Nigerians lose millions to phoney investment funds

Aduke Komolafe, a 58-year-old Nigerian civil servant, put an end to her life by swallowing rat poison, mortified at the loss of her savings to a phoney investment fund.

Lured by the promise of 100% returns in two weeks, the mother of five put 1,3-million naira ($10 000) into Pennywise, one of dozens of self-styled “wonder” investment firms dotting the populous south-western cities of Lagos and Ibadan.

“My mother could not stand the shame and agony of losing everything,” her 25-year-old daughter Kunle told Agence France-Presse (AFP) at the family’s dingy two bedroom Ibadan apartment.

“She was influenced by a friend who told her that she had reaped a lot of money by investing in Pennywise. Now we have not only lost the money but also the breadwinner of the family,” lamented Kunle, an unemployed political science graduate.

Nigeria is better known for international internet fraud — known as 419 from the relevant section of the penal code — where email users from Sydney to Monaco are invited to part with their bank details. Those naive enough to do so quickly find their account has been emptied of funds.


The pretext varies from a make-believe inheritance to a fictitious lottery win in exchange for “processing fees” of several thousand dollars. Very often the sender claims to be someone immensely rich who is struggling to transfer all of his immense fortune out of the country and needs help.

One that has recently circulated purports to have been sent by Maryam, the wife of the late Sani Abacha, a military leader and de facto president of Nigeria from 1993 to 1998.

She is said to be looking for someone to temporarily take care of some of her husband’s stolen millions. All she needed was the bank account number.

International internet fraud perpetrated by Nigerians is so rampant that the latest legislation Nigeria brought in to combat it holds liable not only the fraud convicts but also cybercafe owners and office managers who allow their premises to be used for the sending of fraudulent emails.

But in recent months hundreds of Nigerians have fallen victim to “fund managers” offering too-good-to-be-true returns on ultra short-term deposits only to disappear when the maturity date comes round.

The high returns by the smartly turned out young men and women who are “salespeople” for the likes of Spring of Wealth, Pot of Wealth and Megawealth not only seem too good to be true. They are.

“I was returning from the office one day when a young man in a French suit accosted me. He persuaded me to invest in his firm, promising to turn 10 000 naira into 20 000 in two weeks,” Barikisu Bello told AFP.

“I ignored him at first. But he sounded so convincing that I later gave in to the deal. To my surprise, I was paid 20 000 naira at maturity,” she said.

“I then decided to raise the stake by investing 50 000 naira. I even encouraged two of my friends to give it a try and put in 100 000 each. At maturity, they began to tell us stories and up until now, we have not been able to recover money the three of us put in,” she said.

Bello said the fund managers are fraud convicts whose activities should be stopped and the Nigerian authorities appear to be listening.

Oyo state police spokesperson Bisi Okuwobi told AFP most of the illegal firms in the state capital Ibadan have been closed down by security agents.

“A lot of the staff have been arrested and are helping the police in our investigations,” she added.

When AFP visited Treasure Fund in Ibadan it turned out to be a one-bedroom flat furnished only with one table and a chair and with one clerk in attendance.

“The operators of the investment outfits are fake. We are collaborating with the security agencies to put an end to their nefarious and fraudulent activities,” said Lanre Oloyi, spokesperson for the Securities and Exchange Commission (SEC), tasked with regulating and protecting the interests of investors.

He said claims by the operators that they are licensed by the commission are spurious. “None of those parading themselves as fund managers is registered with the SEC and we are already clamping down on them,” Oloyi said.

He said investigations have proved that the illegal operators simply take money from deposits and vanish into thin air.

“There is no indication that the money is put into productive investments such as stocks, oil and gas as they claim,” he said. “They are fraudsters who take advantage of the greed and gullibility of Nigerians.” – AFP

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