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Over three million Nigerians have lost about N18bn through Ponzi schemes, the Securities and Exchange Commission (SEC) stated on Tuesday.
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.”
He assured the gathering that the SEC will continue to apply innovative measures to combat the activities of Ponzi schemes while seeking the cooperation of stakeholders.
In his remarks, AGA-Africa Board member, Mr. Markus Green, stated that due to the COVID-19 pandemic, businesses are operated online with criminals taking advantage to attract people to Ponzi schemes.
He added that the webinar is timely in order to build capacity on how to track these schemes, apprehend the perpetrators and prosecute them.
He said: “We bring in experts from the United States to combine with others in Africa for training on these activities and how to curb them. COVID-19 has changed the way we do business but it has not stopped us from our work.”
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Also speaking, the Attorney-General of the Federation and Minister of Justice, Mr. Abubakar Malami, said there was no underlying investment for Ponzi schemes, adding that they can never deliver the returns on investment as promised.
Malami stated that they are fundamentally different from legitimate investment opportunities, as the perpetrators are simply fraudsters who take advantage of even the wealthy, intelligent, and sophisticated people.
He described the perpetrators as people who are usually good at what they do and thrive on trust and friendship promising easy cash in the short term and financial succour to the naive.
He stated that a Ponzi scheme is an operational, social and economic risk.
“The fight against it is now a war, and in fact a full-blown war. It is everywhere, not peculiar to us,” he added.
Malami said the nation had laws to punish those offenders, adding that the government is doing its best to tackle economic problems and is committed to lifting Nigerians from poverty through some incentive-based loans and other programmes.
