Many unsuspecting Nigerians, particularly traders and artisans, have fallen victim to fraudsters who disguise as microfinance operators, losing millions of naira to the banks financial experts described as Ponzi, reports KUNLE AKINRINADE.

It was an unusual crowd in front of the twin office tucked inside a shopping mall in Oke-Odo area of Abule-Egba, a Lagos suburb. Lamentations rented the air as sympathisers tried fruitlessly to calm down a roundly built woman identified simply as Mrs. Alimi.

The poor woman had thrown herself on the floor and burst into tears in full public glare as she lamented her fate, having been swindled by the operators of a microfinance bank in the neighbourhood known as Moneyplus.

”My entire life has crashed! Where do I start from now? How do I pick up the pieces of my life?” she wailed.

”I gave them N40,000 and they promised to give me five times my money but they have disappeared into the thin air. I have been scammed of my hard-earned money. My life has finished,” she added.

But she was not alone in her plight. Olajide Ojo, a welder, shares the same experience. Ojo said he deposited close to N50,000 with the microfinance outfit in the hope that he would be able to get a facility to purchase a welding machine that would cost aboutN300,000, but like other victims of the bank, his hope was dashed as the operators of the finance house bolted when it was time to reward their unsuspecting customers with sums that were twice their deposits as loans.

”I’ve been duped.I’ve been duped. My Ah! N150,000 gone just like that? If I knew that they were fraudsters, I would not have patronised them at all.

“The money I deposited with them were proceeds of some jobs I did for my customers in the last six months. I saved hard and denied myself and my family of luxuries just so I could save for the equipment I had been trying to acquire to boost my work, not knowing that I would live to regret it.

”Actually, it was a friend that introduced the finance house to me. He had been depositing his money with the firm but he too was swindled.”

A trader, Bisi Mohammed, said she lost more than N30,000 to the financial institution, saying: ”I was hoping to get s bountiful loan as promised by the operators of the finance firm, not knowing that they are fraudusters.

”My N30,000 is gone and my hope of obtaining a loan 10 times the sum I deposited has hit the rock.”

Other cases

Many cases involving operators of microfinance institutions who swindled their unsuspecting customers have been reported in recent times. One of them occurred in August 2019 in the ancient city of Kano where a woman, Amina Kabo, who operated Olive Microfinance Bank allegedly defrauded customers to the tune of N897,500 after luring them with bogus loan facilities.

Hundreds of customers comprising traders, artisans, and farmers in Ikare-Akoko area of Ondo State were devastated after a microfinance bank operating under the name Victory Development Multi-Purpose Limited allegedly defrauded them of millions of naira.

Police authorities in Ondo subsequently declared the operator identified as Segun Akindele wanted, but he reportedly fled the town with his staff and locked up his office.

How customers are swindled

The mode of operation of fraudulent microfinance banks is to ensnare their victims with the promise of mouth-watering gifts and give them more than double their deposits as loans.

Although the promise of gifts including food items like bags of rice, vegetable oil, live chickens, grinding machines and cartons of soft drinks was fulfilled, no loan was granted the poor customers.

Alimi said: ”When I deposited the sum of N15,000 with them, I was given a 10 kg bag of rice and a small bottle of vegetable oil. I was very happy and I thought that they were honest and kind people who would also keep their promise of giving us a loan in the sum that is more than double our deposits with their bank.

”I deposited more and more money into the account they opened for me, not knowing that the gift items were just a bait to lure me and others into their trap.”

Alimi’s remarks were echoed by Ojo, who also said he got a gift of chicken and 25kg rice after he made an initial deposit of N20,000.

”I could not have known that the owners of the bank were fake because they promised customers some food items as gifts and multiples of the values of their deposits as loans.

“I was given a live chicken and 25kg bag of rice when I deposited the sum of N20,000 in the account they claimed to have opened for me, but before I knew it, they had scammed me.”

According to a preliminary report by the Economic Financial Crimes Commission (EFCC), in the case of Mrs. Kabo and her accomplices, ”the suspects have been collecting money from their victims under the guise of opening an account for them and giving them a loan.

” Meanwhile, the categories of loans that will be given are based on the amount used in opening the account. For instance, anyone who uses N5,000 to open an account, he or she will be entitled to N50,000. Subsequently, the more the money used to open an account with them, the more the loan that will be given in return.

”However, it was all fake. No loan, no matter how small, has been remitted to any of their customers.

