It appears that a well-organized syndicate of influential individuals, fraudsters, cybercriminals and thieves are still on the prowl, setting up Ponzi schemes disguised as Saccos and taking away hard-earned cash from gullible members.
The most recent case involves a Sacco in Kiambu, which collapsed five years ago and more than Ksh 100 Million belonging to members went up in smoke.
It is essential for members, from the onset, to confirm whether any ‘SACCO’ has been registered by the Commissioner for Cooperatives Development or has a permit from the Sacco Societies Regulatory Authority (SASRA) to undertake a deposit-taking business.
In numerous cases, clueless members make deposits with the promise of acquiring property, often non-existent pieces of land. When members suddenly turn up to be shown their plots and houses, they are told that these properties are not ‘ready.’
Most Ponzi schemes lure members with promises of owning land, with no viable business or strategic plan, and maximize on paid-up radio and television testimonials.
Any Sacco thrives on the basic model of collecting deposits from members, which the Society then lends to members through approved financial products and services.
The public should also ensure that any Sacco they join has separate entities that deal with Front Office Service Activity, Back Office Service Activity, Investments, or Real Estate Business.
According to a public notice issued by SASRA, numerous Ponzi and pyramid schemes, operating as Saccos, were illegally collecting deposits from the public.
According to this SASRA bulleting, members of the public are requested and advised to desist from undertaking or transacting deposit-taking Sacco business (FOSA) with any person, institution, or entity unless the Authority licenses the person, institution, or entity as a deposit-taking Sacco Society, and to report any such person, institution or entity to the Authority or the nearest police station for appropriate action.
The public should watch out for outfits with overly high returns, operate with unregistered investments or unlicensed sellers, and have no brochures explaining their products, strategies, and plans.
As more SACCOs embrace complex IT platforms to provide services to their members better, there is a need to control those who have access to their IT systems and have specific passwords and user names.
Any credible SACCO should also make all efforts to break off its links completely with former staff members and vendors of its ICT platform. This connection has insider information that could be used to compromise the system.
