Fantastic failures of due diligence, particularly the critically-important Know-Your-Customer (KYC) in four commercial banks, have produced startling knock-on effects, culminating in a N30 billion investment scam in Nigeria’s beleaguered economy. The failures recorded simultaneously in four banks – namely Guaranty Trust Bank (GTB), Zenith, Stanbic and the defunct Diamond Bank – opened a dark corridor for a faux investment operation that succeeded in ensnaring over 15,000 depositors in five months.
BUSINESS LEAKS obtained over 400 pages of bank documents as well as a comprehensive list of depositors, not a few of whom lost personal funds ranging from millions to over one billion naira each.
Taking full advantage of a large-scale oversight failure, a Ponzi scheme operator managed in just five months to convince about 15,000 Nigerians to part with over N30 billion; then absconded with the deposits lodged mostly in five different accounts with the Guaranty Trust Bank (GTB).
One of the investors in the phony scheme, Emadu Efe Eva, transferred one billion naira from her Diamond Bank account (now Diamond-Access) to one of the GTB accounts owned by the Ponzi promoters, by name Micheno Cooperative. The GT bank account number is 0346460004.
Forensic documents show that the billion naira transaction was carried out in Lagos on 19th July 2018. The same Emadu Efe Eva made a total of seven investment transactions between 22nd June 2018 and 27th July 2018.
Other commercial banks that housed the Ponzi deposits included Zenith Bank (corporate account no-1015774733), Diamond Bank (account number 0103771684) and Stanbic IBTC Bank (account number 0026336328). The promoter, careful not to be seen as another ‘MMM’ (an infamous pyramid scheme) disguised its operations as a Cooperative Society by name ‘MMCS’, Micheno Multi-Purpose Cooperative Society. It operated five different bank accounts with Guaranty Trust Bank- 0262809804, 0346460004, 0346460028, 0346460011 and 0346460035.
Coming barely two years after the MMM ponzi scheme hit Nigeria like a tidal wave, devastating homes and marriages as it swept away billions of naira in family finances, personal savings, loans and even funds for school fees and/or seed capitals from SMEs (Small and Medium Enterprises), the new ponzi presented itself to the ever gullible populace as Micheno Multi-Purpose Cooperative.
Preliminary investigations reveal that Micheno is actually a portmanteau for Michael and Eno, possibly a husband and wife affair. The Cooperative said its mission was “to create a system that empowers its members through provision of quality, diversified, innovative and market driven financial and technical services and exceeding members’ expectation”.
Zenith Bank documents obtained by our reporters reveal that Micheno’s account with the bank has only two signatories, namely Mr Michael Uno Eke and Ms. Eno Queen Essien. Michael and Eno lent their first names to the Cooperative called Micheno. A joint petition written on behalf of “over 15,000 direct subscribers” states that sometimes in March 2018, the promoters of Micheno Multi-Purpose Cooperative Society obtained registration certificate for the Cooperative from the Federal Capital Territory (FCT) Registrar of Cooperative Societies. In June 2018, the promoters of the Cooperative put out advertisements inviting “unsuspecting members of the public to register and join the Cooperative. The names of the promoters and founding members of the Cooperatives were given as Michael Eke (President), Mbakara Aya (Vice President), Miss Eno Queen Essien, Miss Wendy Daniels, Efah Egba and Mrs. Rejunor Aya. Others are Mrs. Egan Adat Ben-Koko, Mrs. Ruth Bolu-Atte, Ekimini Archibong, Emem Harry and Barrister Tutu Ekeng.
Investigations revealed that the advert promotions targeting unwitting subscribers were done mainly through the “opening ceremony” held on 16th June 2018 at the Calabar International Conference Centre. Promotions were also carried out using billboards mounted in Abuja and Calabar, handbills, comedy/music shows and through referrals from trusted friends and family members. Other subscribers heard about Micheno from colleagues at work.
The official brochure of the MMCS scheme states its aim is to “coordinate entrepreneurs to poll private funds as a source of investment opportunities and credit for members.” The brochure went on to say the Cooperative was to engage in eight fields of investment namely: “collection of savings, real estate, haulage and logistics, agriculture, entertainment and events, oil and gas, multi-level marketing and general marketing of goods & services”.
The over 15,000 subscribers paid N10,000 each to pick what was called membership form. The subscribers were further invited to invest larger funds into the cooperative which will be invested in oil & gas, aviation, real estate and other high-end sectors to attract profit returns of 50-80% in 40 days.
Documents further show that some of the highest subscribers to the scheme included Essien Raymond Ukpong who also unbelievably transferred a total sum of N360 million from his GTB account to another GTB account owned by Micheno Multipurpose Cooperative Society Ltd.
Ndifon Ndim-Ejor of Cross River invested N63 million in the scheme.
