3 million Nigerians lost N18bn to Ponzi schemes – SEC

On Tuesday, over three million Nigerians have lost about N18bn through Ponzi schemes, the Securities and Exchange Commission (SEC) stated.

Director-General, SEC, Lamido Yuguda, said this during a webinar organised by the commission.

Ponzi schemes are fraudulent investing scams which generate returns for early investors with money taken from later investors.

They are similar to pyramid schemes in that both are based on using new investors’ funds to pay the earlier backers.

Speaking at the webinar, Yuguda said, “Ponzi schemes operate with unsustainable operating models that ultimately lead to huge losses for investors.

“Following the collapse of the MMM Ponzi scheme, the Nigerian Deposit Insurance Corporation had estimated that over three million Nigerians lost about N18bn.”

The capital markets regulator had earlier said its aware of the unlicensed investment schemes operating in the country, who end up promising their victims huge, and unjustifiable returns on investment.

According to SEC, “These activities are perpetrated by suspected promoters of Ponzi and other fraudulent schemes under the following identities: Loom Nigeria Money, Box Value Trading Company Limited, Now-Now Alert, Flip Cash Investment, Result Investment Nigeria Limited, Helping Hand and Investment and No Failure Development and Empowerment Nig. Limited.”

Others are “MBA Forex and Investment Ltd, Federate Investors Trading Company, Jamalife Helpers Global Ltd, Flexus Global Solutions and Investment Limited, United Capital Investment Company Limited”.

“Members of the public are to note that by virtue of the provisions of Section 38(1) of the Investments and Securities Act (ISA) 2007, only persons registered with the commission can engage in capital market activities, thus making the actions of these entities listed above unlawful.”

Consequently, the general public is advised to desist from participatong in any scheme listed above, warning that any person who invests in an unlicensed scheme is doing so at his own risk.

A Ponzi scheme is an investment fraud that pays existing investors with funds collected from new investors. Ponzi scheme organizers often promise to invest your money and generate high returns with little or no risk.