A Brazilian pyramid scheme operating in Kenya has gone down with hundreds of millions of shillings belonging to local bitcoin investors.
The firm, founded by Brazilian con Ricardo Rocha, promised those who would be ranked among its biggest investors by April 18, 2018, a free five-day trip to the United Arab Emirates, where they would meet “top global business gurus”.
Ms Esther Muthoni, a businesswoman, is among the thousands of Kenyans who fell for the fraud and invested Sh3.2 million in the scheme.
She hoped to make a killing. Instead Ms Muthoni has lost her life savings. Now she is desperate, sick and confused.
She introduced her friend Lucy Kamatu, who invested Sh550,000 into the scheme. That, too, is gone.
The two illustrate the predicament of Kenyans who were lured into the world of cryptocurrency by Rocha and his agents at Velox 10 Global, a little-known company that claimed to trade in bitcoins.
The firm said it would help investors mint millions of shillings in profits.
It charged $100 (about Sh10,000) as membership fee, but members needed to upgrade by paying an additional $200, with the promise of earning up to $4,000 daily.
The Velox launch at Hotel Intercontinental, Nairobi on September 20, 2017 was colourful.
It promised ambitious Kenyans millions of shillings in returns if they let it invest their cash in bitcoins.
At the time, the then Central Bank of Kenya Governor Njuguna Ndung'u warned against investing in the cryptocurrency.
At the time Velox began its operations in Kenya, it had not yet been registered as a company in the country.
It was registered on January 25, 2018, nearly four years after its operations began.
Media reports from the launch event indicated that Mr Rocha was accompanied by the local Velox representative, Mr Paul Mugo.
Other individuals that were used to market the venture were Ms Sarah Nyambura and Ms Jane Nyambura.
Neither Mr Mugo nor the Nyamburas have answered our calls nor replied text messages in the past two weeks.
Velox, however, is not the only vehicle fraudsters have used to take gullible Kenyans for a ride.
A source at Central Police Station in Nairobi told the Nation that complaints had been raised against another digital currency company.
“Most of those accused opt to settle the cases out of court,” the source said.
When Velox premiered in Kenya, Ms Muthoni hoped for a stress-free investment to secure her future.
She was one of the hundreds of Kenyans who attended the launch, where they were taught how to wire money to the bank account of Velox agent Daniel Karobia Gichuki.
They were promised up to 50 per cent profits on their investments, a typical line used by pyramid schemes.
Ms Muthoni and the others were also promised more money if they introduced more people to the idea.
On November 13 and 17, 2017, Ms Muthoni wired Sh3.2 million to Mr Gichuki’s Equity Bank account.
Mr Gichuki was aware that the bank would want to know why she was transferring more than Sh1 million as required by law.
He told her to indicate that the money was “payment for work done” in the transfer forms.
“I knew I would recover the money in months,” Ms Muthoni told the Nation.
Six months later, a desperate Ms Muthoni reported the matter to Central Police Station when Mr Gichuki refused to return her money.
She also said Mr Gichuki had even threatened to harm her and her daughter. Mr Gichuki was arrested and arraigned for fraud the Milimani chief magistrate’s court. The case is ongoing.
He, however, insists that he was a businessman who also lost his investment, and that he has been in contact with some people that traded through him, to talk them out of suing "since I am also a loser".
He insists that Ms Muthoni and others who invested in Velox were adults who knew what they were doing.
"The fact that my account was used for the transactions is no reason to blame me," he told the court.
The two website names the company was associated with are no longer accessible.
Velox10.com is up for sale, under auction by an IT firm called BGroup.
The second one, veloxglobal.com, reads: “This webpage is parked for free”. An IT expert contacted said the message means the website was a dummy page and likely never existed.
In January last year, a group of seven filed a case at the High Court seeking to stop Velox from operating in Kenya.
Mr Bernard Mulwa, Mr Joshua Obebo, Ms Nancy Kamau, Mr George Itabari, Mr Barnabas Mwangi, Mr Bernard Makira and Mr Stanslaus Mutua said they invested money into Velox but were worried that the firm was operating against what it was allowed to do: handling non-financial assets.
They added that Velox had no registered local shareholders or partners as required by the law.
The group also wanted CBK, Capital Markets Authority and the Directorate of Criminal Investigations ordered to take action against Velox and its founder.
“CBK and the CMA have failed in their licensing and regulatory duties by allowing Velox to continue its illegal activities within Kenya. They ought to be compelled to take legal action against the company,” they told the court.
However, they did not say how much they had invested in Velox.
The Flying Squad wrote to the court requesting for the filed documents, which it wanted to use in an extortion investigation.
Shortly before the seven filed the case, police officers arrested Mr Rocha after an investors meeting at the Hotel Intercontinental.
However, he was released shortly after.
Flying Squad deputy head Jackson Owino on Friday told the Nation that investigations into the scheme are ongoing.