The Big Money Scam

By Abdulateef Ottan, The News (Lagos), 10 September 2001

Lagos—As Nigerians fall over one another to become instant millionaires through phantom investment schemes, a pastor bolts with N250 million.

Pastor Samuel Power has everything a city pastor needs to mint money. Good looks, designer clothes, Spirit-led prophecies and above all, an ability to relate the scriptures to the earthly needs of the city dweller.

He also believes he should lead his church members to create wealth. So, in the three-storey building on 43, Kudirat Abiola Way (Old Oregun Road) where he works as the General Overseer of Wonders and Miracles Bible Church, he also has a business outfit aptly called Success Network Limited (Multi-Level / Network Marketers). In the miracle working -God gospel that Lagosians delight in, the combination of scripture and practical money making was bound to rake in millions. And good money poured in its million.

He played on their gullibility mercilessly. His adverts in the national dailies pulled in customers from around the country. And they promised out of the world rewards: INVEST ONLY N1,500 AND EARN N50 MILLION. In no time, thousands of participants comprising skilled and semi-skilled individuals, artisans, students, traders and other low and middle income earners jumped on the bandwagon of deceit.

In one of the advertisements signed by the founder and chairman of Success Network Limited, Pastor Power said the investment scheme was not a lottery, neither gambling nor a fatalistic endeavour. Yet, whosoever partakes and strictly follows the rules earns money by purchasing one Success Network Certificate for N500 from friends, relations, marketers or directly from its office. After filling the form, an additional N1,000 would be paid the company as a form of investment. In financial equation, N340 is earned by the company, N660 is shared by members at different positions, starting from position two to position 12, multiplied by the number of forms at each position.

Reputed to be successfully operated by Golden Circle International of Germany, the success of the investment scheme is anchored on multi-level marketing, i.e. your ability to sell the form to as many people as possible. For instance, if Mr. X buys a Success Network form for N500, he will discover that the form has 12 names, while the name of Mr. X's sponsor will be found at the bottom list. On completion of the form and paying N1,000, Mr. X will receive three new certificates where his name has been added to the bottom list.

One of the participants, Mr. Victor Azikwe, a self-employed youth who lost about N30,000 to the pastor still deludes himself believing the scheme is a workable programme if the operator had been sincere and upright. He explained to TheNEWS that rather than issuing certificates to participants, Pastor Power took money and issued receipts, promising to pay in three weeks or one month.

As a decoy, he paid initial depositors swel the number of participants. Investigation reveals that those who paid N5,000 with the promise of reaping N75,000 within four weeks were about 10,000 participants. Those who deposited N10,000 with the promise of raking N150,000 within four weeks were more than 12,000 depositors. Those who could part with only N500 were just about 27,000. In simple arithmetic, Pastor Power has miraculously created N200 million. Bamidele Olayemi, a security guard who once worked for the pastor said he lost N32,000. He paid N5,000 and obtained receipts with the promise of reaping N75,000 within one month. He talked his friends into investing in the money spinning scheme. Eight of them parted with N17,000 and became instant losers.

The pastor who started running the business in May this year had a gift of oration and a charisma with which he lured people into his net. About 15 depositors who lost money claimed they were compelled to invest in the scheme because the pastor quoted the Holy Bible copiously. For Olayemi, he said somebody (he or the pastor) would die on the day he sets eyes on the fraudster.

The security guard further painted a graphic picture of what transpired on the day students from tertiary institutions stormed and vandalised the office of the pastor. Following his penchant for not fulfilling earlier promises, the students decided to give the pastor's office a trashing. On Wednesday, 22 August 2001, the students numbering over 250 stormed his office and removed all movable property. In the interim, the general manager of the company made a distress call to Rapid Response Squad (RRS), at Alausa Secretariat, claiming the office was being attacked by armed robbers. The squad arrived the scene only to discover the general manager lied. The students narrated their ordeal.

They were not armed robbers, but believers of the pastor's spiel who fell into a trap. The general manager and other officials were arrested and taken to Alausa secretariat, the headquarters of the squad.

