Nigerian retirees, middle-aged workers and youths are losing their hard-earned money to Ponzi schemes, robbing them of blissful rest, shattering dreams and forcing many back into the labour market, STEPHEN ANGBULU writes
Months after losing his N7m investment in a business, Anozie Ugwu, 55, has yet to come to terms with the incident which he wished was a dream. He had hoped the venture would sustain him after his untimely retirement in mid-2022.
A father of five young children, he worked as a sub-assembly technician for about 15 years in a tobacco processing plant until that ill-fated day when his body failed him.
“I was coupling some of the machines after servicing them as usual when I lost my balance and fell. It would be the second time in a few weeks.
“When my company heard that I fell twice while working, they took me for an MRI (Magnetic Resonance Imaging) scan. According to what they told me, it started and degenerated. It did not happen in one day. And it is because of my posture at work.
“For instance, we have a machine that has about 350 to 400 screws. My maintenance work involved loosening and tightening of screws with my muscles. I stay in one position for hours. This affected my neck, my right arm and left leg and it started to look like I was paralysed. It also affected my spine and lower back disc,” he told our correspondent.
Retiree’s agony
After the terrifying discovery, Ugwu underwent physiotherapy and stayed away from work for two weeks while he recovered. However, two weeks stretched into three months, placing him in the line of fire.
“The policy of the company is that once you have stayed (away) for more than three months, they will slash your salary by half. After another three months they will relieve you of your duty. They will give you one year pay, your retirement benefits. They also promised to foot my medicals for one year,” he explained.
After leaving paid employment, Ugwu, who was on crutches then, sought good investment soil for his N15m severance package. He hoped to use the investment proceeds to pay the tuition of his three undergraduate children and two soon-to-be secondary school leavers while recovering from his injuries.
That was when he learned about Hyfex Capital, a wealth and asset management company run by self-acclaimed wealth management expert, Mr Godswill Oyor. According to details from the company website, Hyfex Capital enables its clients to invest safely in securities that bring steady dividends with minimal risks.
It also offered retirement planning services, spreading funds across several portfolios, including real estate, agriculture, forex and a suite of digital products, depending on the client’s preferences. When Ugwu spotted these deliverables in a Facebook advertisement, he was hooked.
“I saw Mr Godswill Oyor’s advert on Facebook where he advertised for this auto cruise. I clicked the link, joined the WhatsApp group and started communicating one-on-one with him.
“Godswill now told me that his company had estates in Enugu and Ibadan and showed me many things. He asked me whether I was ready to join,” he narrated.
By this time, his N15m had reduced to N9m due to loans he paid back and other family exigencies. He explained, “Before my retirement, I owed a bank close to N3m and other microfinance banks, too, because I had three undergraduates, and the money I was being paid as my salary was not sufficient.
“I have aged parents at home and I’m their only surviving child. So, the money was not going anywhere. This made me borrow money from here and there to sustain myself. After I settled the loans and paid for other things, I was left with N9m.”
Before investing the money, Ugwu received the assurances of the Hyfex CEO, who told him that his business had a special interest in retirees and out-of-work folks. According to him, one of the schemes guarantees a 21 per cent return on investment after 90 days. Another scheme also gives investors a 6 per cent return on investment monthly for three months.
“I told him that I am a retiree and I have issues. He said, ‘don’t worry,’ that there is something he is doing for people whose jobs and businesses failed. Then he asked me what was the source of this money; hope it was not from yahoo-yahoo (fraud).
“When somebody asks that kind of question, you will believe this person is genuine. So, there and then, I paid N5m into Hyfex’s Guaranty Trust Bank account. I also paid N2m into another account for a different package. That makes it N7m.
“But when I left that place, it was as if I was under a spell. I asked myself, why did I do this?’’ he narrated.
Ugwu’s doubts were confirmed three months later when Hyfex Capital stopped paying ROIs and went belly up. Meanwhile, another unsuspecting investor had staked his life savings of about N14m into the various investment packages offered by the firm.
