It is no longer news that several schemes in the name of finance houses have sprung up in the last couple of years with large and very juicy ROIs to unsuspecting members of the public. For a lot of them, Roi can be from 30% to 50%. The rising inflation perceived poor capital market performance, and low returns on government assets have exposed Nigerians to speculative and fraudulent investment schemes, with victims losing more than N300 billion in the last five years.[i]
For instance, victims of the N123 million MBA Forex Scam recently stormed the Economic and Financial Crimes Commission (EFCC) headquarters, demanding the arrest and prosecution of the company’s Chief Executive Officer, Maxwell Odum. The protesters claimed that they were duped out of a whopping N122.51 million in a program offered by the corporation with the promise of a 15% return on investment every month. According to the demonstrators, the corporation has since broken its pledge to pay back the money. The Economic and Financial Crimes Commission expressed concern about the rate at which investment frauds were flourishing in the country, despite enforcement and public education efforts. In a statement issued by its media head, Wilson Uwujaren, the anti-graft authority observed that hapless residents had lost and were still losing money, worsening the nation’s economic troubles.[ii]
As the rate of investment scams in Nigeria continues to rise on a daily basis, with all kinds of companies rising up and alleged to be licensed by the Securities and Exchange Commission and the Central Bank of Nigeria, it is imperative that Nigerians are aware of the different measures available to them to seek justice should they fall victim. This article seeks to address the legal remedies available in Nigeria for the victims of investment scams.
- A Petition to the Economic and Financial Crimes Commission. (EFCC)
The EFCC is the enforcement agency in charge of investigating all financial crimes in Nigeria, enforcement of all economic and financial crimes laws, and identifying and determining the activities of persons suspected of being involved in financial crimes, scams or fraud. [iii] Therefore, the agency can investigate and prosecute those who are alleged to be involved in such acts of investment scams in Nigeria. A petition to this body against the participating fraudulent investment company will get the officers of the EFCC to investigate appropriately and prosecute accordingly should there be a prima facie case to the established against the investment company based on the outcome of their investigation.
- A Petition to the Nigerian Police Special Fraud Unit (PSFU)
The police Special Fraud Unit is a section of the Force Criminal Investigation and Intelligence Department (FCIID), the highest investigative arm of the Nigerian Police. Its functions include investigating and prosecuting serious and complex fraudulent cases within and outside Nigeria. The PSFU provides assistance in reviewing situations where potential fraud has been identified. Among the kind of scams that the PSFU usually investigates and prosecutes are;
- Advance fee schemes, otherwise known as “419”, occur when individuals or businesses receive a solicitation in the form of letters or emails from someone claiming to be a representative of a government or company and offering large quantities of money to be paid to your account provided you pay in advance a percentage of that amount.
- Share scams (sometimes referred to as boiler rooms) – A stranger calls you out of the blue and offers you stock in a firm you’ve never heard of.
- Investment scams target members of a certain group, such as a community or a religious, ethnic, elderly, or professional group.
A petition to the above-mentioned agency availing the details of the investment scam, the company involved with evidence showing the actual investment made and subsequent default will get the PSFU to investigate and prosecute accordingly.
- Institute An Action In Court
The Nigeria Court of Law is also the appropriate body to seek justice for all kinds of civil or criminal wrongs. The Constitution creates courts in Nigeria as the third arm of the government. Courts have jurisdiction over virtually all aspects of the affairs of people in society. From this background, the courts earned the title of being the last hope of the common man.
To institute an action in court, one would normally need to employ the services of a lawyer who will prepare all the processes for filing and also make appropriate representation in court. However, you have the right to represent yourself in court without engaging the services of a legal practitioner[iv]. However, it should be noted that should you choose to do this, the court will hold you to the same standards as if you were a lawyer. To kick start an action of this nature, one would normally begin by first writing Letters of Demand and serving the same to the defaulting company. The Letter of Demand would detail the amount to be recovered and a timeline within which to have the sum paid. This may range between 14 days or 7 days, as the case may be. Should this act fail, and the company defaults in making payments, then one can institute an action either at the Magistrate Court or the High Court of a state, depending on the monetary claim to be recovered and/or the monetary jurisdiction of the court.
- Make an Official Report to Regulatory Bodies.
Another viable remedy would be to make an official report/complaint to the Securities and Exchange Commission or the Central Bank of Nigeria. If the investment company is licensed by any of these bodies, upon investigation and if found culpable, their license can be cancelled if they do not make amends in refunding back what is owed to the investors. Where it is found that they are operating or operated without the required license, they are liable on conviction to a fine of not less than N10,000,000 and an additional fine of not less than N200,000 for each day during which the offence continues, and in other instances, such act may attract imprisonment of a term not less than 5 years, a fine not less than N2,000,000 and a fine not less than N50,000 for each day during which the contravention continues or to both such fines and imprisonment[v].
It is imperative that the general public takes care and caution before investing in any scheme. Do your due diligence and be sure that the Securities and Exchange Commission and the Central Bank of Nigeria duly license the investment company.
[i] https://guardian.ng/news/nigerians-lose-n300b-to-ponzi-schemes-speculative-trade/ accessed on the 30th of November 2022
[ii] https://punchng.com/greed-factor-why-nigerians-are-losing-billions-to-get-rich-quick-investment-frauds/ accessed on the 30th of November, 2022
[iii] Sec.7, Economic and Financial Crime Commission (Establishment) Act 2003
[iv] Section 36(6)( c) Constitution of the Federal Republic of Nigeria, 1999(as amended)
[v] Section 57(5) Banks and Other Financial Institution Act 2020
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