Analogia Malenga
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- Feb 24, 2012
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“They were conned out of billions of shillings in just twelve months.”
Hundreds of Ugandans woke up last week to a sad reality – they had been trapped in an exploitative scam by four Ugandans and four West Africans trading under the name Dunamiscoins Resources. Dunamiscoins Resources is registered in the names of four Ugandans; Nabunnya Mary, Lwanga Samson, Susan Awon and Makula Faith who was removed recently as a director.
But its beneficial owners are four West Africans; Kingsley Egbe and Johnson Frank, both Nigerians, Isaac Akwete, a Ghanaian and a one Dr Mike. On December 3, Dunamiscoins closed shop and its foreign owners fled with over Shs 50 billion in customer deposits, according to two people familiar with the company’s dealings.
The company, registered locally as a microfinance outfit, started business in January this year with a branch in Kampala at the New Taxi Park mall along Namirembe road but soon spread out to other parts of the city; Freedom City mall, Ndeeba, Mukono, Arua, Mbale, Lira (which was in operation for just a week and Masaka (which was scheduled to open on December 3, the very day the bubble burst).
How it worked
Interviewed privately, three former employees who spoke anonymously said the company claimed to be in the business of microfinance and forex trading, but did neither of the two. Edith Tusuubira, the executive director of Uganda Microfinance Regulatory Authority, indeed confirmed to The Observer that Dunamiscoins was a registered member. “Yes it’s a registered institution as microfinance,” Tusuubira said.
But that stopped on paper, in reality, it was a Ponzi scheme. It simply rallied people to deposit money with a promise of very astronomical returns. A principal sum would be paid back with interest in three months. The company paid out a 40 percent, payable after every 21 working days.
For example if you deposited Shs 100 million, Dunamiscoins would pay back Shs 40 million every month in three tranches. That means the depositor would earn Shs 120 million in interest in three months on top of his or her principal sum of Shs 100 million.
“In a very short period we had got so many customers especially businesspeople in downtown Kampala,” the source said.
Interestingly, even enlightened people fell for the scheme en mass, the source said. Another source who had access to many customer records said some of Kampala’s richest people were also customers.
“We had so many people working with Uganda Revenue Authority, NSSF and big banks who have been our customers,” the source said.
According to another former employee, the company collected over Shs 1 billion daily and dispensed about half of that amount daily.
Asked how they moved such huge sums around town, the source said they hired two private security guards from Active Security, who would escort the money to the bank and all other branches since they were near each other. Dunamiscoins has been operating accounts in three banks, Centenary bank, GT bank and Stanbic bank.
However, one source told us that most of the company’s money was in Centenary bank. He said the last time he checked, at the end of November, Centenary bank had Shs 26 billion, Stanbic bank 23 billion while GT Bank had Shs 500 million. All three accounts have been frozen by the Financial Intelligence Authority [FIA], a government entity in charge of combating money laundering and terrorism financing.
Interviewed yesterday, Sydney Asubo, the executive director of FIA, declined to reveal how much money the frozen accounts hold. “I can’t disclose how much is on the accounts but what I can say, the money is not sufficient to cover all the claims,” Asubo said.
Not forex traders
The company claims it has been doing forex trading but those in the know say that is not true. One employee said that in the five months she worked at the company, money was withdrawn twice for purposes of forex trading.
About Shs 500 million was changed into dollars and deposited on the account of Kingsley, who has been the overall boss, ostensibly to be used for trading. However, no one, even those in top management, knew what happened after that.
The Dunamiscoins offices only received deposits and paid back depositors. How the company made its money no one knows. But Dunamiscoins’ operation wasn’t that complex. All they did was receive money from one customer and give it to another without really putting that money through known channels of revenue generation.
“When you deposit money in three months and get 120 percent interest on top of your principal sum, why would you not believe them that they are authentic?” said Samuel Wandera, a director at FIA in charge of International Relations and Strategic Analysis.
A former employee at Dunamiscoins said customers that were fleeced were new. They had just opened up accounts two months ago. Others simply didn’t withdraw their money fast enough, they wanted it to accumulate more profits.
“We had our doubts but they have been consistently paying people without any hustle every day. It was only on Monday and Tuesday [December 2 and 3] that there was no money to pay. For all the time I have worked there, there was no day money was ever mixed, that is where deposits were used to pay those whose money was due. All the money made on that day would be banked because every morning Kingsley would bring the money that was supposed to be given out on that day. He would have the entire month’s schedule of those receiving money,” a former employee said.
The fateful day
Every month, a management meeting would sit at Hotel Triangle in Kampala. On December 2, Kingsley and Johnson, the two ranking bosses didn’t show up for the meeting. The country manager Suzan Awon said they were not feeling well.
However, all branches did not receive money to pay customers that day. To make matters worse, the bosses couldn’t be reached by telephone. The previous day, Global cryptocurrency had been closed, prompting the top managers at Dunamiscoins to withdraw huge sums of money from banks and kept it in safes at office. Also the monies that were deposited by customers on the following days was never taken to the banks but, rather, kept at the main office.
