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Undeterred by losses, Nigerians still embrace Ponzy schemes


MMM on the occasion of its first anniversary, before the crash …

Olusola Deji earns very little as a civil servant working in Lagos State. Indeed, he is quick to remind you of the age-long refrain, “my take home pay cannot take me home.”

Like others who are naïve and have a liking for money doubling, the arrival of Ponzi scheme, Mavrodi Mundial Moneybox (MMM) in Nigeria a couple of years back looked like answered prayer for him.

MMM was the brainchild of the late Russian financial fraudster, and a former deputy of the State Duma, Sergei Panteleevich Mavrodi.

Deji, who ended up being one of the millions of people defrauded around the globe through the dubious scheme, is now one of those that are preaching to Nigerians against venturing into get-rich-quick ventures.


“After I invested my N900, 000, the money grew up to N1.1m and I asked to be paid back soonest. Consequently, I was matched with some people to pay me as the scheme dictated, but unfortunately the day I was to be paid fell on a public holiday. Those who were supposed to pay me called me for a 24-hour extension. A message actually came after 24 hours, but when I woke up, and to my greatest surprise, it was another story entirely.  I tried to call the phone numbers, but none of them picked my calls again.”

Deji continued: “I was traumatised and learnt a bitter lesson. l will never participate in such scheme again because I have not fully recovered from the effect of the last one. It is unthinkable for me to ever get involved in any such scheme again. This is because I have come to realise that these things are not real, but people jump at them because of the economic situation in the country, nothing more,” he said.

If Deji’s case is bad, a lady simply identified as Ogochukwu, who resided at Anuoluwapo Street, in Ejigbo area of Lagos State simply vanished into thin air after losing her customers’ N4.5m to the Ponzi Scheme

Ogochukwu, who allegedly fled to Anambra State left in misery, hundreds of artisans and commercial motorcycle operators in the area, who contributed the said sum through a daily savings scheme, which she operated known in local parlance as Ajo.

Ogochukwu, who allegedly invested the entire sum in the defunct scheme in order to make quick profit vanished with her family members when the scheme crashed.

Before it berthed in the country, Mavrodi had launched Ponzi schemes under the MMM brand in India, China, South Africa and Zimbabwe. It was operated as a financial pyramid in which earlier investors received their profits from subsequent investors as the originator promised returns of 20 percent to 75 percent within a 30-day cycle, as well as lotteries and bonuses for investors.

But as the number of new clients suffered stunted growth, the pyramid collapsed and caused huge financial losses for millions of people, it was not long before the Nigerian franchise started gasping for breath and subsequently crashed in 2016 with Mavrodi’s death, leaving many totally distraught and some dead.

In a statement on its official website, the scheme said it was shutting down due to the death of its founder. The statement read: ”Dear participants, after much deliberation, we have made (sic) the conclusion that continuing the system operation, without our leader and ideological inspire (sic), is impossible and makes no sense. We all carried out the tasks he assigned to us, since we had no doubt in his genius and rightness of the path he had chosen. We are firmly aware of the fact that none of us has a full view of his conception’s profoundness and sequence of all the actions to achieve a final goal, declared in the “MMM’s Ideology.

“Sergey Mavrodi’s broadmindedness scale is unprecedented. Therefore any attempts to continue the system operation without him are bound to fail. We respect him immeasurably and cannot afford to allow that our unskilled actions may cause profanation of his concepts.

“In view of the above, with deep sadness, we have to announce the ultimate and irreversible MMM closure,” it concluded.

The ghosts of the scandalous scheme had barely been exorcised when a multitude of other schemes began to emerge in the country.

Shockingly, millions of Nigerians have already got on board the new schemes despite warnings from concerned professionals and appropriate government agencies regarding the dire consequences of treading such paths.

For instance, human rights activist, Comrade Deji Adeyanju, recently petitioned the acting Chairman of the Economic and Financial Crimes Commission (EFCC), Ibrahim Magu, over a new looming danger called Loom Money Nigeria.

Recently launched in the country, the scheme, which promises a return of N8, 000 for N1, 000 and N104, 000 for N13, 000 in 48 hours, was first reported in the United Kingdom, by the Australian Broadcasting Corporation as a scam after it went viral in Australia.

