Thousands of pyramid scheme victims forgotten as con artists roam freely

Mr Kanai’s problems date back to 2006 when he and his wife Lucy Njambi invested Sh529,000 in Kenya Akiba Microfinance.

The couple had hoped to get a Sh2 million loan to buy a bus and get into the transport industry.

Akiba Microfinance kept postponing the disbursement of the loan and Mr Kanai would later learn that he was among thousands of members who were yet to get a cent after investing in the firm owned by former Imenti Central MP Gideon Mwiti Irea.

Mr Kanai chaired a lobby of victims whose complaints to the Central Bank of Kenya led to a sting operation on Akiba Microfinance.

Owing to the stress and pressure of losing his retirement benefits, Mr Kanai developed high blood pressure, which eventually led to his death.

The Kanai family was not alone.

In 2007, businesswoman Oprah Aguso asked her husband for Sh200,000 to set up a business. She had successfully invested small amounts of money in pyramid schemes and had reaped instant benefits.

When her husband gave her access to his bank account, Ms Aguso withdrew Sh245,000 and went to Uchumi House, where she deposited the money with a company called Magnon Investments, which turned out to be a pyramid firm.

COME CLEAN

After Magnon upped and left, Ms Aguso had no option but to come clean to her husband. The man turned violent and left the home. Family members tried to intervene but her husband insisted on being paid his money before any negotiations could take place. And that’s how a family was broken up.

The same year, Mr Thomas Nderi had just been retrenched from Telkom Kenya and was trying to figure out what to do next.

After being told that he could invest with Akiba Microfinance and have his money triple without breaking a sweat, he walked to the Ministry of Co-operatives.

The then-commissioner Francis Odhiambo confirmed to him that Akiba Microfinance was a registered co-operative. Confident, he took his money to Kenya Business Community Sacco, where he met Mr Irea. That was the end of the road for Mr Nderi’s investment.

While Mr Nderi was immediately thrust into poverty, Mr Irea continued — and still does — to enjoy billions he reaped from Kenya Business Sacco, Akiba Microfinance and Kenya Multipurpose Business.

ELECTED MP

In 2013, Mr Irea was elected Imenti Central MP and served the full term before losing to Moses Kirima in 2017.

Akiba Microfinance was among the first pyramids to be netted as it fell in 2005, with detectives claiming that it was illegally operating a bank.

But the Chief Magistrate’s Court acquitted Mr Irea in 2011, arguing that no proof had been advanced to show that Akiba Microfinance was anything other than a hire purchase business.

Mr Irea’s Akiba Microfinance sued the CBK, demanding Sh930 million in damages. He won.

Today, taxpayers could be forced to pay the former MP over Sh5 billion after mediation on the dispute between Mr Irea and CBK collapsed. Perhaps in a case of poetic justice, Mr Patrick Ingoi, one of the top beneficiaries of pyramids, did not get to enjoy his loot in peace.

BANK ROBBER

Before he got into the world of pyramids, Mr Ingoi was a bank robber. He is most remembered for masterminding a violent Sh23 million bank heist.

The Tanzanian government has been baying for his blood since the 2004 robbery at the National Bank of Commerce in Moshi. Last year, the Court of Appeal dismissed an application by Mr Ingoi seeking to stop extradition and he was immediately shipped to Tanzania.

It is unlikely that Mr Ingoi’s Global Entrepreneurship, which collapsed after receiving Sh139 million from investors, will give victims refunds, but they can get some comfort knowing that some poetic justice was served on Mr Ingoi.

At least 20 people committed suicide between 2005 and 2007 after being defrauded by such schemes, while dozens of divorces and family break-ups were reported.

A crackdown on the pyramids and a task force formed by the then-Co-operatives Minister Joseph Nyaga in 2009 appeared to be the first step to justice for 150,000 victims who lost Sh8.1 billion.

But more than a decade later, not a single individual has been convicted despite the owners of the fraudulent firms being made public.

The Criminal Investigations Department, now Directorate of Criminal Investigations, arraigned 11 suspects, including Mr Irea and George Donde, owner of Deci that gobbled up Sh2.4 billion and was the single largest pyramid then, but nobody was ever found guilty.

GULLIBLE INVESTORS

The criminal justice system failed 150,000 poor Kenyans, something that should perhaps worry victims of new-age pyramids that have conned at least Sh10 billion from gullible investors in the last five years alone.

In 2012, the then Ikolomani MP Boni Khalwale proposed the Anti-Pyramid Schemes Bill, which sought to have owners of such con games fined Sh10 million and jailed for 10 years.

But before the Bill could be discussed in Parliament, it was time for elections, which meant the National Assembly was dissolved.

Under parliamentary procedure, this meant that Dr Khalwale’s Bill was overtaken by time.

It appears the importance and urgency of that (pyramids) was not of interest to other members."

Dr Khalwale won the Kakamega senatorial seat, and unfortunately no legislator took up the initiative to outlaw pyramids.

“What happened is that the Bill was overtaken by time. Usually, such good ideas are taken up by other MPs. But in this case, it appears the importance and urgency of that (pyramids) was not of interest to other members,” Dr Khalwale told the Nation.

The lack of proper laws against pyramids has come back to bite as fraudsters now hit victims in the real estate, agribusiness, cryptocurrency trading and forex trading.

Not many civilian crimes have rocked Kenya as hard as the 2005-2007 wave of pyramids where 150,000 people came on record as having been conned of Sh8 billion.

FORGOTTEN VICTIMS

But few crimes have also been forgotten, just as fast.

The 150,000 victims are now almost a forgotten lot.

Former Kitui West MP Francis Nyenze chaired the task force that travelled across the country on the taxpayer’s tab talking to victims with the aim of helping them recover their investments and looking to stop anyone from being trapped into pyramids in future.

Neither of the objectives has been met today and new-age pyramids are scheming billions from investors annually. In the end, the task force found that over 300 companies had robbed 148,784 people of Sh8.1 billion.

With word flying around that the CBK had frozen Sh5 billion held by the pyramids in various bank accounts, a group of 26,000 victims sued the government in 2015 seeking to be awarded the funds as compensation.

BANK DENIAL

But the CBK has denied that it froze the money. The case comes up today for presentation of arguments. Last year, High Court Judge Grace Nzioka ordered Spell Investment Company Limited, one of the pyramids fingered by the Nyenze task force, to refund 388 customers Sh82 million that they lost in a con game.

Victims sued the firm, the estate of its founder, Bonface Ngosia, Francisca Asembo and Robert Asembo in 2008. Francisca and Robert were sued as administrators of Mr Ngosia’s estate.

Mr Ngosia died in a road crash in June 2007. Mr Donde of DECI, who was once kidnapped by victims in the wee hours of the night and only released after paying Sh20 million, died in 2012.

Peter Ndakwe of Clip Investments, which gobbled up Sh1.9 billion, is now an author. In 2016, he was named in the Panama Papers as one of several wealthy Kenyans who hid assets in the tax haven.