Ayuk Kakore Egbe of Abuja on 3rd August paid N36 million into another of Micheno’s bank accounts with GTB by name Micheno Cooperative Scheme Ltd while Wendy Daniel of Cross River deposited N70 million on 30th July 2018. Wendy made 15 additional payments into MMCS accounts between 26th June and 31st July, bringing her total investments in the scheme to N570 million.
Another is Onyi Chijoke of Calabar who on 4th August invested N4 million. Isah Benjamim of Kaduna on 27th July paid in N19.9 million; Ugochukwu Geraard Okongwu of Calabar paid in N6million on 4th June; Morphy Farms of Cross River paid in N15million on 25th June while Ukpe Emem Nathaniel of Akwa Ibom paid in N11 million on 30th July.
Other subscribers who deposited huge sums into Micheno Cooperative’s bank accounts included
Mr. Abubakar Wakili of Abuja who on 26th June 2018 paid the sum of N8 million into Micheno Cooperative’s GTB account from his own bank, First Bank. Udoh Paul Sunday of Lagos paid in N13 million in three transactions carried out on the 18th, 19th and 20th July 2018, all GTB to GTB transactions.
Odeyeuma Francis of Abuja paid in N9 million on 1st August; Ekpenyong Joseph Okon of Lagos deposited N5 million on 14th July; Sunday Chinagorom paid in N10.2 million;
Rubymarsh Energy of Calabar invested N10.2 million; Victor Essien of Uyo paid in N10 million on 9th July; Otobong Udofia of Uyo invested N7 million on 13th July; Mba Nnenna Esther of Calabar paid in N13 million on 11th July. Oqua Etim Asuquo of Calabar paid in N22.6 million. The payment was in two tranches recorded on 13th and 19th July 2018 while Dorathy Ada Pamou of Calabar deposited from her First Bank account, a total of N26.5 million in seven transactions between 29th June and 26th November 2018. The list is endless.
Endless Wait
Subscribers to the MMCS scheme, led by Adindu M. Ohawwe and Daniel Ojima, said the 40 days given for their investments to mature came and passed but they received no payments. No verifiable explanation was given.
In the attempt to trace the Cooperative’s funds, five different registered companies bearing the name Micheno were discovered. Checks at the Corporate Affairs Commission (CAC), show that they were all registered by Michael Uko Eke as his business enterprises. The five companies are Micheno Ventures, Micheno Global Investment Limited, Micheno & More Business Limited, Micheno Oil & Gas Limited and Micheno Group of Companies Limited. While Micheno Ventures with address as 6 Noble Apartment, Parliamentary Road, Calabar, was registered 3rd November 2017, the other four companies were registered the same day, 30th April 2018. The four companies have the same address: 38 Parliamentary Road, Calabar.
It was also discovered in practical terms that all the Cooperative’s accounts were operated by a sole signatory, Uno Michael Eke, with BVN 22178917780. The same Michael Uno Eke has several personal bank accounts which investors to his scheme claimed were used to warehouse funds diverted from the Cooperative’s accounts. He has two accounts with Keystone Bank; one a domiciliary account, the other a joint savings account with Essien Enobong.
Subscribers to the MMCS scheme decry what they call regulatory lapses of the Central Bank of Nigeria (CBN) and poor risk assessments by commercial banks which in this case turn them into “vehicle of fraud to the detriment of unsuspecting members of the public”. In a petition sent to the National Assembly, the investors want the affected commercial banks to tell them “where the funds of the Cooperative were diverted to”.
They also would want to know why no red flags were ever raised on Micheno Cooperative bank accounts. “If the influx of funds did not attract the attention of the apex bank, at least the volumes of monies (over N25 billion) moved out of the Cooperative’s accounts within 2 months should have attracted the attention of the regulator”, they pondered.
In efforts to speak with someone from MMCS, BUSINESS LEAKS dialed some telephone numbers found on Micheno’s promotional materials. One of the calls connected. When the receiver was asked if he was Micheal Eke, a male voice hastily replied, “God forbid”. The receiver who was identified through Truecaller as MC Mbakara declined to comment on his relationship with Micheno. He excused himself from the phone conversion saying he was busy in the studio doing some recordings.
Another call was to Esther Isek, one of the female models whose photographs and telephone numbers had featured prominently on brochures, handbills and Micheno’s other promotional items. She confirmed being a registered member of the cooperative. Esther said she put her money into the scheme with hopes of making high returns but soon after, it was one story to the other until her investment and those of many others were siphoned. Asked if she knew the whereabouts of Michael Eke, she replied, “The last we heard was that he is in custody.”
When this newspaper contacted Michael on his mobile, it did not appear he was in police net. After his phone rang out for a second time, he switched it off.
