Red Flag Alert: Fraudsters on the Prowl

Protecting Individual and Family Wealth

In today’s society, especially in Nigeria’s increasingly unpredictable financial landscape, the line between legal investment opportunities and fraudulent schemes is becoming dangerously blurred. The growing need for higher returns, driven by inflation, currency depreciation, and economic instability, has created fertile ground for Ponzi schemes and unregulated financial ventures. These schemes continue to distress many families, stripping away wealth that took years and years to build.

For individuals and families with significant wealth, this is not just a financial issue; it is the delicate balance between protecting, sustaining your wealth and suffering sudden financial ruin.

Treacherous Investment Terrain for the unassuming, Unwary and Greedy

Nigeria’s investment climate is both dynamic and dangerous. With a growing population and expanding internet access, many Nigerians are turning to alternative investments to generate wealth, safeguard and preserve their wealth. Sadly, this growing search for returns has created an environment where fraudulent schemes flourish, especially those masked as innovative “investment platforms.”

Between 2020 and 2023, Nigeria has experienced a shocking surge in Ponzi schemes. Reports from the Securities and Exchange Commission (SEC) and Nigeria Deposit Insurance Corporation (NDIC) revealed that over five million Nigerians lost more than three hundred billion naira (N300B) to fraudulent ventures.

These schemes typically promise high monthly returns of 20% to 40% and exhibit certain traits such as:

• Aggressive social media and influencer marketing
• No verifiable business mode
• Exploitation of trust and financial illiteracy within communities.
• Lack of registration with recognized Regulatory Authorities and Professional Associations.

Some of the most recent cases   include:

1. Silverkuun Investment Cooperative Society/Silverkuun Limited:
   Promoted as a cooperative society offering savings and investment opportunities, Silverkuun positioned itself as a platform for wealth creation and financial empowerment. The organization advertised high returns reportedly up to 6.5% monthly attracting many Nigerians seeking alternatives to traditional financial institutions. However, in May 2025, the Nigerian Securities and Exchange Commission (SEC) issued an official statement declaring that Silverkuun is not registered to operate in any capacity within the Nigerian capital market. The SEC warned the public against engaging with the company or its representatives, citing potential exposure to fraud and the risk of financial loss.
2. CBEX:
   CBEX presented itself as a Singapore-based cryptocurrency trading platform, promising investors a 100% return on investment within 30 to 35 days. Operating primarily through Telegram groups and proprietary apps, it attracted thousands of investors across Nigeria and other African Countries. The platform employed a referral-based model, offering bonuses in USDT, and claimed partnerships with AI trading platforms. However, by April 2025, CBEX collapsed, locking users out of their accounts and suspending all withdrawals. Investigations revealed that CBEX was unregistered with Nigeria’s Securities and Exchange Commission (SEC) and lacked any regulatory approval. The SEC, along with the Economic and Financial Crimes Commission (EFCC), Interpol, and the FBI, launched investigations into the scheme, which is estimated to have defrauded investors of over one point three trillion naira. The incident underscores the critical importance of due diligence and regulatory compliance when engaging with investment platforms.

The Underlying Crisis: Why These Schemes Succeed

Several root causes make the Nigerian ecosystem vulnerable to such frauds:

• Greed: The lure of extraordinarily high and fast returns often overrides rational decision-making. Many investors, regardless of their financial knowledge, are tempted by the promise of multiplying wealth quickly, despite clear warning signs.
• Low financial literacy: Many investors don’t understand basic investment principles like risk-return balance or how to verify legitimacy of investments.
• Trust-based culture: People invest based on word-of-mouth, family referrals, or influencer endorsements.
• Weak regulatory enforcement: Many schemes operate in grey areas or fly under the radar of regulatory oversight and compliance.
• Economic desperation: Inflation and currency depreciation push people to seek high-yield, short-term options in a bid to multiply their wealth.

For High-Net-Worth Individuals (HNIs) and families, the absence of practical investment risk understanding and intentional governance frameworks makes them especially vulnerable. The losses experienced are not only financial; they carry reputational damage, emotional trauma, and devastating erosion of trust.

Common Investment Pitfalls

At the crossroads of emotions and economics, many individuals and families make avoidable mistakes:

1. Overreliance on Informal Advice:
   Social capital drives decision-making more than data or expertise. Friends, pastors, and social media “experts” are trusted more than professionals Advisors and experts.
2. Absence of Investment Policy Guidelines/Statements (IPS):
   A documented Investment policy and guideline provides clarity on your investment objectives, your risk appetite, asset allocation and overall investment portfolio evaluation. Without one, your investment decisions can  become reactive,  emotionally erratic as well as influencer and trend driven.
3.  Illiquid and Overconcentrated Portfolios:
    Excessive focus on real estate or agriculture schemes, often without income plans, leads to “dead capital” that can’t be accessed when needed.
4.  Chasing Unrealistic Returns:
    Ponzi schemes thrive on the illusion of low risk, little or nothing investment threshold, and high reward. Examples:

• MBA Forex: 15% monthly
• CBEC Agric: 25–30% in 60 days
• Baraza Cooperative: 30–40% monthly.
  
  

1. Succession Disconnect:
   When investment decisions lie solely with the patriarch/matriarch, transitions become chaotic. More often, its best to Involve younger generations in decision-making at an early stage.
   
   
2. Poor Documentation:
   When there are no records of ownership, investment contracts, or fair, accurate and complete financial reports, legal disputes and succession battles become inevitable.
   
   

Role of Governance in Investment Decision-Making

Individual and family wealth governance is a system of structures, policies, and decision-making frameworks designed to manage, protect, and grow assets across generations. It ensures and enshrines accountability, clarity, and purpose

Investment governance frameworks provide structure, discipline, and continuity. This helps individuals and families spot red flags before damage is done. It encompasses:

1.  Family Investment Committee:
    This includes both family and professional advisors with clearly defined roles, expectations and oversight responsibilities.
2.  Investment Policy Statement (IPS):
    Which outlines the individual or family’s financial vision, risk tolerance, liquidity needs as well as ethical considerations.
3. Fiduciary Oversight:
    Independent advisors provide objectivity, compliance insight, and risk protection, especially in Nigeria’s often unregulated environment.
4. Legal and Compliance Structures
    Setting up Trusts, Holding companies, and Estate plans provides benefits viz:

• Protect assets from liabilities
• Ensure continuity
• Define ownership and decision-making power.
  
  

1.  Value-Driven Governance:
    A Family Investment Charter articulates:

• The family’s vision
• Investment guidelines
• Ethical investment principles
• Dispute resolution protocols
• Guidelines for family members involvement.

Stewardship over Ownership: A New Mindset for Individual and Family Wealth

Stewardship is the responsible management and preservation of family wealth, values, and legacy, not just for current and immediate benefit, but for the long-term good of future generations.

True stewardship means embracing responsibility, not just control and management.

To protect individual and family wealth, its imperative to:

• Develop a Family Investment Charter defining risk appetite, due diligence expectations, layered approvals and oversight, performance monitoring and transparent reporting.
• Engage qualified fiduciaries and independent advisors.
• Train the next generation in financial literacy and governance.
• Build systems that outlive the wisdom or faults of any one individual.

Conclusion

Protecting individual and family wealth is more than making profitable investments; it requires  governance and risk management system, intentional decision-making, and continuous education across generations.

Legacy is not defined by what is inherited but by what is safeguarded and how intentionally it is preserved.