Barth Effiong, a marketing manager at one of Nigeria’s foremost pharmaceutical companies, said he planned to cash out his capital and returns in September 2022 to enrol in a Master’s programme at the University of Birmingham, United Kingdom. But his hopes were dashed as his money was stuck in the scheme.
He said, “I looked forward to studying at the University of Birmingham in the UK. I was actually planning for the September intake of last year (2022) or the January intake of this year (2023).
“I had some money already saved up. But I just thought, if between April and September or January 2023, I could just get some little interest on it, that will fund my flight ticket or the visa application; those extra costs that come with the entire process.”
In April, a friend introduced Effiong to Mr Oyor, whom he said he’d recognised for his faith-based work but had not known him as a wealth management expert.
“I had known him before. In fact, because of his position, he was someone I looked up to as a spiritual leader. Someone I would want to know either personally or on professional grounds.
“So when my friend told me about the auto cruise investment from Hyfex Capital; for me, it was a no-brainer because this is someone who I supposedly held in high regard. I also checked what other people were saying about his business. And it was highly convincing,” Effiong added.
In the following weeks, he ploughed his life savings into three separate investment packages run by Hyfex Capital, totalling N13.6m.
He explains that “First, I wired over N1m. Then for the registration for the auto cruise, I paid N1.95m. So that’s a total of about N3m. Then I sent in around $7,000 for another scheme that lasts for three weeks. For that one, they actually sent me the return. I kept adding any spare money that was with me until it added up to N13.6m. So, he (Oyor) suggested that I allow it to compound rather than withdrawing my capital and interest,” he said.
Effiong said he sank more money into the venture as his trade afforded him, totalling over $27,000. In the ensuing months, returns came in steadily until September 2022, when he began to notice the first signs of trouble.
“There was this man whose children were being sent out of school because of school fees. He said he needed his N2.5m urgently and he has been trying to reach Mr Oyor but wasn’t getting any feedback.
“So, this man created a separate WhatsApp group, added many of us and told us that he was trying to get his money out but Hyfex Capital is not responding to him even though they are responding to new investors.”
“So, some of those in the group and an executive at Hyfex calmed him down saying there is no problem and he would get his money out. After that, we all left the group,” he explained.
Effiong and thousands of other investors would soon realise that the unnamed agitator was not raising a false alarm after all. When it was time to retrieve his funds, all emails and text messages to Hyfex Capital went unanswered.
“Towards September, the responses to messages began to slow down. The returns were not coming in anymore. I began to message him more frequently like ‘What’s happening? You’ve not paid my returns. You’ve not responded to my message. I need this money for my tuition fee,” he said. But it was too late.
Like Effiong, Ugwu, who was still recovering from his injuries, was also dazed by the communication blackout. So was Abinde, a digital content creator who invested N8.6m; funds he’d saved up to study Engineering Management at Michigan Technological University in the United States.
Adeyinka, a fertiliser dealer and a father of one girl, was also looking forward to a good year-end when he got wind of the development. He also invested N2m in Hyfex Capital months earlier and had received ROIs only twice. Though he had been patient for months, the abrupt silence grew deafening.
“It wasn’t until late November that we heard how he was planning to flee the country. All his phone lines have been changed. He closed his physical office in Ibadan too. In December, we learned that the police had apprehended him.
“He was tracked to Lagos, then arrested and held in Panti police station after the intervention of one of the investors who lost N100m to the scheme. So that was when the information leaked,” he told The PUNCH.
When contacted, Counsel to Hyfex Capital, Ayobami Olopade, told our correspondent that although investors were in court to recoup their funds, the company will publicise its formal stance via a communique soon.
“I am unable to discuss this at the moment. The matter is in court. But let me assure you that the company will come out with a formal position on this matter. A communique will be released soon and investors will be advised on the situation,” he said.
