Lagos: Victims of Ponzi schemes have legal avenues to seek redress, from civil litigation and criminal prosecution to regulatory intervention, lawyers said on Sunday. But they cautioned that recovering lost funds and bringing perpetrators to justice remains a major challenge.
The lawyers expressed their views in separate interviews with the News Agency of Nigeria (NAN) in Lagos on Sunday.
Mr Chibuikem Opara, a lawyer with Justification Chambers in Ikeja, said many Nigerians continued to fall victim to Ponzi schemes despite repeated warnings from regulators and financial experts.
He dismissed the notion that participation in such schemes was driven solely by a lack of legitimate investment opportunities, arguing that promoters often exploited investors’ desire for quick profits by promising unrealistic returns.
“What you cannot take away is the fact that many Nigerians have fallen and continue to fall victim to these schemes every time, and the legal remedies available to victims are limited,” he said.
Opara explained that victims could institute civil actions, individually or collectively, against the beneficiary company for breach of contract or to recover funds arising from failure of consideration, though such claims may be harder to enforce once funds are diverted.
He added that affected investors could also apply to the Federal High Court for an order to wind up the beneficiary company.
However, he cautioned that such measures might prove ineffective if the operators had already diverted the funds and abandoned the company.
According to him, the success of recovery efforts largely depends on the prompt intervention of regulatory and law enforcement agencies, which can freeze recipient accounts to facilitate asset recovery and support winding-up proceedings.
Opara noted that regulators and security agencies often become aware of Ponzi schemes only after victims have suffered substantial losses.
He attributed this to the failure of many victims to report suspicious investment schemes early enough for timely intervention.
He added that perpetrators sometimes transfer funds abroad before authorities detect the fraud, while the secretive and deceptive nature of the schemes further complicates investigations and prosecutions.
“Most times, everything about the schemes is made to appear elusive, just like the profits promised to victims,” he said.
Also speaking, Mr Vincent Aminu of A.F. Aminu and Co. urged victims of investment scams to report such cases promptly to the appropriate law enforcement agencies.
He advised victims to petition the Economic and Financial Crimes Commission (EFCC) or report the matter to the Nigeria Police Force for investigation.
According to him, prosecutors may, upon the conclusion of investigations, file charges under relevant fraud-related laws, including the Criminal Code and the Advance Fee Fraud and Other Fraud Related Offences Act.
Beyond criminal proceedings, Aminu said victims could also pursue civil claims to recover their money.
He noted that such claims could be based on breach of contract, unjust enrichment or fraudulent misrepresentation, depending on the facts of each case.
He added that victims could petition the Securities and Exchange Commission (SEC), which has the power to investigate illegal investment operators, shut down unauthorised platforms and freeze assets where necessary.
Aminu identified the anonymity of many online fraudsters as one of the greatest challenges confronting investigators.
According to him, many operators conceal their identities through fake digital profiles and technologies that make them difficult to trace.
He also warned that victims who delay taking legal action could jeopardise their chances of obtaining redress.
In addition, he observed that the slow pace of court proceedings often prolongs justice for victims.
“Many fraud-related cases take years before the court reaches a verdict, thereby delaying justice for victims,” he said.
Mr Chris Ayiyi of Ayiyi Chambers, Apapa, described Ponzi schemes as financial traps that reward early participants with funds contributed by later investors.
He said the initial payouts often create a false impression of legitimacy, encouraging more people to invest before the schemes inevitably collapse.
Ayiyi called for either an outright ban on Ponzi schemes or sustained nationwide public awareness campaigns to educate Nigerians about their dangers.
He also urged the National Assembly to enact stronger legislation to tighten the regulation of investment schemes and provide greater protection for investors.
According to him, more robust legal safeguards are essential in a capital-driven economy.
