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How Russian pyramid scheme sank with Kenyans, foreigners’ billions of shillings

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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.

In an interview with People Daily, 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 by People Daily, 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.

People Daily has also learnt that 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.

 

By PD


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Business

How I made my first million

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At what age did you make your first million? 

I was 19.

How did you make it? 

I was running a creative design and printing agency. I bid for and won an order to design and print marketing materials for a global NGO which has offices in Kenya.

How did you spend or invest it? 

I re-invested most of it into the business by buying more machinery to reduce costs associated with outsourcing. I also set up a new business with a friend – a movie shop in Nairobi CBD.

The biggest money mistake you have ever made? 

Setting up the movie shop was the greatest money mistake – but I picked up two of the greatest business lessons. One, to never divest too early, and only invest in a business you understand well.

What is the best investment you have ever made?

 I would say investing in myself and in my exposure through travel. Travel has made me see endless possibilities for innovating new products, business models and solutions in the African market. A combination of the international exposure and strong local market understanding is priceless.

What is the worst purchase you have ever made? 

The movie shop. I bought a ready business that I did not understand and it went crumbling down. We eventually closed it a few months later.

If you had a spare million or two, where would you invest it right now?

I would invest it in my current business – a software technology company. This is because I believe the business has potential to become a great success.

What is the biggest money lesson you have learnt about growing it and making it work for you? 

Initially, we all have to work for money. However, I have learnt that the wealthy person has learnt how to make money work for them, through consistently investing what one earns.

Where do you learn about finances? 

I read a lot of books about real success stories from entrepreneurs because I believe entrepreneurship is a great way to create wealth, while creating value in the society. I also stay curious to learn about different investment vehicles because I know I shouldn’t put all my eggs in one basket.

Any financial myths you think should be busted? 

Money is not the root of all evil; greed may be. Money is a good thing because it can create freedom and prosperity, if well spent.

What two personal finance rules do you follow? 

Live within your means; and work to make money as a tool to accomplish real goals. Real goals are not just about making “enough” money, because it is almost impossible to define “enough.”

Investing or saving…Which one carries more weight?

Investing. However, they go hand to hand as saving to invest is acceptable.

One can get rich easily… but how does one stay rich? 

By constantly making calculated investment risks, and always striving to be wealthy, not rich.


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The life lessons I learnt from a brief stay with my grandfather

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With the schools closed, my parents got tired of me and my three siblings quarrelling and sent us to the village to stay with my grandparents.

More than any book or class, this visit taught me so much about appreciating what I have in my life and being open to the differences that I was blind to.

I protested going to the village at first, but now I am happy I did.

I had never liked being around my grandfather for so long because he is such a strict disciplinarian.

However, staying around him taught me why he is the way he is. He taught me about the value of hard work and integrity.

My grandfather is not one to stand lazy and idle people. So he taught me that I needed to structure my day to the tasks I needed to accomplish and spend time in the evening enjoying leisure.

So in this plan, we wake up in the morning to sweep the compound clean. My sisters then join my grandmother in the kitchen to make breakfast, as my brother and I help grandfather feed the cows before milking them.

Tending the animals

After breakfast, we would all go to the farm to weed. The afternoons were more of reading and playing. My brother soon gravitated towards tending the animals while I enjoyed working on the farm with my grandmother.

I also loved fetching water from the stream. We then spent the evening watching television to catch up with the news.

The discipline also made us more mindful about how our lives affected others, even when no one was watching.

We carried enough sanitisers and face masks to last us the duration of our imposed stay. We were careful because our grandparents were at that age of being vulnerable to the virus.

I noticed that many villagers were sceptical of the existence of Covid-19. They argued and dismissed the global pandemic as a hoax.

Some said they were yet to see anyone who had succumbed to the virus. Some were really tickled to see us donning face masks all the time, but we stayed true to the act knowing my grandparents’ lives depended on it.

This is how my grandfather raised my father and his eight siblings, and I am happy I got to learn this.

by nation.co.ke


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Lifestyle

Foul smell leads to recovery of couple

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Crime Scene Tape
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Decomposing bodies of a couple that has been missing for more than a week were found in their house in Laini centre off the Nairobi-Nakuru highway, yesterday.

A foul smell emanating from the house of the 72-year-old-man and his wife, 62, led to their recovery. Police have launched investigations into the incident.

There were conflicting reports about the deaths with some claiming that the two were murdered while others suspected that they could have died of carbon monoxide emitted from a jiko.

Police declined to give names of the deceased until the next of kin are informed. Emotions ran high as locals viewed the bodies.

A village elder, Moses Mwathi, revealed that the couple was working in a quarry before they went missing.

Mwathi said neighbours thought that they had travelled to their rural home but got concerned after a foul smell started emanating from their house.

“On checking they noticed that the house was locked from inside and the bodies could be seen lying on their bed,” he said.

Police gained access into the house after breaking the door. The bodies were taken to the mortuary

Naivasha OCPD Samuel Waweru said initial investigations pointed to carbon monoxide poisoning from a jiko.

“We can’t, however, rule out murder at this moment and only a post-mortem examination will establish the real cause of the death,” said the police boss.

And in the nearby Kinungi village, a 35-year-old farmworker committed suicide by hanging himself in a house.

The body was found by his employer before police were called in. Jim Kimani, a friend to the deceased, said he was in low spirits over debts.

“He claimed that some people he owed money were harassing him but we never thought that he would commit suicide,” Kimani said.

by Standardmedia.co.ke


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