Responses from the banks
In a written response to accusations of “regulatory and supervisory lapses”, GTB where Micheno maintained five different accounts gave a breakdown of the transaction history of the embattled investment company. According to the bank, Micheno’s Naira account – 0262809804 “recorded a total turnover of about N21.4 billion (excluding reversals).
A summary of the credit entries into the account shows that funds were received by Micheno from 11,866 “various third parties” (investors) totaling Nineteen Billion, Nine Hundred and Twelve Million, Three Hundred and Thirty-Eight Thousand, Eight Hundred and Ninety Nine Naira, Eleven Kobo (19,912,338,899.11).
Six Hundred and Thirty Four million, Eight Hundred and Eleven Thousand naira (634,811,000.00) came in as cash deposits from 1,056 investors while Three Fifty Million, Eight Hundred and Twenty million naira (350,820,000.00) were 36 bank-to-bank “transfers from Micheno Multipurpose Cooperative Society, Stanbic account”
Ten “transfers from Micheno Multipurpose Cooperative Society, GTBank” were made totalling
Fourteen Million, Five Hundred and Fifty million naira (14,550,000.00) while Two million, Nine Hundred and Twenty Nine Thousand, One Hundred and Ninety-One naira, Fifty-Three kobo was “interest on time deposit.”
Similarly, “Micheno Multipurpose Cooperative Society (Naira Account -0346460004) recorded a total turnover of about N26 billion (excluding reversals)”.
The bank added that “there were no transactions in the three domiciliary accounts since inception. The domiciliary accounts are”Micheno Multipurposes Cooperative Society (Domiciliary Accounts – 0346460011, 0346460028, 0346460035).”
GTB admitted it received several correspondences from law enforcement agencies in respect of Micheno Ventures and Micheno Mutipurpose Coorperative Society but added that “it is possible that the interest of law enforcement agencies may have been triggered by the Suspicious Transaction Reports filed by the bank.”
BUSINESS LEAKS gathered that law enforcement’s attention to Micheno was drawn by petitions from wearied investors led by one Adindu M. Ohawwe and Ojima Daniel on behalf of 1123 other petitioners.
The bank deflected accusations of poor due diligence, particularly the allegation that banks allowed Mr. Michael Eke to be the sole signatory to Micheno Multipurpose Cooperative Society Ltd’s accounts and dissipated funds without recourse to other members. GTB said the Cooperative’s account had three signatories and not one as alleged by the aggrieved investors. It however added that the account of Micheno Ventures is a sole proprietorship account which was “solely administered by Uno Michael Eke, being the sole proprietor.”
Another oversight lapses alleged by the investors is that Micheno Cooperative Society Limited is registered as a society with its activities limited to the Federal Capital Territory as specified in article 2.3 of its constitution but operated its head office in Calabar, Cross River State. To this, GTB responded that “there is no legal or regulatory provision limiting the society and indeed any entity in Nigeria from opening an account in other locations aside from their primary place of business.”
The bank concluded that it “empathize with the subscribers of Micheno Multipurpose Cooperative Society who appear to have lost their hard earned funds in this debacle.” However it added that “it is pertinent to state that every investment activity incorporates an element of risk, which we suspect the subscribers should have been fully aware of by carrying out their enhanced due diligence before subscribing.”
Responses from other banks associated with Micheno are not as detailed, perhaps in reflection of the relatively low volume of transactions they recorded with the investment company. They only virtually provided basic information on Micheno’s account mandate and statements of accounts.
Investors fight back
Many of the investors, unwilling to accept the humongous losses they attribute to bank negligence, have been seeking ways to recover some of their funds and /or to at least put the Micheno operators behind bars. Though a mass action was initiated by over 1,000 subscribers, a few of them with contacts in high places resorted to individual efforts.
One of them is Ms Briggs Nimi Osim who invested N47 million in one of Micheno’s investment packages called SwissGolden. Her efforts succeeded in remanding Micheno’s chief promoter, Uno Michael Eke, in prison custody for a while.
On two occasions, the Economic and Financial Crimes Commission (EFCC) dragged Eke to the Federal High Court, Calabar, Cross River State. BUSINESS LEAKS gathered that “a few powerful investors” including top government functionaries of Cross River State, especially commissioners and aides of the governor exerted insurmountable pressure on the banks and EFCC officials and were able to recover part of their funds.
In a curious twist to the saga, Uno Michael Eke who investors also accused of exporting their funds overseas blamed his woes on conspiracy of commercial banks which he said became jittery as increasing numbers of depositors pulled out monies from their accounts to invest in Micheno. Ekeh added that he reinvested investors’ funds in Swiss gold but that his foreign adventure took a hit from a sudden policy change on fund conversion in the host country.
This investigation was carried out under the Collaborative Media Engagement for Development Inclusivity and Accountability Project of the WSCIJ, with funding from the MacArthur Foundation.
