There has been a worrisome rise in fraudulent scams masquerading as finance houses in Nigeria over the years. These schemes have a tendency to lure unsuspecting members of the public with the promise of unusually high Returns on Investment (ROIs), sometimes between 30% and 50%. The rise in the number of these scams is attributed to various causes such as rising inflation, perceived capital market underperformance, and low yields for government securities. These situations have placed many Nigerians at risk to an extent where losses have totaled more than N300 billion in the past five years.

A good example is the recent CBEX investment platform that has come under scrutiny with numerous concerns suggesting it may operate as a Ponzi scheme. CBEX promotes itself as a cryptocurrency trading platform, offering users an AI-driven trading bot. that purportedly guarantees 100% profit on every trade -a claim that is highly unrealistic.

Despite ongoing efforts by the EFCC and other regulatory agencies to educate the public and curb fraudulent schemes, investment scams continue to spread, further eroding the economy and public trust in financial systems.

With increasingly more investment scams emerging—most claiming to be registered by the Central Bank of Nigeria (CBN) or Securities and Exchange Commission (SEC)—it is essential that Nigerians are aware of the legal remedies they can pursue if they fall victim. This article provides an overview of some of the significant remedies one can pursue in Nigerian law.

1. Filing a Petition to the Economic and Financial Crimes Commission (EFCC)

EFCC is the agency with the mandate to prosecute and investigate economic and financial crimes in Nigeria. It can investigate fraudulent and scam transactions, as well as investment offenses. The victims can file a formal petition, outlining the fraudulent actions of the investment company, as well as evidence of payment, breached agreement, and record of communication. Where a prima facie case exists, the offenders could be prosecuted.

2. Reporting to the Nigerian Police Special Fraud Unit (PSFU)

The Force Criminal Investigation and Intelligence Department (FCIID), which houses in it the Special Fraud Unit, is statutorily charged with the responsibility of investigating complex economic crimes both domestic and foreign. The PSFU handles a variety of scams some of which are:

• Advance Fee Fraud (419): Substantial monies advanced on terms of payment of advance fees.
• Share Scams: Cold calls in which shares of new companies are offered.
• Affinity Investment Scams: Deception directed towards specific affinity groups (religious, ethnic, professional, or community-based).

Presenting a comprehensively documented petition that includes details about the scam, the sum involved, and attachments can prompt the PSFU to investigate and potentially prosecute the offenders.

 

3. Taking Legal Action in Court

A victim also has the option of seeking justice through a civil or criminal suit in court. The judiciary, the third branch of government, is the ultimate redress forum. To initiate legal proceedings:

• Secure a lawyer to prepare and file the necessary court documents.
• Or, one may represent himself in court, but he shall be governed by the same rules of law as an attorney.
• Start with a Letter of Demand to the defaulting firm, requiring repayment within a particular time period (7 to 14 days).
• If the default occurs, a suit can be instituted either at the Magistrate Court or High Court, depending upon the amount involved and the monetary jurisdiction of the court.

4. Reporting to Regulatory Authorities

Another effective remedy is to lodge an official complaint with the Securities and Exchange Commission (SEC) or the Central Bank of Nigeria (CBN). Both regulators oversee financial institutions and investment companies in Nigeria.

• In case the firm is licensed, regulatory sanctions (e.g., suspension or cancellation of license) can follow if it defaults on its obligations.
• If the firm is not properly licensed, it may face:
• A fine of at least N10 million and N200,000 for each day the offence continues.
• In other cases, imprisonment for at least 5 years, and/or a fine of at least N2 million, plus N50,000 for each day of continued breach.

Investment frauds are more sophisticated and widespread in Nigeria. Therefore, the public must be careful and conduct thorough due diligence before they part with their money. Always check if an investment firm is registered and licensed by the SEC or the CBN. In the unfortunate case that you become a victim of such a scam, the law offers several avenues to pursue justice and get your money back. Acting promptly through the right channels can be the difference between a successful recovery and a failed attempt.

 

 

 

Lawyers advice should be sought about your specific circumstances.