EDGY OPTIMIST By Obinna Chima
By the time the truth dawned on them earlier this week, the websites had disappeared, the withdrawals had stopped, and the dreams of getting attractive returns on their funds had evaporated.
Social media has been flooded with heartbreaking stories of parents counting their losses, traders whose business capital disappeared overnight, and workers who watched their hard-earned savings vanish with the click of a button. That was because the collapse of two Ponzi schemes: the National Reading Culture (NRC) and TAG investment platforms – has left thousands asking the same painful question: ‘How did we fall for it again?
For the NRC, reports indicate that it was founded in 2023 and claimed to have its headquarters in the United States. It required its clients to pay registration and VIP upgrade fees ranging from N18,900 to N174,000 and thereafter they were expected to complete daily “reading” tasks to qualify for earnings and referral bonuses. The illegal platform marketed itself as a literacy initiative and relied largely on deposits from members and a referral structure that promised to double their money within a few days, which is the old strategy that other Ponzi schemes adopt.
Equally, promoters of TAG, which was based in Rivers State, had projected it as an online investment scheme with lucrative returns on investment.
With this, what began as a desperate search for financial relief for many of the victims has ended in tears, regret and crushing debt.
But beyond the personal tragedies, the latest Ponzi debacle has exposed deeper issues in our society. The underlying recurring pattern is a reflection of the level of poverty, the lack of financial literacy and even more important, the level of greed. These have been identified as major reasons for the unending number of persons that fall for the activities of illegal investment companies, with losses recorded over the years in the country estimated at over N2 trillion.
This undying and unrestrained appetite for get-rich-quick syndrome among some Nigerians have seen them swindled by promoters of these illegal businesses.
Ponzi schemes have existed for more than a century, and the formula remains the same: Scammers lure investors with promises of big gains. Instead of generating real profits, they use money from new investors to pay earlier ones — while pocketing much of the cash themselves.
They offer unrealistic returns on investments to gullible persons. For instance, at the Ojuelegba area of Lagos, some persons were seen recently distributing a handbill advertising an investment scheme that offers 30 per cent returns in 30 days. Sadly, such glaring red flags are often ignored by people lured by the promise of quick profits.
In the past, Nigeria witnessed the spectacular collapse of prominent Ponzi schemes such as MMM and Zarfund, which left millions of investors counting their losses after operators disappeared with billions of naira. Other fraudulent investment schemes that fleeced unsuspecting Nigerians over the years included Nospecto, Galaxy Transport, Famzhi Interbiz Limited, MBA Trading & Capital Investment Limited, Imagine Global Solutions, Chinmark Investment, Chymall, and several others.
Despite these painful experiences, new Ponzi schemes continue to emerge, exploiting the same combination of economic hardship, financial illiteracy, greed and the promise of quick wealth.
One of the enduring lessons from the repeated collapse of Ponzi schemes is that financial prudence remains the first line of defence against investment fraud. Many victims fail to take time to verify the legitimacy of the companies behind the mouth-watering offers being dangled before them or to understand how genuine investments work.
This underscores the urgent need for greater financial literacy and a more realistic appreciation that every legitimate investment carries risks and that exceptionally high, guaranteed returns are usually too good to be true.
Investors must therefore exercise caution, conduct proper due diligence and confirm that any investment platform is duly registered with the appropriate regulatory authorities before committing their hard-earned money.
The Central Bank of Nigeria, the Securities and Exchange Commission, the Nigeria Deposit Insurance Corporation, and regulators have continued to use every opportunity to warn Nigerians against the activities of these corporate fraudsters.
Also, the Financial Services Regulation Coordinating Committee (FSRCC) has consistently advised and persuaded Nigerians to stop dealing with such firms who lure and defraud unsuspecting members of the public by offering extra-ordinary returns on investments as bait and had called on members of the public to visit the websites of the CBN, SEC and other relevant member agencies of the FSRCC to verify the registration and license status of such companies and schemes before investing in them.
Nevertheless, it is important for the regulators to strengthen their collaboration with the security agencies to ensure that the Investments and Securities Act (ISA) 2025, which expressly prohibits Ponzi Schemes and other unlawful investment schemes and prescribes stringent jail terms and other sanctions for the promoters of such schemes is fully enforced. The ISA 2025, which was last year, assented to by President Bola Tinubu, empowers law enforcement agencies and regulators to prosecute offenders, dismantle fraudulent operations early, and in some cases, recover and return assets to victims. This is because illegal investment operations are financial crimes that destroy livelihoods, erode public confidence in legitimate investment opportunities and undermine the integrity of the nation’s financial system.
Clearly, real wealth takes time to build. And it can only happen through long term consistent investments in products that contribute to economic growth and through licensed operators.
Members of the public must shun greed. They must steer clear of offers that seem too good to be true and always engage only licenced, registered and trusted financial companies and finally, make sure all their investment decisions are done with sound judgement.