The scheme in Nigeria comes with diverse nomenclatures such as ‘Loom Circle, Fractal Mandala and Blessing Loom, while its central name remains Loom Money Nigeria.

Would be victims are first invited to join a WhatsApp group chat, usually by a friend or relative, after which they are to invest N1, 000, N2, 000 or N13, 000, with the promise of eight times return once the entrant recruits a new entrant(s).

After the investor has received his/her maiden payment, he/she is mandated to invite at least one person to join the system, which currently has four levels– purple, blue, orange and red.

Each time eight people join the loom, the person at the centre (red) gets the target amount and leaves the group. The loom will then split into two groups and the top half and the bottom half become the new looms and everyone moves into the next level and the cycle begins again. The more people you manage to add to the circle, the quicker its movement, and thus, the easier it becomes for the initial investor to make his chunk of “easy money.”

Acting Director-General, SEC, Ms Mary Uduk

Unlike the MMM, whose bespectacled founder, Mavrodi was not a hidden figure, promoters of Loom are elusive and their pyramid scheme operates via closed groups mainly on Facebook and Whatsapp.

Individuals are also creating their own names on WhatsApp groups, some of which are “Jack Loom and Catherine Loom to mention a few.

Adeyanju, in his petition made available to The Guardian, said Loom is another means devised by fraudsters to swindle unsuspecting Nigerians through a Ponzi Scheme.

“I am deeply concerned about this dangerous trend that has enveloped the minds of young Nigerians, who believe that Loom is an investment opportunity through which they can make easy money. This new Ponzi scheme is an investment fraud that pays existing investors from new investors, which may likely lose their investments if the chain discontinues.

“Consequently, I call on the commission to immediately launch an investigation into this very matter by unmasking the brains behind this new Ponzi scheme in our various social media platforms.

“It is pertinent to note that this unrealistic investment opportunity has led many unsuspecting Nigerians into investing their hard-earned money into a scheme that does not guarantee a return for their investment.

“The Commission must as a matter of urgency swing into action and nip this fraudulent scheme in the bud before Nigerians get deeply involved.

“I am equally appealing to the commission to create an awareness campaign to sensitise Nigerians on the risks involved in participating in fraudulent schemes such as this.


Before Adeyanju’s petition, the Securities and Exchange Commission (SEC) recently raised the alarm over the activities of a group it described as “online fraudsters, who are currently running an online investment scheme tagged Loom Money Nigeria.”

The acting Director-General of the SEC, Mary Uduk, told journalists that “Loom Money Nigeria” has since taken over social media by targeting young people to participate in an illegal Ponzi pyramid scheme.

Ms. Uduk, who spoke through the acting Executive Commissioner (Operations) of the SEC, Isyaku Tilde, confirmed that the fraudsters use social media platforms like Facebook and WhatsApp to lure unsuspecting victims.

According to the SEC DG, the group lures young Nigerians into investing as low as N1, 000 and N13, 000, with a promise of getting as much as eight times return for value of investment within 48 hours.

Ms Uduk, who described Loom Money Nigeria as a Ponzi scheme and danger to Nigerians, said the venture has no tangible business model, as returns are expected to be paid from other people’s invested funds.

“We are aware of the activities of an online investment scheme tagged ‘Loom Money Nigeria’. The platform has embarked on an aggressive online media campaign on Facebook and WhatsApp to lure the investing public to participate by joining various Loom WhatsApp groups to invest as much as N1, 000 and N13, 000 and get as much as eight times the value of the investment in 48 hours.

“Unlike MMM that had a website and the promoter known, promoters of ‘Loom Money Nigeria’ are not yet known.
“This pyramid scheme operates through closed groups, mainly on Facebook and WhatsApp. If it were a local Ponzi scheme with known offices, it would be very easy for the commission to seal their offices and freeze their accounts.

“We, therefore, wish to notify the investing public that the operation of this investment scheme has no tangible business model, hence it’s a Ponzi scheme, where returns are paid from other peoples’ invested sums. Also, its operation is not registered by the commission,” she said.

She, therefore, advised Nigerians to distance themselves from the scheme, warning that anyone who subscribes to it does so at his/her own risk. She added that an inter-agency committee, Financial Services Regulation Coordinating Committee (FSRCC) was collaborating with security agencies to track the group and shut it down.