While the actual figures of investors’ money stuck in Hyfex are yet to be known, Ugwu, Effiong, Abinde, Adeyinka and thousands more are still trying to salvage their bit of the pie. Their tale is similar to that of millions of Nigerians who have lost money to similar ventures in the past few years. The thought of starting afresh has pushed many into depression, while others have resorted to suicide.
Nigeria’s graveyard
Perhaps, the most renowned Ponzi scheme to hypnotise millions of Nigeria was the Mavrodi Mundial Movement. When MMM crashed in early 2017, Nigerians lost about N12bn, data from the Central Bank of Nigeria revealed. While investors licked their wounds, an ambitious minority studied and replicated the model, unleashing untold mayhem on unsuspecting folks.
Founded by Marksman Chinedu Ijomah or Chinmark as he is popularly known, operated a series of businesses. They include Chinmark Homes Shelter, Chinmark Rides and Logistics, Chinmark Restaurants and Food Services, Chinmark Medicals and Chinmark Consultancy, among others.
Ijomah, like many others, branded himself as a thoroughbred businessman. His religiosity also ticked the box of many Nigerians who considered him god-fearing.
Attracted by that trust were thousands of investors who handed him N20bn of their hard-earned money. However, in December 2021, the Securities and Exchange Commission declared Chinmark Group and its affiliated investment arm, FINAFRICA Investment Limited, illegal entities.
A statement issued by the SEC on December 25, 2021, read, “The attention of the Securities and Exchange Commission, Nigeria, has been drawn to the activities of an Illegal Operator (FINAFRICA Investment Ltd.).
“The company claimed to be an investment company that engages in business development in commercial sectors of the economy and uses the funds in entities under Chimark Group.
“The commission hereby notifies the investing public that neither FINAFRICA Investment Ltd. nor Chinmark Group is registered by the SEC and the investment scheme promoted by these entities are also not authorised by the SEC. In view of the above, the general public is hereby warned that any person dealing with the within named company in any capital market related business is doing so at his/her own risk.”
The group folded up in April 2021 when it could not meet its financial obligations. Ijomah was reportedly arrested but freed again due to his close ties with influential government officials within and outside of Enugu State. Findings by The PUNCH revealed that he still roams free even as 4,466 of the 4,966 investors lick their wounds. As of March 2023, they are yet to recover their funds. Mrs Nuella, who invested millions of naira without her husband’s knowledge, reportedly took her own life.
Farm storage business
OFPB was founded in 2020 by Ovaioza Yunusa, then a 28-year-old graduate of the School of Nursing and Midwifery, Nasarawa State.
The scheme lasted one year. Within that time, Ovaioza attracted N12bn of investors’ money by fronting a farm produce storage and processing investment scheme. However, trouble started when OFPB stopped paying ROIs in the first quarter of 2022.
By March 2022, angry investors had started calling for their money. But Ovaioza attributed the delay to skirmishes with the Securities and Exchange Commission, a similar excuse her Chinmark counterpart floated on social media. On April 18, 2022, she was arrested with her husband in Abuja while attempting to flee the country.
Eatrich Farms was an agritech business that digitised farming. When it went belly-up in the last quarter of 2021, it had sucked N20bn from Nigerians. Months earlier, the business had stopped paying out ROI to its 250 investors. Eatrich’s founder, Sam Afolabi, absconded with the investors funds.
When Jennifer Nyesome-Effiong, a graduate of Pan-Atlantic University, founded Hachi Farms in 2018, she vowed to shower her investors with juicy ROIs every 90 days. The paddy rice scheme stopped paying ROIs in August 2021, claiming that N250m of its monies went missing.
In January 2023, the EFCC revealed that it receives over 1,000 petitions against Ponzi scheme operators monthly. The Ponzi scheme was named after Charles Ponzi, an American-Italian businessman who duped investors in the 1920s with a postage stamp speculation plan. They are unverified investment ventures that pay existing investors with funds pooled from new investors.
Ponzi managers often promise to invest monies received from the public into high returns-generating vehicles with little or no risk. They lure victims into believing that the ROIs are drawn from actual businesses. However, new investors are the source of funds.
