Arrest, prosecute sponsors of Ponzi schemes
A recent incident in Lagos State, whereby a man committed suicide over the loss of a huge sum of money to a Ponzi scheme, has refocused public attention on the ravages of these questionable investment options and their sponsors. According to the story, the victim – along with hundreds of others – had invested huge sums […]
A recent incident in Lagos State, whereby a man committed suicide over the loss of a huge sum of money to a Ponzi scheme, has refocused public attention on the ravages of these questionable investment options and their sponsors. According to the story, the victim – along with hundreds of others – had invested huge sums of money in the scheme which promised them returns on investment ranging between 60% to 110%, only to discover that their hard-earned money had vanished into thin air as it was paid to fraudsters who had posed as genuine investment managers.
While his suicide bid went through, others who had contemplated the same line of action were fortunate as they were saved by providence from taking their lives. All of the living ones invariably went home with unforgettable bitter tales of woe, while the culprits smiled to their vaults.
Against the backdrop of the disturbing elements of the story under consideration, it is noteworthy that the country’s bitter experiences with Ponzi schemes have not dissuaded yet new clients from patronising them, as they still thrive and attract unwitting clients who deposit huge sums of money, with them. For clarification, the term Ponzi refers to an investment scheme where the operators promise abnormal, irresistible and mouth-watering returns on investment (ROI), by paying early investors with funds obtained from later investors and sooner than later abscond with the remaining investors’ funds.
The enterprise is named after a certain Charles Ponzi, who was one of the earliest culprits in the United States of America in this dubious enterprise. Historically, one of the earliest Ponzi schemes in Nigeria was in 1990 by one Umanah Umanah in Port Harcourt, Rivers State, which attracted significant public interest along with equal measure of widespread grief when the scheme collapsed like a pack of cards.
It took a presidential order from then Head of State, General Ibrahim Babangida, to have him arrested and his scheme shut down, when it ran aground. Ever since, several such dubious schemes have come up with tantalizing names such as ‘Monitree’, ‘Moniwell’ and ‘Evermoni and the very popular MMM, which many fell victim to in 2019. This is just to name a few as there are many others in various forms.
Disturbing as it is, the situation actually betrays the level of financial illiteracy and credulity around the country. Meanwhile, the Central Bank of Nigeria (CBN) on its part has warned on several occasions, alerting the general public on the futility and danger of patronising such unreliable investment ventures. Despite the warnings, many Nigerians still patronize them, a development which gives rise to the raging contention that patrons of Ponzi schemes are gullible elements who are seeking quick and easy money and therefore deserve their plight. However, there is also another contention that the resort to Ponzi schemes – in spite of the dangers associated with them – draws from a more fundamental weakness of the country’s financial system, with respect to the problem of limited economic inclusion for citizens who are needy of credit facilities. While it cannot be ruled out that rabid kleptomania could lead some to seek to reap where they did not sow, the situation actually calls for a more robust approach by the apex bank towards curbing the growing malady of the proliferation of Ponzi schemes.
While the CBN may need to step up its game on sensitization of the public with respect to dissuading would-be patrons of Ponzi schemes, we urge citizens to exercise caution when engaging in financial activities. Adequate investigation should be carried out to gather enough information. There is also need to intensify efforts at arresting the sponsors of such ventures and treating them as common thieves which they are. It needs to be noted that in the country’s statute books there are enough laws to invoke for the purpose of dealing decisively with this menace of Ponzi schemes. These criminals advertise their ventures openly either on social media or through billboards or fliers, therefore, they are easy to apprehend. There is no need to wait until several people fall victim before action is taken. This has gone on for too long; it is time to stop them.