Pastor Power has since become a ghost, according to the security guard. He claims the pastor phoned regularly to know the situation of things. But nobody knows his whereabouts. However, another victim of his scam, Mr. Olakunle Awojodi, a photographer said the company had opened an office near his house.

Another depositor, a trader at Alaba International Market who spoke on condition of anonymity, said he paid N10,000 twice in June and was issued receipts No 9250 and 9279 respectively, expecting to reap N150,000 for each registration. Staring into empty space, he pleaded with TheNEWS to prevail on the man to refund his deposits by deducting 10 per cent service charge and return 90 per cent of his deposit. Unfortunately, efforts made by this magazine to locate the man was fruitless. However, Azikwe said the pastor phoned the office some days after the fracas to know whether the situation had calmed down. But he declined to give his telephone number nor his contact address.

Hard as they tried Afolabi Adebayo and Adeboye Adefusika, students of Adeyemi College of Education, Ondo and the University of Technology at Akure could not smile off their losses when they called at the office a day after the invading students had called. When Adebayo was told how he's been conned he became dazed. Then in tears he narrated how his place back in his hometown would become a beehive of people he had persuaded to invest. He begged the magazine to run the story soon so that his folks at home could read.

Victor Omoregbe, who claimed to have met the pastor on several occasions said the man ran into bad weather the moment he began to tinker with people's money. The pastor, basking in the euphoria of having millions of naira in his bank account bought musical equipment worth N1.5 million for his church. In less than two weeks, he also bought a Mitsubishi bus and a V-boot Mercedes Benz for himself, in addition to acquiring a cell phone. He also opened branches in other parts of the country, while his staff wasted money on air travel to some state capitals.

Omoregbe, who appeared to be an incurable optimist said the investment scheme based on fluid multi level network marketing, designed like a co-operative scheme, is a workable and worthwhile investment. In his view, people contribute money and give to one person, hoping that others who contribute will have their turn to collect their shares. For a new entrant into the scheme, it will require 24 persons to push his name out. Thus, someone who registers with N500 will need about 25 persons to enter or register to entitle him to N7,500, i.e. N300 from 25 persons equals N7,500. The company takes N200 as service charge.

The headquarters of Securities and Exchange Commission (SEC), the apex regulatory authority on investments and securities is being inundated with avalanche of questionable investment companies, promising high investment returns. SEC issued a public statement last month, warning members of the public to be wary of existence of fraudulent investment proposals, noting they are not in accordance with the Investment and Securities Act (ISA), of 1999.

The six black sheep identified as making spurious claims are Trust Fund managed by Diamond Circle International Ltd., Mafoluku-Oshodi, Lagos; Eco Trust, managed by Ecotrust Investment Ltd., Ojudu GRA, Lagos; Cash Tree, managed by Winjosy Ltd, Ajegunle, Lagos; New Masterpiece, managed by Union Masters Ltd, Ikeja, Lagos; Providence Fund International Ltd, Ikate Surulere, Lagos and One for All, All for One Programme, managed by Global International, Ogba, Ikeja, Lagos.

The grouse of SEC is anchored on a point of law. Section 20(1) of ISA 1999, states that No securities exchange or capital trade point as defined in section 264 of this decree shall commence operation unless it is registered with the commission in accordance with the provisions of this decree and the rules and regulations made thereunder. Under section 264, the pertinent terms relating to the activities of the illegal investment companies includes broker, capital trade point, certificate of registration. The section under review defines a broker as any person engaged in the business of effecting transactions in securities for the account of others, capital trade point on the other hand means an exchange registered by the commission in pursuant to this decree, which constitutes, maintains or provides market place facilities for bringing together purchasers and sellers of securities or for otherwise performing, with respect to securities, the functions commonly performed by a securities exchange. It defines certificate of registration as any certificate or licence issued by the commission as a part of its registration functions under this decree. When TheNEWS approached the managing director of Eco Trust Investment Limited, Mr. Ernest Nwizu at Ogudu on the illegality of the scheme as declared by SEC, he flawed the publication on many grounds. He challenges the magazine to proof the authenticity of SEC's public notice. He pooh-poohed the claims as irrelevant. As a ploy not to answer the question put him, he directed the reporter to the legal adviser/secretary of the company who was not available at the time of going to press.