“No one knew why this money was taken out of the bank and kept at office. It stayed there for some days before it was taken. We don’t know when it was taken out,” a source said.
On December 2, when cashiers had no money to give out, someone suggested they use money kept in the safes. When they opened the safes, the money was long gone. Customers started getting jittery. And the cashiers started looking for exit routes.
That Tuesday none of the top managers showed up for work. Then the coin dropped, employees at Freedom City fled angry depositors. A similar scene erupted at all other branches. Realizing that the center was no longer holding, some employees grabbed some company assets and fled too.
Living in fear
All the four employees we spoke to are in hiding fearing arrest or being pounced on by angry depositors. The company has been employing 144 people, a bulk of them marketers.
They have been receiving Shs 600,000 in salaries every month on top of a five per cent commission on every client they brought in.
“I had to switch off my phone because my clients are looking for me. I don’t know what to tell them, they think I’m equally guilty,” a former employee told us.
What the institutions say
Interviewed for a comment, Centenary bank communication manager, Beatrice Lugalambi, listened to the queries and then her phone went dead. By press time, the phone was still switched off.
For his part, FIA’s Wandera said the problem of virtual currencies is not limited to Uganda. Many countries are suffering too, he said.
“We analyze and once we suspect there is a criminal element, then we freeze the accounts and do the required investigations because these operations of cryptocurrencies are not regulated,” Wandera said.
He added that when they suspected that something was amiss, they had to take immediate action. He said FIA wrote to the ministry of Finance, Bank of Uganda and parliament but no concrete action was taken.
Charity Mugumya, Bank of Uganda’s director for information, said monitoring money transfers is the work of FIA. But Wandera said Dunamiscoins and others usually register as legitimate businesses.
“For the bank to confirm that there is criminal activity, there must be a trend analysis to know that something is not going on well,” Wandera said.
He denied accusations that they are sleeping on the job or colluding with criminals to fleece Ugandans.
“The way we do our work is not like we are policemen but the law requires that financial institutions monitor all transactions, which go through their institutions for anything that is contrary to the purpose for which it was created. But the business for which these guys were licensed would be looked at in the financial sector as a legitimate business and when you look at their accounts per se you would know that they are dealing in a microfinance business. You must first discover a trend that would tell you that what they are doing is different from what they were licensed to do,” Wandera said.
Tusuubira from UMRA said they did their job of monitoring, but added that criminals will always find loopholes to exploit. “We have always monitored many things in this country but if they go wrong, does it mean you have not monitored?” Tusuubira said.
Source: The Observer
Hundreds of Ugandans woke up last week to a sad reality – they had been trapped in an exploitative scam by four Ugandans and four West Africans trading under the name Dunamiscoins Resources. Dunamiscoins Resources is registered in the names of four Ugandans; Nabunnya Mary, Lwanga Samson, Susan Awon and Makula Faith who was removed recently as a director.
But its beneficial owners are four West Africans; Kingsley Egbe and Johnson Frank, both Nigerians, Isaac Akwete, a Ghanaian and a one Dr Mike. On December 3, Dunamiscoins closed shop and its foreign owners fled with over Shs 50 billion in customer deposits, according to two people familiar with the company’s dealings.
The company, registered locally as a microfinance outfit, started business in January this year with a branch in Kampala at the New Taxi Park mall along Namirembe road but soon spread out to other parts of the city; Freedom City mall, Ndeeba, Mukono, Arua, Mbale, Lira (which was in operation for just a week and Masaka (which was scheduled to open on December 3, the very day the bubble burst).
How it worked
Interviewed privately, three former employees who spoke anonymously said the company claimed to be in the business of microfinance and forex trading, but did neither of the two. Edith Tusuubira, the executive director of Uganda Microfinance Regulatory Authority, indeed confirmed to The Observer that Dunamiscoins was a registered member. “Yes it’s a registered institution as microfinance,” Tusuubira said.
But that stopped on paper, in reality, it was a Ponzi scheme. It simply rallied people to deposit money with a promise of very astronomical returns. A principal sum would be paid back with interest in three months. The company paid out a 40 percent, payable after every 21 working days.
For example if you deposited Shs 100 million, Dunamiscoins would pay back Shs 40 million every month in three tranches. That means the depositor would earn Shs 120 million in interest in three months on top of his or her principal sum of Shs 100 million.
“In a very short period we had got so many customers especially businesspeople in downtown Kampala,” the source said.
Interestingly, even enlightened people fell for the scheme en mass, the source said. Another source who had access to many customer records said some of Kampala’s richest people were also customers.
“We had so many people working with Uganda Revenue Authority, NSSF and big banks who have been our customers,” the source said.
According to another former employee, the company collected over Shs 1 billion daily and dispensed about half of that amount daily.
Asked how they moved such huge sums around town, the source said they hired two private security guards from Active Security, who would escort the money to the bank and all other branches since they were near each other. Dunamiscoins has been operating accounts in three banks, Centenary bank, GT bank and Stanbic bank.