It would be recalled that the Nigeria Deposit Insurance Corporation (NDIC) and the Central Bank of Nigeria (CBN) have at different times warned Nigerians to be careful of any deposit money institution that is not insured by the NDIC. They specifically warned Nigerians against patronising ponzi schemes and other forms of digital and block-chain currencies.

Apart from Loom Money Nigeria, there are a number of schemes that have quietly launched some attractive online money making offerings, where thousands of Nigerians are being fleeced, after being baited with promises of earning residual money with which they would improve their lifestyles, through a network that requires financial investments.

Some of the new, but less popular Ponzi schemes, which claim that participants could earn money by just mining cash include, Minenaira, Cashmining, and Gits8.

On its website, Minenaira lays claim to over 50, 000 subscribers, and also said it has paid out N42m so far to these subscribers. On its part, Cashmining claims to have 64, 000 subscribers, adding that it has paid out $28, 000 to them.

Minenaira appears to be out of favour with its subscribers, some of whom are already venting spleen on the platform.

For instance, a vexed Amos Agbogun came down real hard on the platform, describing the scheme as the worst scam ever, saying all the money he mined in the programme turn back to zero.

Another user, Prosper Omodiagbe equally described Minenaira as a “bloody scam,” adding: “after all the time and data I spent mining, they deducted my earnings and refused to pay me what was due to me. I urged all Nigerians not to waste their time on Minenaira.”

Desire, another subscriber feels the same way like Omodiagbe and Agbogun about Minenaira. She had this to say: “Every time you reach the payout benchmark, they keep on increasing it. This is absolutely a fraud. Run for your lives people! If you contact the team with your complaint and observations, they would tell you to shut up. Their app must be removed from Google Play Store with immediate effect to save Nigerians from falling prey.”

A dissatisfied Adeosun Mercy accused the site of increasing its mine rate from N1/min to N3/min only to charge 60 per cent on withdrawal and increase minimum withdrawal from N5, 000 to N10, 000, later from N10, 000 to N20, 000.

Gladys Nwosu buttressed this, when she alleged that minimum withdrawal which was N10, 000 when she started mining got increased to N30, 000 and 50 per cent withdrawal fee.

Prince James, who has been a participant of Gits8, another scheme that prides itself as “a trusted community marketplace for people to make money online,” only has words of condemnation for the scheme, which he claimed “is a scam. They are not real. I am yet to collect any money from them,” he said.

Fastplay24 is another scheme where its promoters claim up to N15, 000 is won every 20 minutes by answering 10 simple questions in just 10 minutes, every day. The scheme claims it has over 53, 000 subscribers, and has already paid out almost N3m.

In the last weeks of 2018, Initiative Q, an invite-only payment network that aims to set the stage for a new digital currency that will possibly supplant Bitcoin trended online. An estimated two million people were reported to have signed up in more than 180 countries, Nigeria inclusive, before the end of the year.

Although the payment network attracted so much attention, it also faced criticisms, especially as many were concerned with its sophisticated pyramid scheme, since its success largely rests on how many people sign up.

Initiative Q is exactly what its name suggests, more of an idea than anything concrete because the currency doesn’t exist in any official capacity.

In fact, its registrants are counting on it to metamorphose to become a real and profitable entity. The website too is currently down with no known date when it would come up.

Perfectkash, which is an imitation of the infamous MMM is currently down with subscribers’ money trapped. While still in operation late last year, it claimed that on signing up, subscribers on Level One would donate N5, 000 to receive N10, 000 in just two days. Then on promotion to Level Two, they were expected to donate the same N10, 000 to get N20, 000 in four days before going again in full cycle.

While MMM may be gone, multi level online programmes have always trended among Nigerians. Coolnaira, one of such programmes is a Uni-Level MLM Network. Subscribers are expected to join with a minimum of N1, 000 for product package before introducing others to participate, using their referral link.

An interesting part of this programme is the claim by its promoters that their products are virtual digital packages, which every member must purchase, sell or re-sell by introducing friends to purchase under them in order to earn commission. This shows that they are solely dependent on the referral system to earn money.