A careful perusal of a hand bill provided reveals a mouth watering offer as evident in this payoff: Becoming a millionaire without stress. Authored by the managing director, Mr. Nwizu, argued that the scheme is not a lottery, gambling or game organisation, nor is it a bank or a finance house, yet the scheme is akin to a modified thrift co-operative society to the benefit of humanity, especially those who have a target and strong desire to live an improved financial lifestyle. If SEC had done its homework well, it would have increased the list of spurious and illegal investment houses to 40 companies, because according to the Public Relations Officer/Executive Secretary of the Association of Network Contribution Co-ordinators of Nigeria (ANCCON), Mr. Ben Pedro Mckings, 20 companies were initially registered, while 13 have been accredited by ANCCON.

Another twist in the investment saga is the existence of ANCCON. It is doubtful if SEC recognises the body, yet the association claims it ensures that fraud is not perpetrated in the course of multi level marketing (MLM).

Mckings admitted that ANCCON is not empowered by law, i.e. SEC or Nigerian Deposit Insurance Corporation (NDIC), to control companies operating multi-level marketing. For him, accredited companies located in several states of the Federation including Abuja, are expected to register with the Corporate Affairs Commission (CAC), as a limited liability company. The member companies are also expected to provide a copy of Form CO7, provide copy of their Memorandum and Article of Association. Their share capital minimum base is put at N20 million. As part of its requirements, a registered company must have at least two directors, while the chairman/managing director is expected to possess a minimum of West African School Certificate (WASC), or Senior School Certificate, SSCE. y In some of the companies visited, unemployed men and women explained to this magazine many attractive benefits derivable from buying the certificate of fortune. Each of the managing directors proved evasive for discussion. Some of the managing directors were hitherto furniture makers, laundry men until they became very important personality (VIP) by employing agents and marketers who will sell certificates while they rake money.

Mckings admitted that the greatest problem facing the industry is the existence of 'Help Sell Scheme' operated by Pastor Power, the managing director of Success Network Limited. Rather than allowing the participants to sell the certificates, the company volunteers to help sell it. In no time, most of those who invested were not aware that unless the certificates were sold, they cannot reap any benefit. This explains why a lot of gullible participants paid money to Pastor Power rather than taking certificates which should be sold to others to ensure they reap some money. Nkem Jacobs, a manager in the Corporate Affairs department of Afribank Nigeria PLC said the multi-level marketing is a carry out of Western capitalist economy which found popular approval in the context of globalisation-marketing without frontiers.

The workings of the scheme is predicated on money and certificates. Money paid by one person goes to another person who holds a certificate as proof of ownership.

Jacobs identified two fundamental problems with the scheme. These are the credibility of the institution operating the scheme and possibility of down-line fatigue to sell the certificates. Although, the PRO of ANCCON exudes confidence in the scheme and the operators, the manager said the operators are anonymous individuals with no financial strength to carry risks. Moreso, financial transactions throughout the world is based on trust, confidence and credibility. How can any network individuals repose confidence in a business organisation that is not approved by SEC, NDIC, CBN, CIBN and other financial regulatory agencies?

Mallam Yahaya Ibrahim, an economist with FSB International Bank Plc, Ikoyi, Lagos said the inability to sell the certificates as noted by Jacobs will make the buyer a loser. A trader buys a product with the intention of selling to make a profit. If he is unable to sell it, a problem will arise. In this instance, money is not a product one can sell under uncertain situation since the paper or certificate is not a credible instrument that can automatically be converted to money.

