Suspected pyramid scheme continues to operate

A Brazilian organisation with a business model similar to that of a pyramid scheme is continuing to operate in Kenya despite warnings by authorities in neighbouring countries.

D9 Club also known as D9 Clube and described as a sports trading agent, has been asking Kenyan “investors” to put in as much as Sh200,000 on top of Sh5,500 to activate an account, the Nation has found out.

The promise is that the money will multiply and yield some Sh17,000 per week in a category classified as gold. The purported payments are scheduled for 52 weeks, putting the total at Sh884,000.

After being tipped off by a mobile money agent in Nairobi’s Kibera who has been waiting in vain for the weekly payout, the Nation investigation team made contact with a D9 recruiter.

DAILY SESSIONS

The organisation has daily sessions, mostly during the lunch break between 1 pm and 2 pm at Pioneer House in the city centre where potential “investors” are not only taken through how the programme works but are encouraged to bring on board as many people as possible. The rewards for recruiting new members, those in attendance are told, include cars and expensive holidays.

D9’s online marketing is equally robust, complete with a website for recruitment and referrals with a portal assigned to every country where the organisation is active.

“D9 Club is a company from Brazil that is giving people an opportunity to make money from the lucrative sports trading industry,” the website description reads.

WELCOME NEWCOMERS

At the sessions in Nairobi attended by the Nation, there are a few staff at hand to welcome newcomers into a room lined up with comfortable red seats. The venue is full to capacity. After the presentation, which basically calls for the Sh200,000 investment with the refrain that “this is not a pyramid scheme” but a reputable international organisation, not many questions are asked.

The minimum “investment” that is largely discouraged in the session is Sh26,700 with returns of Sh1,300 per week. The presenter, a Kenyan, is equally hesitant to explain the mode of payment and whether the returns are taxed.

Part of the marketing involves referring to prominent individuals, with the recruiter naming an elected politician in Kiambu as among the key “investors”. 

'EVERY MONDAY'

“Don’t worry, just open a Gmail account and money will be sent to you every Monday for the next 52 weeks,” said a female recruiter who spoke to the Nation.

Asked if D9 is a pyramid scheme the trainer, identified as Vincent, who is the only D9 official who could be reached for comment, defended the organisation.  

“What do you mean we are a pyramid scheme? Even the government can be described as a pyramid scheme. If you are just interested in spoiling our trade and not investing then please let those making money make their money. This is an international thing and we have more than 5,000 members here (in Kenya) already,” the trainer said.

FACEBOOK PAGE

The D9 Club has a website and Facebook page but no Kenyan contact details or physical address.

“It’s not a pyramid scheme. It’s real. You will be paid through your D9 account then you transfer it to your bank account,” the company replied when contacted via Facebook.

The multi-level marketing format where one brings more people and earns from their contributions is typical of pyramid or Ponzi schemes. The common trend is that the initial members get the money promised to attract more people before the entire structure collapses.

'ILLEGAL' SCHEME

The National Bank of Rwanda, the equivalent of the Central Bank of Kenya, recently warned financial institutions operating in the country that D9 was an “illegal pyramid scheme”.

“It has come to the attention of the National Bank of Rwanda that an organisation known as D9 Club which uses internet chain recruitment with the characteristics of a pyramid scheme is extending its operations in the region, especially in Uganda, Kenya, Tanzania and Zambia,” wrote Governor John Rwangombwa.

The regulator noted that Magara Smart Protus, the alleged promoter of D9 in Uganda where the scheme is well-established, had started operations in Rwanda through a Kampala branch of Equity Bank’s Uganda subsidiary.

'ADEQUATE CONTROLS'

The regulator asked the banks to “put in place adequate controls to prevent transfer of funds to this scheme and stop its spread across the country”.

In response to our enquiry this week, Equity Bank said that the Ugandan account had been frozen, but did not comment on whether or not D9 had accounts in the financial institutions of Kenyan operations.

In April, CBK and the Sacco Societies Regulatory Authority warned over the increasing number of organisations using the pyramid scheme model and promising lucrative returns.