, and this one is a “good challenge” because it is the government investigating their accounts, and not as though they had made some losses.
They are able to resume payment again after a month’s delay, and they apologise profusely to their investors via another memo, telling you that due to the delay, your investment plan has been extended by one month to meet up with the previous delay. You are happy, you are hooked, you sing their praises, surely this people are very honest. You even write them a thank you note, and refer more people.
Then the bubble bursts completely.
The next month, you don’t get any payment or notice or memo. You send in messages and try to call them but your phone call is unanswered. After a week of ceaseless calls and messages and anxieties, you get another memo telling you that they had issues with their distribution channels or payment platforms or that the government had frozen their accounts, and promise you that “their team of lawyers, accountants and technicians are working round the clock to ensure that the situation is resolved within the shortest possible time.” Once resolved, payments would resume in earnest.
Initially you are intrigued by the fact that they have a “team of lawyers, accountants and technicians.” But then, one month passes, two month passes. No payments. At this time, your anxiety rate is high. You begin to wonder and panic. Have you been duped? Was it all another Ponzi or Pyramid scheme? You try their phone numbers, it doesn’t going through. You send messages and emails, but no response. You try to locate their offices, they tell you that they had moved out. Meanwhile, you are receiving phone calls and threats from the people that you personally referred to the scheme, some of whom did not even get any return on their investment. Then it begins to dawn on you bit by bit, that it was all a fraudulent scheme.
But you refuse to be defrauded. You must get your money back.
You carry out your investigations and find out that the business was really owned by one person. If you are lucky to trace the owner of the company and get him arrested, he tells you the same story that the government froze the company’s account, or even bluntly, that the business had crashed because some investors pulled out their money or some management of staff mismanaged the business in the absence of the Owner/MD. Someone else is always to blame, not them.
If you insist on getting back your money, the owner will tell you that he can’t meet up with the principal, talk less of the interests, and if only the investors can give them about a year or two to get back on their feet again, they are sure that they would meet up. Otherwise, you should forget the interest and settle for the principal, which they hope to pay you back within two years in bits and pieces. All these agreement after you involved the police, and that is if you succeeded in getting the owner.
Thereafter, you here that the company was under investigation by the EFCC for fraudulent activities; because, apparently, another investor had reported the matter to the EFCC. Since they are under investigation, you let go. It may even be that the owners are found guilty of fraud and later imprisoned. After that, nothing is heard about them. You have lost 90 percent of your total investments.
These sorts of fraudulent ponzi-type schemes are rampant in Nigeria today.
And people keep getting defrauded daily. And the reason is because many people like cheap and quick money. In short once you are greedy for cheap money, you will easily fall prey to such a scheme. It is well-known fact that every successful business takes between 10 to 20 years to really become successful. But these schemers tell you that they have studied the market and somehow have a magic wand business plan for spontaneous growth and can/have achieved overnight success within 2 to 5 years.
All that glitters is not gold. When it sounds too good to be true, then usually it is too good to be true, especially when all your questions are answered in such a way that it looks like the business owners have it all covered. But the tales are there for us to see. These schemes are no different from Ponzi or Pyramid schemes. There are usually those at the top of the pyramid who get in early and take much of the profit; whereas, the late investors are the ones who bear the brunt of the fraud. Either that or all the investors soon find out they have just been duped.
I speak from the perspective of a victim of such schemes and one who had represented those who have been victims of such schemes, and from the standpoint of a professional who have had such schemers come to him for advice and representations before law enforcement agencies.
Some of these schemers sound genuine. But it’s all the same, anybody who makes haste to be rich will have his hands soiled and will never be innocent. The business owners want to get rich quickly by using other people’s money (OPM). 100 per cent of them know that their promises will fail because nature has its principles and nobody can side-track these principles without getting hurt. The investors likewise who had earned their moneys through blood and sweat know in their hearts that such a thing is not backed by natural principles, but hope that these schemers must have found a way to side-track basic business principles. They also want to get rich quickly and earn passive income. They end up with their fingers burnt.
Recent in these schemes is a case involving Imagine Global companies owned by a couple, Bamise & Elizabeth Ajetunmobi. A court in Lagos in July 2022 ordered the absconded couple and their companies to pay over 140 ponzi victims about N19billion. According to the report, the company ran lending service to small and medium businesses, offering 22 percent as interest on loans received and 10 percent returns to investors. Chances are that a quarter of that amount will never be realized.
Unfortunately, so many people still patronise those schemes, despite having lost their moneys previously in similar fashion. These schemes are still out there, and I’m sure in more forms than one. Be wary of them.
Articles on this site are meant for general knowledge only, not as professional advice. If you need personal advice on matters contained herein, you are advised to contact a professional.
We are a firm of legal practitioners and CAC certified agents. We help business owners, entrepreneurs and associations register their businesses, companies and associations with ease. If you need our help with any of the matters contained in the article, feel free to send us a mail at niyiama@yahoo.com or reach us on WhatsApp at +234-08126194751.
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