Another MMM copycat is Robertwealth. It is supposedly an investment programme where subscribers put money and expect huge payout in 14 working days.

According to the organisers, Robertwealth, which is a subsidiary of Wealthcon and has 52, 012 members, makes her major source of income from diamond trading.

Apart from what investors are expected to gain, the scheme with juicy offers, lures members into an aggressive membership recruitment drive. It has five levels of progression and increased earning. In Level One, clients are expected to recruit 20 members who invest N20, 000 and above each to qualify for incentives worth N100, 000 and 10 per cent referral bonus.

In Level Two, members are expected to provide 50 members to get N200, 000 and 20 per cent referral bonus while in three, with 100 members referred, clients get up N300, 000 plus 25 per cent referral bonus and 100 per cent for first investment.

In Level Four, subscribers who have 400 referrals win a trip to Dubai and receive a stone diamond investment worth N1.5m, while in Level Five, subscribers with 600 members receive a car worth N4.5m and monthly allowance of N100, 000 for a period of two years.

According to the company site, their Dubai Head Office is at Alma’s Tower-Dubai-United Arab Emirates while they are domiciled in Nigeria at First Floor, No. 50 Ekpo Abasi by Yellow Duke, Calabar, Cross River State.

Mrs. Joy Ezechukwu, one of the participants who put N50, 000 into the scheme after receiving N100, 000 expressed happiness and embarked on a recruitment spree to boost her earnings.

Ezechukwu who spoke to The Guardian said she has invited a few of her friends who have also made some money from the programme.

However, three of the biggest trending money making websites in the country at the moment are Nigeria News Update (NNU) Income Programme, GistMedia (formerly Newspay) and Zinoly. NNU claims it has over 774, 770 subscribers, but Newspay and Zinoly do not provide any figure on their websites.

The latest payout to subscribers (as posted on GistMedia’s website for April 2019) was N470, 000 with N3m already paid since takeover in February. The three are similar in many respects and claim to assist Nigerians in dealing with their financial challenges by earning residual income, reading news and making constructive comments on such news items.

Both Gistmedia and Nigeria News Update (NNU) charge as much as N1, 600 as registration fee.

However, some NNU subscribers told The Guardian that they were skeptical about its sustainability and ability to continue paying.

For instance, a user who declined to give her name said at the beginning, the programme was very good, but lately they are finding it hard to pay subscribers. According to her, in two months she was only paid N10, 000 out of an expected N40, 000.

Another member, Anene Somto labeled it a scam outright.

When GistMedia acquired Newspay in February for N330, 000, the company in a post on the site claimed the latter had been struggling to meet its obligations. The post made by one Ifeoma Nkemdilim assured subscribers of continuity in earning income and reading news. The post directed members to re-subscribe to the platform and pay the mandatory N1, 600 to login and get started with earning. The new management claimed it only purchased the domain name for traffic purpose and is not responsible for data on Newspay.

Zinoly, one of the newest entrant claims to pay participants for logging in daily, reading news, posting comments, sharing posts on Facebook and referring others to register.

Findings revealed that the sites charges N1, 500 as registration fee, and gives out N1, 000, which is 70 per cent of this as commission to affiliates who refer friends and contacts.

According to a statement on its website, organisers insists that the programme is not a ponzi scheme, or pyramid one just as they were not out to pay subscribers.

Even though the managers of this initiative did not specifically indicate the source of their income, they said, “we generate revenue from different sources and share it across all our members.

“We pay out on the 21 day of the month, starting from affiliate earners with a minimum of N2, 000. With enough activities, earning could rise up to N5, 000 and above. This is followed by top activities earners, starting from the highest earners. Once the available revenue is finally exhausted, pending earnings would be carried over to the following month’s revenue payout.

“For those that did not get paid, but who earned up to the N5, 000 threshold, the system keeps running and updating their entitlements. And these earnings would be carried over to the following month. All they need is to earn more to become top earners and have a share of the following month’s revenue payout.”

Investigation by The Guardian revealed that some subscribers who failed to get a single referral did not receive money when they requested for it.