However, one source told us that most of the company’s money was in Centenary bank. He said the last time he checked, at the end of November, Centenary bank had Shs 26 billion, Stanbic bank 23 billion while GT Bank had Shs 500 million. All three accounts have been frozen by the Financial Intelligence Authority [FIA], a government entity in charge of combating money laundering and terrorism financing.
Interviewed yesterday, Sydney Asubo, the executive director of FIA, declined to reveal how much money the frozen accounts hold. “I can’t disclose how much is on the accounts but what I can say, the money is not sufficient to cover all the claims,” Asubo said.
Not forex traders
The company claims it has been doing forex trading but those in the know say that is not true. One employee said that in the five months she worked at the company, money was withdrawn twice for purposes of forex trading.
About Shs 500 million was changed into dollars and deposited on the account of Kingsley, who has been the overall boss, ostensibly to be used for trading. However, no one, even those in top management, knew what happened after that.
The Dunamiscoins offices only received deposits and paid back depositors. How the company made its money no one knows. But Dunamiscoins’ operation wasn’t that complex. All they did was receive money from one customer and give it to another without really putting that money through known channels of revenue generation.
“When you deposit money in three months and get 120 percent interest on top of your principal sum, why would you not believe them that they are authentic?” said Samuel Wandera, a director at FIA in charge of International Relations and Strategic Analysis.
A former employee at Dunamiscoins said customers that were fleeced were new. They had just opened up accounts two months ago. Others simply didn’t withdraw their money fast enough, they wanted it to accumulate more profits.
“We had our doubts but they have been consistently paying people without any hustle every day. It was only on Monday and Tuesday [December 2 and 3] that there was no money to pay. For all the time I have worked there, there was no day money was ever mixed, that is where deposits were used to pay those whose money was due. All the money made on that day would be banked because every morning Kingsley would bring the money that was supposed to be given out on that day. He would have the entire month’s schedule of those receiving money,” a former employee said.
The fateful day
Every month, a management meeting would sit at Hotel Triangle in Kampala. On December 2, Kingsley and Johnson, the two ranking bosses didn’t show up for the meeting. The country manager Suzan Awon said they were not feeling well.
However, all branches did not receive money to pay customers that day. To make matters worse, the bosses couldn’t be reached by telephone. The previous day, Global cryptocurrency had been closed, prompting the top managers at Dunamiscoins to withdraw huge sums of money from banks and kept it in safes at office. Also the monies that were deposited by customers on the following days was never taken to the banks but, rather, kept at the main office.
“No one knew why this money was taken out of the bank and kept at office. It stayed there for some days before it was taken. We don’t know when it was taken out,” a source said.
On December 2, when cashiers had no money to give out, someone suggested they use money kept in the safes. When they opened the safes, the money was long gone. Customers started getting jittery. And the cashiers started looking for exit routes.
That Tuesday none of the top managers showed up for work. Then the coin dropped, employees at Freedom City fled angry depositors. A similar scene erupted at all other branches. Realizing that the center was no longer holding, some employees grabbed some company assets and fled too.
Living in fear
All the four employees we spoke to are in hiding fearing arrest or being pounced on by angry depositors. The company has been employing 144 people, a bulk of them marketers.
They have been receiving Shs 600,000 in salaries every month on top of a five per cent commission on every client they brought in.
“I had to switch off my phone because my clients are looking for me. I don’t know what to tell them, they think I’m equally guilty,” a former employee told us.
What the institutions say
Interviewed for a comment, Centenary bank communication manager, Beatrice Lugalambi, listened to the queries and then her phone went dead. By press time, the phone was still switched off.
For his part, FIA’s Wandera said the problem of virtual currencies is not limited to Uganda. Many countries are suffering too, he said.
“We analyze and once we suspect there is a criminal element, then we freeze the accounts and do the required investigations because these operations of cryptocurrencies are not regulated,” Wandera said.
He added that when they suspected that something was amiss, they had to take immediate action. He said FIA wrote to the ministry of Finance, Bank of Uganda and parliament but no concrete action was taken.
Charity Mugumya, Bank of Uganda’s director for information, said monitoring money transfers is the work of FIA. But Wandera said Dunamiscoins and others usually register as legitimate businesses.
“For the bank to confirm that there is criminal activity, there must be a trend analysis to know that something is not going on well,” Wandera said.
He denied accusations that they are sleeping on the job or colluding with criminals to fleece Ugandans.
“The way we do our work is not like we are policemen but the law requires that financial institutions monitor all transactions, which go through their institutions for anything that is contrary to the purpose for which it was created. But the business for which these guys were licensed would be looked at in the financial sector as a legitimate business and when you look at their accounts per se you would know that they are dealing in a microfinance business. You must first discover a trend that would tell you that what they are doing is different from what they were licensed to do,” Wandera said.
Tusuubira from UMRA said they did their job of monitoring, but added that criminals will always find loopholes to exploit. “We have always monitored many things in this country but if they go wrong, does it mean you have not monitored?” Tusuubira said.
Source: The Observer