According to the United States Securities and Exchange Commission, most Ponzi fraudsters do not invest the monies received. They pay earlier investors with new monies and siphon the rest. These schemes collapse when the inflow of new investors plummets or when a large number of existing investors cash out their funds at the same time.
Mercy Usman, a financial analyst with one of Nigeria’s leading commercial banks, says most Ponzi schemes are recognisable from their high ROI promises, vague or complex business models and various pay-at-your-level inlets.
She stated, “They often promise high returns with little or no risk to the investors. While the average return often ranges between three to seven per cent, Ponzi schemes promise you as high as 40, 50 or even 70 per cent returns.
“Also, most of them do not have an explainable business model. The recent ones have a way of fronting several businesses to act as a cover. But when you probe deeper, you will discover the fraud. And I think in the last three years, one extra thing they do now is they don’t make it a fixed price. They make it a pay-at-your-level thing so that even the poor can join.
“You feel you’re not putting much. You feel you’re just putting your dormant income. So, you don’t feel like it’s all your investment that went into it. You feel it’s going to come back.”
Usman added that a lack of proper certification is also a red flag. According to her, the rush for these schemes is predicated on the rising cost of living coupled with stagnant incomes. However, the law is clear on the practitioners of Ponzi schemes.
Uncooperative system
Former Attorney-General of Oyo State, Oluseun Abimbola, SAN, who has helped several victims of fraud recover their monies in court, said fraudsters exploit legal loopholes and poor regulatory mechanisms to perpetrate their enterprise.
According to him, a greater emphasis on implementing extant policies and collaboration amongst government agencies would curtail the menace.
Abimbola said, “One of the challenges that I have seen having litigated some of those matters in civil courts trying to recover funds belonging to creditors who are owed is that our systems still lack the sophistication of being able to curtail the losses at the time when it is discovered.
“And so you find out these funds are not kept in the home. These funds are kept in the bank accounts of these individuals or companies. But before you say ‘Jack Robinson,’ when they are going bust, they have already moved out the funds.
“So our systems are still sufficiently porous enough to allow an indiscreet or faceless ABC & Co. limited to amass billions in its account belonging to creditors and yet no bank raises an eyebrow when those funds are being amassed.
‘’If ABC & Co. that does not buy or sell to the best of your knowledge, does not have a factory, then why would we have so much as N2bn in its accounts? And they don’t flag the account for NFIU to investigate.”
He said anti-graft agencies such as the EFCC must deepen collaboration with the immigration service through prompt information sharing that would help track and apprehend Ponzi operators before they flee to non-extradition countries, as is their custom.
“When these companies go bust, the promoters elope from the country to some island that does not have extradition treaties with Nigeria and you don’t hear of them for the next 20 years.
“So obviously, if at the time when these things are being observed either by the bank or by the NFIU by the EFCC before they move on the promoters, you would have been able to share that information with immigration and with all those agencies that can guard against the disappearance of such persons. You would have flagged their passports globally. If you need to obtain an order of court, you would have done that discreetly so you can apprehend them at the point of exit.”
However, Abimbola blamed the unsuspecting investors for driving the schemes through greed.
He argued, “We also have to consider the greed of the individuals. Yes, some schemes look very legit. Even after doing your due diligence, you can still fall victim. But there are many others that you don’t need God to tell you that this is a scam.
“When someone tells you to put N1m and get N3m after one month as returns, you already know this is a scam. They may say they are doing forex trading and the like. But let them show the investors how to do it. You can ask them how N1m can become N3m in one month. If so, all the forex traders in the world must have become billionaires by now.’’
As of the time of filing this report, the Securities and Exchange Commission is probing the Vektr Capital Global Group, whose operators, Solomon Solomon and Zakari Haruna were arrested for allegedly amassing N891m without due registration.
However, the SEC spokesperson, Mrs Efe Ebelo and his EFCC counterpart, Wilson Uwajuren have yet to respond to queries on the status of the case.