[FILE PHOTO] Central Bank of Nigeria’s (CBN) governor Godwin Emefiele

According to a heartbroken housewife, Mrs. Harrison, who made her payment request on the 19 day of the month, but failed to refer anyone, the money she asked for after initial deduction from the account was later returned to account without any payout.

Also, another participant who gave her name as Idowu claimed she received N8, 000 in December, but expressed surprise when she received the same amount in January when she cashed out N16, 000 of her earnings.

Even with these noticeable challenges, some participants expressed delight at opportunities presented by these schemes for them to make some money, and hoped they become sustainable.

Not a few are miffed that thousands of Nigerians still subscribe to new, phoney money-spinning schemes despite the scars left on others that participated in similar schemes.

Debo Ayobade, a sociologist said poverty remains the underlying factor that is driving Nigerians into Ponzi schemes. As the extreme poverty capital of the world, he fears the trend might not end any time soon.

“Getting rich quick is as a result of peoples’ desire to escape from poverty. Most people that are poorly paid embrace something that can give them instant gratification, and that is why you see people that have N1, 000 once they hear that there is a programme or scheme that gives N5, 000 in a matter of days, they rush to be part of it without asking salient questions simply because of their love for instant gratification. They are simply impatient, so rather than nurture an investment of N5, 000 to yield N10, 000 profit gradually, they are in a hurry because they want to be rich instantaneously.”

Ayobade regretted that the thought of getting rich quick has virtually ravaged the lives of our youths even as the older ones are not left out because they have lost hope.

“Most people who have families have lost hope in government and that is why they are ready to do anything that will give them extra money. Despite the years spent in schools, most graduates are still unemployed and businesses are having issues. In an atmosphere like this, they are bound to fall for schemes that promise them heavy returns, which they did not work for such.

Ayobade, who teaches Industrial Sociology at the University of Lagos said some of this people contemplate suicide when they fall prey to these schemes.

“I teach Industrial Sociology and I have practically turned lecture sessions to evangelism, where I talk to these young minds and encourage them to believe in their struggles; believe in themselves; work hard and strive to be the best they can be.

“Someone that I know said: ‘My parents are over 70 and still living in abject poverty. What’s the point of getting to 50 years and still be poor?’ So, you can see that many people go into these Ponzi schemes and other such ventures in order to make money and escape from poverty.

Even though he also believes that a good number of people are led to these schemes as a result of greed, Ayobade added that if an enabling environment is created, people wouldn’t invest in such schemes. “So, governments at all levels must hit the ground running, and endeavour to create enabling environment to enable businesses thrive, by putting the right infrastructure in place, paying salaries at the right time, and making conscious efforts to make life easy for Nigerians,” Ayobade advised.

Also, the Chief Executive Officer (CEO) of Nobelova Gradani Psychoeducation Services, Helen Oshikoya, agrees that poverty is a major contributor to Nigerians attachment to Ponzi schemes.


“Poverty has led people into investing in Ponzi schemes. Also, the diversifying nature of our economy is a factor in the sense that we tend to strive on risk taking in everything we do, including our financial security. We shouldn’t be having interest rate or returns more than the economy. For instance, bank’s interest rate stands at 12 or 13 percent and we have inflation rate of 24 per cent. This simply does not make sense. If government doesn’t regularise income spending, infrastructure and other things, people will definitely look for the fastest means to make money,” the CEO said.

Oshikoya added: “Most people don’t want to do something illegal. So, if someone comes up with a legitimate thing that will give 20 to 50 per cent in return, people will take the risk and you cannot stop people from taking risk. Even though the person who has taken risk to invest in Ponzi scheme may lose his/her resources at the end of the day, but he/she will not go to jail for taking risk with his/her money. People are mindful of the risk but it doesn’t prevent them from taking it.

Oshikoya, who explained that “gambling and gaming are psychologically based addictions, added that risk taking in this case is not a mental challenge, but a survival challenge as those partaking in those schemes have the mindset that even though some people were defrauded before, they would not get to that point, or fall victim. It is the same mindset that we have when we enter aeroplanes despite plane crashes. So, that is why people take risks over and over again not minding the outcome.

Oshikoya, therefore, advised people to thread cautiously, saying, “people should be more careful trying to do their risk investment; know who the provider is; do their authentication very well, and don’t put all their life savings, but the one they can afford to lose.”


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