CBEX ponzi and ‘miracle money’

By Olusegun Adeniyi

Long before the late Sergei Mavrodi arrived on the Nigerian financial scene in November 2015 with his MMM pyramid scheme, his reputation as an international fraudster preceded him.

As far back as 2007, Mavrodi had been convicted in Russia for defrauding 10,000 investors.

But somehow, he survived brushes with the law over sharp practices to go global with a Ponzi scheme that promised 3,000 percent ‘return on investment’ after upending the savings of more than a few people in his country.

With such tantalising promise, it came as no surprise that Mavrodi would hit the jackpot in Nigeria where too many citizens are looking for ‘miracle money’.

Unfortunately, by December 2016, the scam had unravelled, leaving about three million Nigerians holding the wrong end of the candle just days before Christmas.

“What is the scam here, if all members are warned in advance about all the risks, the possible and impossible ones?” an unrepentant Mavrodi asked in a letter he posted on the page for swindled participants of the scheme but addressed to then President Muhammadu Buhari.

“They know there are no investments at all. The warning is a red text on a yellow background placed on the most prominent place of the website.”

Following that misadventure, the Security and Exchange Commission (SEC) warned Nigerians about patronizing Ponzi schemes.

SEC listed a few of these ventures to include Now-Now Alert, Flip Cash Investment, Result Investment Nigeria Limited, Helping Hand and Investment, No Failure Development and Empowerment Nigeria Ltd, and several others.

Despite the warning, patronage for these Ponzi schemes only increased.

A few of them also devised a clever way to legitimise their businesses:

They boycotted industry regulator, SEC, and secured certificates of registration with the Economic and Financial Crimes Commission (EFCC). That became the tool for deceiving the unwary.

The latest of these ‘businesses’ is Crypto Bridge Exchange otherwise called CBEX which has scammed our people to the tune of more than a trillion Naira, going by most reports.

Registered with the Corporate Affairs (CAC) last September, its EFCC certificate was obtained in January this year.

Because they do their businesses online, it is easy for most of these crooks to evade accountability, but it is also obvious that they have collaborators within the system.

It is important that they be identified and brought to justice.

Meanwhile, I have read the lamentation of several of the victims, but they have only themselves to blame.

The Yoruba people have a way of putting this: “Ẹni ńwá’fà ńw’ófò.” Crudely translated, it means financial deals that are too good to be true most often end in tears.

Perhaps the United States SEC definition of Ponzi schemes would be more useful. “A kind of pyramid scheme that operates on the ‘rob Peter to pay Paul’ principle,” the US commission explains.

“With the promise of large returns as bait, the fraudster takes in money from new investors and uses it to pay off the earlier investors until no more new recruits can be found and the whole scheme collapses, with the newest investors losing everything.”

It is easy for all kinds of dubious businesspeople to prey on the greed and ignorance of gullible Nigerians.

That is because the virtual collapse of the moral frame of our government mirrors other fractures in our society.

There is also a way in which we can connect this to the get-rich-by-any-means mentality that is at the heart of the activities of ritualists as captured in my column of last week.

Incidentally, I received several mails on that column but one stood out for me. It is from a young man, Oluwafisayo Agbolabori.

He highlighted several things that are often ascribed to ‘miracles’ by many Church leaders in Nigeria in a manner that absolves people of their responsibilities.

“At the individual level, such ‘miracles’ corrupt the minds of the gullible into thinking that there is an ‘invisible hand’ somewhere that could change N3,000 to N3,000,000,” he wrote.

“As a Christian, I strongly believe in miracles. But my point is this: Instead of sharing these ‘miracles’ that, at best, can’t be replicated by most of our people, the clerics can share the potency (miracle) of self audit, hard work, self reliance etc…”

I agree with Oluwafisayo. The mentality that stupendous wealth could be ‘created’ outside productivity or credible investment also explains why promoters of Ponzi schemes continue to thrive.

But the real enablers are the regulatory institutions whose certificates assist these crooks in their nefarious activities. That is where the real inquisition should begin on this matter.

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