2022 SBL CONFAB: Panel Tackles the Ponzi Menace; Explores Insolvency as a Resolution Tool


For the three-man panel that sat down at the ongoing Annual Conference of the NBA Section on Business Law in Abuja to examine the effects of, and remedies for, the wave of Ponzi (or pyramid) schemes currently sweeping across the Nigerian socio-economic landscape, there was no pulling of punches: PONZI IS A SCAM. And a scam, by whatever name it is called, would smell just as odious.

Moderated by Prof. Bolanle Adebola, a law lecturer from the University of Reading in England, the panel had Mrs. Anastasia Braimoh, until recently an official with Nigeria’s Securities and Exchange Commission (SEC); and Mr. Kalu Okorie from the law firm of Punuka (who represented the firm’s Principal Partner, Dr.
Anthony Idigbe, SAN).

As reported by NEWSWIRE Law and Events Magazine correspondent at the Transcorp Hilton venue of the confab, Braimoh began her contribution by outlining the basic characteristics of a scam or fraud to include the following, among others: zero regulation; no data on operators, financial health, or relevant corporate indices; mouth-watering promises of returns as well as unrealistic expectations; and high-sounding terminology designed to bamboozle the gullible or greedy.

A company, Mrs. Braimoh further noted, could start out as a legitimate enterprise, but over time evolve into a Ponzi scheme.

On his part, Punuka’s Okorie outlined the various efforts made over the years to seek relief for victims (and so-called investors) of Ponzi schemes. He lamented, however, that, thanks to the inherent opacity of Ponzi enterprises, the chances of restitution are extremely slim, for the simple reason that there is no fundamental framework for a resolution.

Insolvency and freezing of assets, the panelists agreed, was an option against the perpetrators of such schemes only to the extent that they are reported on time – before the perpetrators cash in on payments by victims into their bank accounts. The inherent limitations of SEC operations are also an inhibiting factor, seeing that Ponzi schemes are essentially criminal, and therefore under the purview of the police and other law-enforcement agencies.

Another vexed issue the panelists looked at is the disbursement of recovered funds, as this is usually subject to no small number of legal and judicial interventions – including, in one recent and infamous case, court action by the perpetrators themselves!

NEWSWIRE’s correspondent reports that in all, the panelists were unanimous in agreeing on the need for a stronger and better-defined legal framework to combat the menace of Ponzi schemes. In the meantime, though, insolvency remains the only viable legal option for action against the perpetrators of these fraudulent schemes – as well as the need for prospective victims (some of whom have played the role of active promoters, along with their so-called ‘downlines’) to be more circumspect in dabbling into anything that offers sky-high returns, or a one-way ticket out of poverty, in the shortest possible time, and with minimal effort. For now, Braimoh and Okorie agreed, such healthy distrust remains the best defence against the Ponzi menace.

If it seems too good to be true, as the saying goes, it probably isn’t.


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