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Investors’ billions that sank with pyramid schemes

By Joe Kiarie | March 14th 2015
Jane Musimbi lost Sh31m to the schemes in 2006.

The staggering financial losses Kenyan households suffered in the hands of pyramid scheme masterminds can today be revealed.

Top among individuals who lost their cash to the unregulated money-grabbing outfits is Eileen Kagendo, a Nairobi County resident who had invested Sh131 million in diverse schemes by the time they collapsed eight years ago.

She lost all the money, the highest loss recorded to date. Kagendo had invested her millions in nine schemes, among them, DECI, Sasanet Investment Cooperative Society, Mont Blanc Afrique (PLC) Ltd, Circuit Investments and Silver Ventures.

Isaac Marete, also from Nairobi, lost Sh27.7 million. As fate would have it, his son, Kenneth Mugambi, was equally defrauded of Sh21.3 million by the dubious schemes.

Marete had deposited the money in among others Sasanet, Kenya Akiba Microfinance Ltd and Mont Blanc Afrique, while Mugambi invested at Kenya Business Community Savings and Credit Society Ltd and Sasanet.

The three are among more than 26,000 victims drawn from 45 out of the 47 counties in the country who have gone to court seeking to, at least, recover the Sh4 billion they lost to the schemes, which they contend were officially registered by the government.

With a government task-force on pyramid schemes putting the total remittances at Sh8.5 billion, the number of petitioners could grow to more than 60,000 if all affected individuals comply with the set requirements, which include official identification and transaction documents, to be enlisted in the petition.

Among the other big losers in Nairobi, the worst hit region, are Jane Musimbi, who lost Sh31.3 million, Mercy Nyambura (Sh26.5 million), Christine Karimi (Sh15.8 million), Roseline Mwende (Sh15 million), Purity Macharia (Sh13.4 million), Ernesta Panyag (Sh13.2million), Mary Wambui (Sh13.1 million) and Ezekiel Odhiambo (Sh13 million).

According to court documents, 2,495 petitioners from Nairobi region were swindled a whopping Sh1.1 billion by the financial outfits.

Kiambu, was the second worst-hit county with Josphat Njoroge and Robert Macharia, losing Sh23.1 million and Sh21.2 million respectively.

Other affected regions include Nakuru, Murang'a, Meru, Nyeri, Uasin Gishu, Kakamega, Bungoma, Machakos, Kajiado, Siaya, Kirinyaga, and Kericho.

In Kajiado, Esther Chepkurgat lost Sh16 million while in Bungoma, John Bukaya lost Sh10 million. Jacinta Cheruiyot lost Sh7 million in Elgeyo Marakwet, while Grace Imbiakha from Kakamega lost Sh6.7 million in the scandal that unfolded between 2005 and 2007.

Tana River County recorded the least loss at Sh50,000. Mandera and Samburu counties had one petitioner each losing Sh900,000 and Sh203,000, respectively.

No one has come out to report loss of cash to the schemes from Wajir and Garissa Counties.

In the petition filed by the National Pyramid Scheme Victims Initiative (NPSVI) at the High Court in Nairobi, the petitioners have sued the Attorney General, the Central Bank of Kenya (CBK) as well as the principal secretaries for Finance, Internal Security and Cooperative Development and Marketing for compensation for the money lost in the pyramid schemes.

They want the government ordered to proportionately distribute among them all the money they had deposited in the various financial institutions.

Just before the collapse of the schemes, all accounts known to the government in institutions where victims had invested their money were ordered frozen and deposits amounting to Sh5.2 billion transferred to CBK.

Through their advocate, Wanyiri Kihoro, the victims are seeking compensation for damages. 

In the application, Kihoro seeks to demonstrate how government institutions and systems were used in the fraud through the dubious pyramid schemes he says the government legalised.

"This legitimisation enabled the outfits to access national institutions like banks, Kenya Revenue Authority PINs and National Identification card numbers, without which the applicants could not have been defrauded their money," he states.

"The government should support the victims by returning to each what rightfully belongs to them," says Pastor Samuel Kariuki, the NPSVI chairman.

The case will be heard on April 10.

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