How operators move from neighbourhoods to neighbourhoods

The mode of operation of fraudulent finance houses is to set up multiple offices in different parts of the country and move from one location to another after scamming innocent customers of their hard earned money through bogus loan facilities and bonus on money deposited.

For example, the EFCC discovered that Mrs. Kabo, who initially operated her firm in Jega area of Kebbi State, subsequently relocated her fake Olive Microfinance Bank to No. 26 Dubabe Plaza, Sokoto, where she was later apprehended by operatives of the anti-graft agency in December 2019.

A statement released by the spokesperson of the commission, Wilson Uwujaren, said:

“The suspect was arrested on December 4, 2019, at No. 26 Dubabe Plaza, Opposite Asibiti, Eastern By-Pass, Tamaje, Sokoto following a tip-off. The suspect was arrested alongside three others whom she recruited as staff –Mariam Usman, Abdulrahman Lawali, and Shehu Ibrahim.

”Further investigation revealed that the suspect operates such a scheme in Jega and Gwandu in Kebbi State respectively.”

In August 2019, a 10-man syndicate behind a fake microfinance bank was busted by the operatives of Oyo State Police Command. The syndicate, according to the then Commissioner of Police in the state, Mr. Shina Olukolu, was found to have operated illegal banks in Lagos and Lokoja in Kogi State but had relocated to Ibadan to further their nefarious activities after defrauding people in the places they had established their fake bank- STAAGMART Nigeria Limited.

Operatives also recovered from the syndicate the sum of N961,375 and a certificate of incorporation of the bank which, according to the police, is located at D69 in Oyingbo area of Lagos.

Olukolu said the suspects were apprehended following a tip-off that some hoodlums suspected to be armed robbers lodged at S.L Hotel in Boluwaji area of Ibadan.

“The company is a financial institution and gives soft loan to customers. The customers are expected to invest N30,000 and above to be entitled to 10% of the total money invested within five days.”

”The suspects, after receiving a huge unspecified amount of money from customers in Lokoja, absconded with the money to Ibadan and lodge at S.L Hotel where they were arrested.”

The brains behind the Ikare-Akoko microfinance bank allegedly disappeared with customers’ funds after tricking the customers to obtain a registration form for N1, 000 and pay another N4,000 for insurance, after which they would have to pay between N10,000 and N50,000 to qualify them for a loan of N250,000 and above.

The customers were reportedly assured that the loan would be made available to them in two weeks after they must have fulfilled their own part of the agreement.

The unsuspecting customers were said to have stormed the bank’s office when they did not receive any alert from the bank as promised, only to meet the place under lock, while the owner and his staff’s mobile phones were switched off.

Although the victims reported the matter to the police at Ikare Division, the operator of the bank was said to have bolted before he could be arrested.

Experts caution public

Financial experts have described microfinance outfits promising customers gift items and bogus loans as fraudulent.

They urged the public to be wary of such unscrupulous finance houses who they say are nothing but Ponzi scheme operators.

A forensic finance expert, Fidelis Oti, warned members of the public to ”show circumspection in patronising microfinance banks who operate from obscure places without proper corporate ambience.

”Most of the operators of these illegal and fraudulent microfinance banks cannot afford to pay for flat or corporate offices in open buildings. So, what they do is to rent a shop or two from where they operate with two or more staff and swindle people of their money.

”I want to urge the public to always find out or cross-check from concerned regulatory authorities if the banks are known and registered to operate as banks and not just as an ordinary firm with undefined activities.”

Oti added: ”Also, people should avoid being lured by scammers who operate as benevolent microfinance business owners, giving food items to customers and promising them 10 times the worth of their deposits as loans.

“No genuine bank will promise depositors such bogus loans. The owners of such microfinance outfits are nothing but Ponzi scheme operators like the controversial MMM, which lured people with bogus profits and defrauded them.”

In her own remarks, Ms. Peju Job, an investment analyst, noted that those who often fall victims to fraudulent ”wonder’ banks are themselves suffering from avarice.”

She said: ”I wonder how people could be lured with more than what they save with a bank if not that such people themselves love to reap from where they did not sow.

”You saved N2,000 with a purported finance house and think that the promise of getting N20,000 could be real? Ordinarily, such a promise should tell you that you are dealing with Ponzi scheme operators who are fraudulent.

“The public should be wary of embracing Ponzi operators who masquerade as microfinance bank operators.” (The Nation)

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