Kampala, Uganda | NOW THEN DIGITAL — Security agencies, led by the Criminal Investigations Directorate, have initiated probes into pyramid schemes that have enticed investors with promises of substantial profits only to defraud them of their investments.
The most recent focus of these inter-agency investigations is Capital Chicken SMC Limited, which attracted individuals with promises of over 40% profits in five months within the chicken business sector.
Assistant Inspector General of Police Tom Magambo, the Director of Criminal Investigations, emphasized the seriousness with which they approach cases of fraud perpetrated by pyramid schemes. He stressed their commitment to collaborative investigations aimed at apprehending those responsible and safeguarding unsuspecting investors’ funds.
“We take fraud very seriously. We are carrying out joint investigations against these groups who are fleecing money from people.” Mr. Magambo stated.
He added: ”They have different dimensions. Some have external players, but whenever we get information, we investigate them.”
On Thursday, Capital Chicken abruptly ceased operations without notifying its clients, prompting social media complaints from victims unable to access the scheme’s offices.
To date, at least 43 clients of Capital Chicken have reported their losses to the police. Records at Kira Road Police Station indicate losses exceeding Shs1.6 billion, with a client at Jinja Road Police Station reporting a loss of over Shs100 million, and another losing Shs52 million.
In a statement on their website, Capital Chicken cited the freezing of their accounts by the Financial Intelligence Authority (FIA) as the reason for their temporary closure.
“We have been forced to temporarily close following a Capital Markets Authority (CMA) news release discrediting us about two weeks ago and the subsequent freeze of our accounts by the FIA that has made it impossible for us to run normal operations,” read a portion of Capital Chicken’s statement shared on X (formerly Twitter).
The Executive Director of the Financial Intelligence Authority, Mr. Samuel Were Wandera, confirmed that they had frozen Capital Chicken’s accounts pending investigations by the police and CMA, emphasizing their support for the ongoing inquiries.
“The suspension of their accounts is to aid the investigations,” stated Mr. Wandera, noting that the details were available to the police and the CMA, leading the investigation.
The Capital Markets Authority (CMA), which had earlier cautioned the public against unregulated investment companies, issued a statement acknowledging their awareness of the issues surrounding Capital Chicken.
“The CMA has not temporarily closed Capital Chicken Limited (SMC) as alleged,” clarified the CMA statement.
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The statement continued, ”This matter is now being handled by the Uganda Police Criminal Investigations Directorate.”
Numerous similar companies involved in agricultural investments have been enticing investors to participate in farming projects under their management.
Investigators have revealed that fraudsters employ various schemes across multiple sectors to defraud unsuspecting victims of their investments.
Pyramid scheme fraud gained notoriety in Uganda in the late 1990s with the creation of savings and loan groups like Dutch International and Caring for Orphans, Widows, and the Elderly. These schemes accumulated savings from their victims before disappearing.
However, recovering lost funds or prosecuting the suspects has proven challenging. The suspects are often charged with embezzlement or operating financial institutions without licenses.
Over the past two decades, judges have emphasized that clients cannot claim their funds were embezzled when they are not owners or directors of the pyramid scheme companies.
In several instances, suspects have exploited legal loopholes, resulting in acquittals in court.
Mr. Magambo urged the public to exercise caution by seeking regulatory approval before investing in any scheme.
https://twitter.com/capitalchicken2/status/1709241821707055444
