Fraud: When parents bear the burden of their children's actions

James and Jane denied the charges and were released on a Sh500 million bond each. [iStockphoto]

Joseph Mburu Mwema, a pharmacist, recalls the first time he learnt of forex exchange (FX). A friend had just joined an online trading scheme that was promising large returns.

To Mwema, the allure of vast returns proved too good to turn down. He quickly roped in his parents and brothers and invested heavily in a foreign exchange company, Sparkle Investment.

"I borrowed Sh1.8 million from Co-operative Bank and deposited it to Sparkle Investment account, called the financial manager and informed him of the same before going to their office after the lapse of two weeks to sign an MoU," said Mwema.

Sparkle Investment was set up by Charles Mwangi in 2006 and swindled unsuspecting investors over Sh900 million by the time it wound up. Mwangi, a university graduate, is on the run since 2016 when the Directorate of Criminal Investigation (DCI) detectives pounced on his parents - James and Jane Kiguru.

Testifying in March 2021 in a case facing James and Jane, Mwema said he earned six months of interest as per their agreement from March 2015 to September 2015 after the end of the 60-day-grace period.

Buoyed by the good proceeds, he borrowed more from the Kenya Women Finance Trust Limited (KWFT) and Co-operative Bank, and invested Sh7.75 million before Sparkle started facing 'financial troubles'.

"Pressure from financial institutions made me inquire what could have happened as I was not receiving my monthly interest as agreed in the memorandum. When I called the financial manager and the director, they informed me that my bank account had a problem," said Mwema.

He told the court that Mwangi visited his home on December 12, 2015, for a meeting with him, his parents and brothers, and explained to them the challenges the company was experiencing.

Mwema said Mwangi informed them that Sparkle was under investigation over allegations that some of its investors profited from the National Youths Service (NYS) loot.

After the meeting, they waited for three months in vain. The banks soon after demanded the servicing of the loans. When it, however, became apparent that the company was collapsing, they reported the matter to the DCI.

Fraud

A perusal of the court file reveals how other investors invested millions into the scheme executed by Mwangi.

David Ndungu Nganga, a retired teacher, said he found it appealing after calculating what he would get at a 10 per cent interest on his investment. However, it was not until 2015 that he was informed that Sparkle was going under.

Sparkle Investment swindled unsuspecting investors over Sh900 million by the time it wound up. [iStockphoto]

Ndungu said the directors told them that officers from Kenya Revenue Authority (KRA) and the Ethics and Anti-Corruption Commission (EACC) had allegedly invaded their offices and frozen their accounts.

"The 10 per cent interest on each investment was appealing and all was well until somewhere in 2015 when were informed of existing technical hitches in the company," said Nganga.

He said he deposited $8,188 to Delta Stock Account directly from his Equity Bank account but was later asked to avoid depositing the money in the UK as it was expensive.

"The fund's manager advised me to deposit in the Sparkle Account so as to avoid high charges, saying the deposits in bulk to Sparkle meant better rates," said Nganga, who in total deposited Sh20, 418,800.

Another victim, Peter Muteithia Kanywira- a church caretaker (PCEA) in Nthoome, Nairobi, said he took a Sh2 million loan with Equity Bank.

"I heard about Sparkle Investment Company from Kiguru's cousin, he had informed us about it while in a chama meeting - the idea behind it was awesome, and I wanted to know more," said Kanywira.

In December 2015, before he could receive his first interest, which amounted to Sh200,000, the company sent a text message requesting him to attend a meeting alleging that its operations had been halted by the government for not paying taxes.

Sparkle Investment

According to court records, Mwangi's mother Jane registered Sparkle Investments on July 11, 2005, as a detergent manufacturing company.

Mwangi, however, ran the business as a funds manager while his parents served as the directors.

An investor was required to invest a minimum of Sh200, 000 and was expected to earn a 10 per cent return monthly. The minimum amount later shot to Sh5 million.

The sweet venture started souring in November 2015 when the company started experiencing shortfalls.

In 2016, the police filed a miscellaneous application at the Chief Magistrate's Court in Nakuru seeking to investigate the couple and their son.

James Kiguru and his wife Jane Kiguru at Nakuru Law Courts, November 28, 2016. [Kipsang Joseph, Standard]

In the Notice of Motion dated August 23, 2016, the police sought orders to gain entry, search and seize any material of evidential value in the premises and workplaces of the three.

The couple was arrested later in October and charged in court with six counts.

Mwangi was, however, nowhere to be seen as the parents took to the dock. He is still on the run and several warrants of arrest have been issued against him.

James and Jane denied the charges and were released on a Sh500 million bond each.

Australia

In another case, a woman was on September 19 charged for allegedly obtaining Sh8.1 million by false pretence from a Kenyan woman residing in Australia.

Mary Wanjiku is said to have conned Keziah Ngina Sh8.1 million on diverse dates between February 1 and August 30, 2022, claiming that she will offer her a construction job.

Wanjku appeared before Principal Magistrate Ruth Kefa on Monday evening and denied the charge.

According to the prosecution, Wanjiku duped Ngina, who believed she will be offered work, to sell a property.

"The accused (Wanjiku), while posing as a property agent, received the money from Ngina, who resides in Australia, through cronies using different accounts," read the charge.

According to Wanjiku's lawyer Karanja Mbugua, however, the suspect was being charged on behalf of her daughter.

Mbugua told the court that Wanjiku was not the suspect but rather her daughter, who like Ngina, also resides in Australia.

"I request the court to consider admitting my client to reasonable bond terms and also consider the complex nature of the offence," said Mbugua.

The lawyer said Wanjiku has been complying with the police investigating the matter and is not a flight risk.

Wanjiku was released on a surety bond of Sh8 million.

The case will be mentioned on October 13, 2022.