A Russian pyramid scheme operating in Kenya has gone down with billions of shillings belonging to local and foreign investors in the last fraud to hit the world of cryptocurrency.
The firm, Maalin Group Companies headed by Abdalle Mohamed Ali and run the Forex Trading business in Nairobi promised its members huge returns on investment.
Thousands of Kenyans and foreigners who fell for the fraud and invested their money in the scheme are now staring at the risk of losing their life savings.
This as a sitting Cabinet Secretary is on the spotlight for allegedly aiding the escape of Abdalle Mohamed Ali , chief architect of the ratchet in which dozens of Somali lawmakers, lawyers, senior government officers and traders have lost close to Sh 15 billion.
Sheikh Abdulla Kulow, an investor who has lost close to sh 200 million in the scheme has also cited deputy Inspector General of police, Immigration officials, two prominent law firms, a middle east embassy in Nairobi and a senior politician from the Northern Kenya as having a hand in the collapse of the Pyramid scheme last Friday, leaving many of the investors destitute.
Kulow said that he sold his three houses in South C estate and to put money in the scheme hoping to make a killing but now he is staring at losing his life investment.
“This is a huge blow to me and my family because this is what I have been depending for the last years after I sold my apartments to invest in the scheme,” said Kulow.
“The Government must make sure is brought back to country and return our money,” he added.
Convinced of the huge returns, Kullow, introduced his friend who owns one of the restaurants in the city, who invested Sh55 million into the scheme. That, too seems to have vanished to thin air.
Abdalle Mohamed Ali has been reported missing for the last three days after he abandoned his V8 land cruiser at Jomo Kenyatta International Airport (JKIA) and left for unknown destination though speculations pointed to either Somalia or Mauritius.
Early Monday, victims and clans were held in meetings at a city hotel fundraising money to facilitate the tracking of the suspects using Interpol.
On Sunday, Senior Counsel Ahmednasir Abdullahi announced on his twitter account that a huge Ponzi scheme that was popular with the Somali community in Kenya, Somalia and diaspora had gone and its owner’s disappeared to thin air.
“A huge Ponzi scheme went under last week in NAIROBI…losses are conservatively estimated at between American USD 65 to USD 80 million,” Abdullahi said, noting that the scheme was 8 years old.
According to him, the Ponzi scheme was actually an on-line forex trading company registered in Russia and owned by Russians.
“According to my sources the Somali front man was a commission agent,” he explained in a tweet.
His tweet came after grief and anxiety had engulfed thousands of investors on early Sunday as word went around town that their get-rich-quick Ponzi pyramid scheme had went under and mastermind gone missing.
Left with no coin to reclaim and virtually no legal recourse, some of the investors stormed Abdalle’s office to demand for answers, but only got his staff who had no answers to their provocative questions.
Preliminary Investigations by People Daily have revealed the supposed ‘investors’ who pumped millions of dollars into a characterless enterprise in Nairobi’s Jamia Mall in the hope of ripping a fortune have been left with nothing other than a sour taste in their mouths as their money doubling man had gone into hiding.
Some investors who spoke in confidence, said that they had lost close to sh 5.9 billion joining the growing list of pyramid schemes that have evolved with the times and are preying on gullible Kenyans looking to make a quick buck without lifting too much weight.
What is more baffling is that Kenyans are now losing billions of shillings to dubious businesses that operate like New-Age pyramid schemes, with most investors left with little avenues for reprieve.
While the last two weeks have seen focus placed on Simple Homes co-founder Nuzrat Sharif and Goldenscapes Group owner Peter Wangai, the two schemes are just a scratch on the surface of the overall losses, pain and tears that thousands of investors have found themselves in.
In this particular, Maalin Group Companies which run the scheme headquartered in Eastleigh, a neighborhood predominantly inhibited by Somali community, involved assuring pleasant promises of money multiplication at rates their businesses in Eastleigh or other parts of the world could not deliver.
The proprietor Abdalla Mohamed Ali, who could not even write his name nor speak any of the national languages had the knowledge of convincing his fellow Somali especially members of parliament in Somalia and other senior government officials to pump their money into the scheme.
The Ponzi scheme was centered in Nairobi aided by former employees of Amana forex who took commissions based on every depositor they bring to invest.
To qualify as an investor, according to documents seen, one had to part with a minimum of USD 20,000 (sh 2million) but we could not immediately establish the returns on the investment.
The masterminds started off paying monthly interest rates of between 10 and 15 per cent.
This means that someone who invested Sh1, 000,000 would earn at least Sh100000 a month from their investment. Someone investing Sh10 million would earn at least Sh1, 000,000 a month in interest.
In some of the records, some individuals including a prominent city lawyer and an Eastleigh based businessman had at some point deposited between $500,000 and $8,000,000. (Sh 51 million and sh 825 million)
For the scheme to survive, the mastermind, Abdalle Mohamed Ali and the initial beneficiaries spread word about the high returns, drawing in new investors whose money would be used to pay off interest and attract even more investors.
By 2020, the company schemes had registered 600 members spread from Nairobi Kenya to Somalia, Dubai, Saudi Arabia, Turkey and US.
Among them were 20 Somali MPs and other senior government officials. In addition, Most of the money came from investors based in Turkey, Saudi Arabia and Dubai.
Majority of the victims sold their properties for better returns in the scheme not knowing that it was a Ponzi scheme, 15 years ago an Indian businessman had the same Ponzi scheme that majority of the investors were Somalis who were lured by Somali brokers who work at forex outlets who had trust of many people based on clans connections.
Mohammed Jamal Gure, a businessman who is familiar with the forex trading business, said Maalin model operated just like the Mogadishu based ones.
Just last month, Central Bank of Somalia directed commercial banks to close accounts associated with the forex companies, a decision that gobbling up thousands of dollars belonging to investors.
Despite the warning by Central Bank against Somali’s get-rich-quick schemes in Mogadishu, politicians were wiring their money to Nairobi joining ranks with fellow Somalis abroad sending money in droves to Abdalla in Eastleigh.
Though, Forex trading in Kenya is regulated by the Capital Markets Authority (CMA) and the Central Bank, Abdille’s business was not regulated either putting at risk investors investment.
While the last two weeks have seen focus placed on Simple Homes co-founder Nuzrat Sharif and Goldenscapes Group owner Peter Wangai, the two schemes are just a scratch on the surface of the overall losses, pain and tears that thousands of investors have found themselves in and the crooks have got even smarter.
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