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Last Updated: Friday, 13 July 2007, 07:40 GMT 08:40 UK
Kenyan 'pyramid' victims seek justice
By Caroline Karobia
BBC, Nairobi

Former civil servant George Angira says he is a cautious man.

Leah Jerenga
Leah Jerenga thought she would be a millionaire by now
When a friend in the Kenyan capital, Nairobi, suggested that he invest in a scheme guaranteed to triple his money in a month, he was wary.

"I insisted that I had to see his investment of about $1,500 mature before I joined," Mr Angira says.

After a month, Mr Angira accompanied his friend to a company office in Nairobi and witnessed him being paid $4,500, after which his friend reinvested $1,500 on the spot.

"This really interested me so, after interviewing the manager of the scheme, I was satisfied and immediately pumped in $3,500," he explained.

But after a month, when he returned to the company offices where he paid the money, the company had relocated and he met dozens of other people camped outside the premises seeking their funds.

"I had planned to pay school fees for my children and boost my business capital with the profits but now I am just depressed, I even went for prayers after this loss but I still cannot believe this," he explains with tears running down his face.

This is the first such scheme to have collapsed in Kenya, so Mr Angira had not heard about previous scams along similar lines.

Foreign profits

Back in April, Leah Jerenga thought that by now, she would be a millionaire.

But her dreams have been shattered.

We believed that this was all real because the offices where we made the deposits were being guarded by police officers
Leah Jerenga
Ms Jerenga, a Nairobi businessperson and preacher, was persuaded to invest $5,000 in another "pyramid" scheme, or "ponzi" as they are known in Kenya.

The people running the schemes said they were investing customers' money in western stock markets, earning hard currency and so guaranteeing high returns.

"I withdrew all I had in my account after I was told the company would buy shares in London where I would get the profits," Ms Jerenga recalls.

But Ms Jerenga and Mr Angira, like some 600 other Kenyans, now realise that when a deal is too good to be true, that is because it is.

They are now hoping that when they file their papers this Friday the courts will come to their rescue.

Lawyer Peter Bonyo says more than $500,000 has been lost to the fraudsters.

He says that a number of people have now been arrested over the affair, so the court case may recover some money for Ms Jerenga and Mr Angira and the others.

Quick way out

The Central Bank of Kenya has already issued two notices, warning Kenyans against joining such schemes.

But those who lost their hard-earned money are questioning why law enforcement officers seemed to turn a blind eye to the scams at the time.

"We believed that this was all real because the offices where we made the deposits were being guarded by police officers - if they were illegal why didn't they act?" asked Ms Jerenga.

Ken Ouko, a sociologist at the Nairobi University, says many poor Kenyans are unable to access more reliable ways of making money so they seek a quick way out and pyramids schemes provided the avenue.

The pyramid phenomenon in the country is also associated with recent economic growth, he says.

"Many Kenyans are able to raise capital to set up small enterprises, however they cannot all do the same thing, so many are looking to such schemes which present themselves as hassle-free investments."

Economists say the fraudsters may also have taken advantage of the recent interest in stock market investments among ordinary Kenyans, who may have heard about people making lots of money, without really understanding the risks involved.


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