68% of Somali MPs, senior government officials and Somali diaspora lose $59m in Nairobi-based Ponzi scheme

March 15, 2020 (Awdinle Online) – Dozens of Somali MPs, traders and diaspora Somalis are counting loses running into millions of dollars after a get-rich-quick scheme went burst this month sinking with it close to $60 million as the people behind the racket have gone underground.

Investigations by HOL now reveal the supposed ‘investors’ who pumped millions of dollars into a nondescript enterprise in Nairobi’s Eastleigh area in the hope of ripping a fortune have been left with nothing other than a sour taste in their mouths as their money doubling man from central Somalia is missing in action.

According to sources privy to the racket, the seemingly Johnny-come-latelies lost $59 million to a ‘forex’ trading company joining the growing list of Kenyans particularly in Nairobi who have fallen prey to various shades of Ponzi schemes losing millions of dollars with little or no legal recourse.

THE FRAUDSTER’S PARADISE

Like several other Ponzi schemes some of which are under investigations in Kenya at the moment, this case involved the usual promises of money multiplication at rates their businesses in Eastleigh or other parts of the world could not deliver.

The company behind the scheme was known to the investors as Maalin. It was run by a couple and a friend. To qualify as an investor, one had to part with a minimum of $20,000 but HOL was not able to establish the returns on the investment. In some of the records seen by HOL, some individuals had at some point deposited between $500,000 and $8,000,000.

However, the business operated just like the ones in Mogadishu fashioned as forex traders. Hundreds of ‘forex traders’ in Mogadishu and other parts of the country are still reeling from the losses after the ‘forex’ companies collapsed in February gobbling up thousands of dollars.

This came barely a month after the Central Bank of Somalia directed commercial banks to close accounts associated with the said forex companies.

BACK TO NAIROBI

Even as the Central Bank was warning Somalis against the get-rich-quick schemes in Mogadishu, politicians were wiring their money to Nairobi joining ranks with fellow Somalis abroad sending money in troves to the trio in Eastleigh.

Our investigations indicate that the trio operated 13 accounts with 10 of them managed by the company’s staff while the remaining three were directly run by the couple and the friend.

“When money landed in any of the ten accounts, they were immediately transferred to the three accounts,” our source said.

Prior to going burst, the company had registered 600 members drawn from Somalia, Dubai, Saudi Arabia, US and Kenya. Among them were 20 Somali MPs and other senior government officials. Most of the money came from investors based in Saudi Arabia and Dubai.

Our investigations further reveal some of the accounts were based in Turkey.

TRIO MIA


True to the spirit and letter of modern-day Ponzi scheme script, the trio vanished a week ago into thin air. A source said he saw the three at Jomo Kenyatta International Airport (JKIA) but their destination remains unknown though speculations pointed to either Somalia or Mauritius.

Left with no coin to reclaim and virtually no legal recourse, some of the members went for the staff for answers. “Only $6000 was recovered from all the ten accounts managed by the staff,” our sources said noting, “The trio disappeared with $59 million held in the three accounts they had direct control.”

Members were told the company was duly registered in Kenya but it is emerging it was not registered but was only used as a clearing house. Forex trading in Kenya is regulated by the Capital Markets Authority (CMA) and the Central Bank.

Kenyan authorities are currently investigating several Ponzi schemes and other get-rich-quick rackets which have subjected individuals and families to agony as many lose lifetime savings and loans to such dealings.

There is currently no particular law in Kenya addressing Ponzi or pyramid schemes save for the 2009 Task Force on Pyramid Schemes and related laws within the Penal Code. The case in point is even more complicated given that most of the affected individuals could be foreigners.