Ugandan security agencies, led by the Criminal Investigations Directorate, have initiated a comprehensive investigation into pyramid schemes that promise investors substantial profits but ultimately swindle them out of their money.
Capital Chicken SMC Limited, an enterprise that enticed individuals to invest in a chicken farming business with the allure of over 40 percent profits in just five months, is the latest subject of these inter-agency investigations.
A Serious Pursuit of Fraudsters
Assistant Inspector General of Police Tom Magambo, the Director of Criminal Investigations, stressed the seriousness with which these pyramid scheme fraud cases are being handled.
He affirmed that they are conducting joint investigations to identify and bring to justice those behind these schemes and safeguard unsuspecting investors’ funds.
“We take fraud very seriously. We are carrying out joint investigations against these groups, who are fleecing money from people. They have different dimensions. Some have external players, but whenever we get information, we investigate them,” stated Mr. Magambo.
Sudden Closure Raises Concerns
Capital Chicken recently closed its operations without prior notice to its clients, which triggered complaints on social media from affected investors.
At least 43 clients have since reported their losses to the police.
According to the records at Kira Road Police Station, over Shs1.6 billion of clients’ money went missing. Jinja Road Police Station has received reports from one client who lost more than Shs100 million and another who lost Shs52 million.
Capital Chicken explained its sudden closure in a statement on their website, attributing it to the freezing of their accounts by the Financial Intelligence Authority (FIA) following the discrediting release from the Capital Markets Authority (CMA) a couple of weeks earlier.
FIA and CMA Collaboration
Mr. Samuel Were Wandera, the executive director of the Financial Intelligence Authority, confirmed that their decision to freeze Capital Chicken’s accounts was made to support ongoing investigations by the police and CMA.
The CMA had previously cautioned the public about investment companies that were operating without their regulatory approval.
Continued Operation of Similar Companies
Many other companies, similar to Capital Chicken, have been urging individuals to invest in their agricultural projects.
These fraudsters deploy various schemes across different sectors to exploit victims financially.
A Historical Problem
Pyramid scheme fraudsters have plagued Uganda since the late 1990s, initially creating savings and loan groups like Dutch International and Caring for Orphans, Widows, and the Elderly.
They would collect savings from their victims, only to disappear with the funds.
Over the past two decades, victims have struggled to recover their money, while legal proceedings against suspects are often based on charges of embezzlement or operating financial institutions without licenses.
Judges have consistently emphasized that clients can’t claim embezzlement when they aren’t the owners or directors of the pyramid scheme company, leading to acquittals in some cases.
Mr. Magambo advises the public to exercise caution by seeking guidance from regulators before investing in any scheme, a vital step in preventing further exploitation by pyramid scheme fraudsters.