The scheme is thriving due to abject poverty in the society. A disillusioned and disoriented citizenry will jump at any scheme that offers little investment, but plentiful gains. But the probability that low-income or middle-income earners will buy the certificates are nil. The banker said the Unit Trust scheme introduced in the 80s collapsed like a pack of cards. What is the guarantee that a house built on quicksand will survive a whirlwind? It is doubtful if Mr. Mckings will guarantee the certificates holders if the scheme collapses.

Nasiru Lawal, accountant with Afcott Nigeria Limited, Isolo, Lagos admitted the scheme was broached to him several times. On each occasion, he declined, claiming that if he had money to invest, he would rather purchase shares in blue chip companies or take an insurance policy or put his money in a fixed deposit account. As a financial analyst, Lawal said the workings of the scheme is suspect, noting that the phenomenon of the Port Harcourt based company run by Umana Umana in the 90s was a lesson in financial prudence.

Umanah-Umanah was a Port Harcourt based smart alec who took depositors' money, promising high interest rate of 40 per cent. When the bubble burst, highly placed individuals in the society were socially and economically dislocated by the realisation that Umana was playing pranks with their money. More than N200m went down the drain.

Jacobs likened the thriving business to rumours. Rumour, as he explains spreads fast, while its roots cannot be located. Ditto for the rush for the certificates. In a society that places low premium on hardwork, any scheme with high returns will certainly catch the fancy of low and middle income earners, especially unemployed youths who have been roaming the streets for job.

As things stands, Pastor Samuel Power is smiling to his bank, having defrauded gullible citizens of their hard earned money. In the interim, SEC has warned members of the public not to patronise some investment companies promising fraudulent investment proposals. But if those cheated had heeded the warning of Nkem Jacobs: If it looks too good to be true, it is likely not to be true, the people will not have made a millionaire out of Pastor Power. In Ibadan, the Oyo State capital, Power's ingenuity is replicated in another form Greenarch International Limited located at 146, Oyo Road, Ojoo, Ibadan the Oyo State capital is a beehive of activities. The company runs a scholarship scheme entitled the Millennium Awards. Applicants troop in and out of the office either to buy an application form or to submit one. Indeed, names of purported winners were published in the Tuesday, 3 September 2001 edition of The Guardian.

When TheNEWS visited the office, the chief executive of the organisation, Mr. Babatunde Samuel, swore the scholarship scheme is sponsored by two foreign outfits, Goldspring Corporation, which he said is an international building/ construction company based in the United States of America and Archville International, which according to him, is a pharmaceutical company based in Switzerland.

Applicants are compelled to register with the Employment, Career and Financial Opportunities Club, ECAFO, which Greenarch supervises, with N400.

For the nursery and primary school category, an applicant pays N250 to obtain a form. Successful applicants in this category are expected to get a scholarship of N1,500 a year. For a secondary school student seeking a scholarship of N10,000, the application form costs N500 while students of tertiary institutions pay N1,500.00 each for application forms. A successful applicant in this category is promised N40,000 scholarship a year.

For the omnibus scholarship, beneficiaries are entitled to a total scholarship grant of N70,000. N10,00 is given at the nursery and primary school levels, another N10,000 at the secondary level and N20,000 at the tertiary level. The remaining N30,000 is paid to the beneficiary on graduation. The application form for this category is N1,200.

There is also the overseas scholarship awards which ranges between 12,000 and 30,000 U.S. dollars or its equivalent and a monthly stipend of between 800 and 1,000 U.S. dollars paid to beneficiaries.

Samuel claimed Greenarch has been running the scholarship scheme since 1988, and between that year and now, the co-sponsors have disbursed over 250,000 U.S. dollars in form of direct scholarship awards, overseas and local study loans and perpetual awards. But curiously, in spite of all these claims, Samuel could not produce an iota of evidence to prove payment to a single beneficiary.

The NEWS gathered that over 17,000 application forms have been bought from Greenarch. But Samuel could neither name one single person, dead or alive who has benefitted from this scheme since inception nor give any documentary evidence that Goldsprinng Corporation and Archville International, the purported sponsors of the Millennium Scholarship Award actually exist and that Greenarch has legal educational collaboration with them.