A Kiambu couple defrauded thousands of investors by promising to double their cash deposits only to later disappear and close shop after collecting more than Sh1 billion, witness statements filed in court by victims of the suspected con game show.
Alfred Wangai Mundia and Mercy Nkatha Kirimi, the owners of online forex trading firm VIP Portal, allegedly told clients that they would use their capital to trade stocks in internationally listed companies but fell back on the promise as soon as the money had been deposited into their account.
Some 122 investors have lodged a class action suit against the forex trader seeking compensation for their money, which they claim has not matured one year after deposit, despite a guarantee that they would receive dividends on their cash within a month.
The petitioners claim to have paid a total of Sh77 million to VIP Portal, but police records say the suspected fraudsters at one time had more than Sh1 billion deposits in the account.
The alleged fraud scheme first came to public limelight last year when accounts of VIP Portal at Family and Barclays banks were frozen through a court order sought by the police.
The victims want the court to order the couple to refund their cash and pay them general damages for the broken promise, and punitive damages for breaching the contract they entered into with the forex trader.
“I deposited money with the defendant expecting payment of my initial investment sum plus interest. This, however, was not to be as the defendant refused to pay what it owes to me, being Sh5.5 million.
“The defendant’s actions have been done with the intention of defrauding and swindling me of my hard-earned money and in addition are an express breach of the service agreement between us,” George Mungai Nyanjui, one of the petitioners, says in court papers seen by the Business Daily.
The promise of getting one’s investment plus returns of up to 80 per cent in just 25 working days with the premium option easily lured several investors looking to get rich quick.
Investors could also go for the platinum option, which would see their investment grow by 60 per cent in 29 working days.
Samuel Njoroge, another investor, claims that VIP Portal had agreed to absorb any losses that would arise after trading using his cash. This was to give relief to investors who were afraid of losing their money, and was key in attracting more clients to try their hand in the business.
“Further terms were that in case any losses were made, it would be absorbed by VIP Portal and not passed on to the investors. Pursuant to this, the members deposited money with VIP Portal expecting payment of their initial investment sum plus interest,” Mr Njoroge says.
The class action suit comes as Mr Mundia and Ms Kirimi are facing criminal charges in the Kiambu Chief Magistrate’s court for defrauding the public and running a forex trading business without a licence from the Central Bank of Kenya.
The matter attracted the attention of the Law Society of Kenya, which piled pressure on the police to investigate the firm.
The couple was charged in June after police officers from the Banking Fraud Investigation Unit concluded that VIP Portal appeared to be a pyramid scheme and was running a forex trading company without a licence.
Mr Wangai has, however, argued that the firm is listed as an international business company in Saint Vincent and the Grenadines, and that it has never engaged in any illegal business.
Victims of the suspected con game moved to court after they learnt of a suit in which VIP Portal is fighting to unblock its accounts held at Family Bank. Walter Rotich, who lost Sh3.6 million, claims that VIP Portal is attracting new investors, whose money is being wired to offshore accounts.
“Despite having its accounts frozen, the defendant company has continued to receive money from innocent members of the public who now wire money to their offshore account in Poland,” he said.
Justice David Onyancha had in October paused the proceedings of VIP Portal’s suit against Family Bank to allow the criminal trial to proceed.
He, however, directed that the suit continue on December 19 after the criminal trial failed to start and was pushed to March, 2015.
Mr Mundia and Ms Kirimi are the firm’s directors alongside a man identified as Colin Mundia, who has gone missing since the start of investigations. Police suspect he fled to avoid being arrested.
The Central Bank of Kenya had written to the police in March saying that VIP Portal was not licensed to operate as a forex trading firm, which led to the couple’s arrest and arraignment.
At the time the forex trader’s accounts were frozen in May, the firm had handled over Sh1.08 billion, most of which had been withdrawn by Mr Mundia and Ms Kirimi. The account had a balance of Sh174 million prior to the freeze.
“Between October 2013 and May 2014, the VIP Portal bank account with Family Bank had received a total of Sh1.08 billion from the public as deposits. The action against Mr Mundia and Ms Kirimi was taken to prevent a major pyramid scheme,” police said in a letter to Law Society of Kenya.
The 122 petitioners claim that they have visited the forex trader’s head office in Limuru several times but have been denied information regarding whether they will be paid.
“The petitioners have on several occasions gone to VIP Portal’s registered office to demand payment of their money only to be met with hostility and denied information as to when they will be paid,” added Nellie Wairimu,” who is representing the 122 investors.
The petitioners hold that despite serving VIP Portal with demand letters, the forex trader has refused to pay them their dues.