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How chicken Ponzi scheme spun Shs1.6b web of deceit
Mr Pius Wamanga, the Capital Chicken operations manager. For several months, the self-styled agribusiness contract farming organisation has lured unsuspecting Ugandans into bogus agribusiness contract farming partnerships. PHOTO/COURTESY
What you need to know:
- For years, unscrupulous individuals have used different Ponzi schemes to solicit huge sums of money from Ugandans. The latest Ponzi scheme to fleece Ugandans is Capital Chicken. As Gabriel Buule writes, it used social media to set out its stall.
For several months, a self-styled agribusiness contract farming organisation has been thriving on social media influencers to lure unsuspecting Ugandans into bogus agribusiness contract farming partnerships.
Dubbed Capital Chicken, the classic Ponzi scheme dangled a juicy carrot that coaxed its victims into investing particular amounts of money to earn an income out of poultry farming. It sounded harmless if straightforward enough. Except; it was not.
In various messages, previously shared by social media influencers on their behalf, the proprietors of the Ponzi scheme were persistent in offering assurances to their targeted investors that their intention was to leverage on their poultry expertise.
If you were unable to actively rear chicken but wished to passively participate in the production and development of the value chain, then you qualified to undertake a collective poultry farming partnership with Capital Chicken. All you needed to do was provide funds to the company. The funds would be channelled towards acquisition of more chicken on behalf of the farmer for the furtherance of the success of the poultry project.
The money would then be invested, with resales yielding profits of between 48 percent and 60 percent per month. Investment plans ranged from Shs1 million to Shs10 million, with a maturity of five months. For those whom the lights on the dashboard did not flicker given the sweetness of the deal, bitterness was the order of the day when Capital Chicken abruptly closed shop on September 29.
Victims speak out
Amid the ‘I told you so’ reminders that were not in scant supply on social media were feelings of profound loss and regret. Take Mr Rogers Ssegawa and his colleague, Ms Maria Nakanwagi, who were last December lured by a marketer from Capital Chicken into investing money with the scheme. Against their better judgment, they shelled out Shs30 million on two different investment packages.
The first Shs15 million investment package would mature on May 14. The other was earmarked for June.
“They did not show us their poultry farm, but they said it was in Mukono as they kept making it complicated to visit the farm,” Mr Ssegawa told Saturday Monitor.
On May 7, a week to the day their first investment package was supposed to mature, Mr Ssegawa’s phone buzzed. A representative from Capital Chicken was on the other line. Would Mr Ssegawa and Ms Nakanwagi consider re-investing the money? The pair swiftly mouthed a “no, thanks.”
In a week’s time, they would learn why such a request had been made. A plea from Capital Chicken to make the payment after 30 days—ostensibly due to changes in the payment system—looked more than ever like a case of robbing Peter to pay Paul.
“The operations manager, Pius Wamanga, kept referring us to different persons whom he called his personal assistants until later when he said he was demanding some money from some people and that he would pay us later,” Ssegawa said in an interview, adding that their aggressiveness saw Capital Chicken, possibly with great reluctance, pay Shs10 million of the Shs25 million for their first investment package.
Mr Ssegawa proceeded to note, “We asked them to give us cheques as a guarantee as we noticed a couple of red flags but he still kept playing us and later he gave us cheques which he refused us to bank.”
Ssegawa says he later often started finding a couple of people complaining at Wamanga’s office and they banked one of the cheques in the Housing Finance Bank, only to find out that the account was empyty.
He added that a person in the Wamanga office tipped them that they should ask for cheques for an account in Stanbic Bank. “He told us that he had money for new investors in Stanbic Bank,” he explains.
It was not until the end of August when Ssegawa was helped by friends in Stanbic to secure the money that totalled to Shs55 million.
“ A source in the bank told us that whenever money would reflect on his bank account, he would immediately remove the money. We worked with the bank to use the cheques [to get our money] and that was the case,” Ssegawa revealed.
CMA warning
In September, the Capital Markets Authority (CMA) warned that it is risky for investors to invest their money in schemes that are not regulated. CMA’s warning against investing in unregulated investment activities came against the backdrop of public complaints received about Capital Chicken, Veta Plan Chicken, and The Mall Fund.
Capital Chicken distanced itself from CMA accusations, saying it operates as a farming partnership company and not an investment firm as indicated.
Ms Lyn Tukei, the spokesperson of CMA, confirmed that they were aware of the concerns that had been raised by the public. This was in regard to investment contracts offered by Capital Chicken (SMC) Limited.
In a statement, CMA confirmed that Capital Chicken (SMC) Limited is not authorised to offer investment contracts to the public as per Section 90 of CMA Act. The statement further revealed that Capital Chicken (SMC) Limited is not temporarily closed as shared by the proprietors. The entity, CMA stressed, is under police investigation under case numbers GEF 38/2023 and GEF 39/2023.
The police revealed on October 5 that “statements had been recorded from 41 victims, shedding light on transactions totalling approximately Shs1,641,376,000.” It named Pius Wamanga and Ernest Sempebwa as “primary suspects” and urged “anyone who has been affected by the company or has information related to this case to come forward and cooperate with our investigators.”
Capital Chicken responds
In the wake of a deluge of social media complaints, Capital Chicken was compelled to put out a statement shared on its social media platforms and website.
“We would like to assure our clients that we are running a business and their capital is safe with us as exhibited with our Sanlam Insurance cover and good quality breeds that ensures proper return rates,” management of Capital Chicken said in a September 18 statement.
However, their office at Kamwokya-Kanjokya Street has since been closed. An employee who asked to remain anonymous told Saturday Monitor that even the workers were fleeced. Most of them, our source disclosed, left months ago after going several months without pay.
Not the first time
This is not the first Ponzi scheme to leave Ugandans caught in the crosshairs. In fact, it comes barely a year after BLQ, a sports betting scam, fleeced Ugandans of billions of shillings. Before that, Telexfree left a number of Ugandans counting losses. Telexfree was a pyramid scheme, which in 2013, sold a “voice-over-Internet-protocol” (VOIP) telephone service, similar to Skype.
Elsewhere, there was the curious case of Dunamiscoins Resources Ltd. It was registered under the laws of Uganda (80020001481676) on January 21, 2019, as a private company limited by shares. It operated legally within the country’s financial system, with known head offices on Plot 11A Rotary Avenue, Kampala. In December 2019, both customers and staff woke up to a rude shock that the company was penniless.
Back in 2007, conmen operating under the cover of the non-profit organisation ‘Caring for Orphans, Widows and the Elderly’ (Cowe) defrauded unsuspecting Ugandans of billions of shillings.
The organisation held an NGO licence, but operated as a bank or microfinance institution and held marketing campaigns across the country, including radio adverts. More than 3,000 people invested by mortgaging their property like land to banks to cash in on the astronomical 54 percent profit promised.
In 2006, Bank of Uganda tried to intervene by freezing the organisation’s account, but the fraudsters successfully challenged this move in the High Court by claiming they had not been given a fair hearing.
