'Wonder Banks' Feed Fat on Investor Gullibility

By Acceler8now.com Stock Investing Team, November 6, 2007

N560.5 million is a staggering sum, by any account, especially when the context is the amount of loss suffered by hapless investors who got lured into bogus investment schemes run by the so-called 'wonder banks'. That would seem bizarre, even inconceivable, except that the reports published in the local media two days ago, attributed the disclosure to the Commissioner of Police in the Special Fraud Investigation Unit, Ikoyi, Mr Olayinka Balogun, who spoke to pressmen. He was reported to have told the press that these get-rich-quick investment schemes had fleeced innocent 'investors' of that mind-boggling amount. The Police is at this point doing the odd job of investigating, tracking and attempting to recover huge sums of the money lost by victims, as well as arresting the operators. Some success in recoveries has yielded some N84 million. According to the police chief, these fraudulent 'investment houses' dangled the carrot of mouth-watering investment returns to their short-sighted victims, causing them to throw in their savings in pursuit of now elusive quick returns.

My quick online search threw up a number of media reports on the same subject. The News had carried a story on August 8, titled "Soldiers Storm Wonder Bank, MD Arrested", in which the effort by a detachment of soldiers and mobile policemen to help victims recover trapped funds from one such operator, called Treasureline Interlink Limited, was reported. Another story of September 29 by The News narrated the ugly experiences of various victims. A Mama Femi, for instance, had N.5 million trapped in one Wealth Solution and another N.5 million sprinkled over a few other of those 'banks'. So, for her, N1 million is at stake. For another woman that wanted anonymity, her N.9 million was trapped with Wealth Solution. You can also access more disturbing figures involved in these scams from a Nigerian Tribune story. What readily comes out of it all is that a lot of ordinary Nigerians, while in search of wealth through some clandestine organisations, have ended up losing their hard-earned money. Great pity!

Time to Wise Up
Considering the massive effort by serious companies that are trying to raise funds to invest in defined businesses like banking, food sector, etc and the other genuine investment opportunities that are available today, you'd wonder why anybody would fall into the trap of these vampire organisations. But then, such schemes feed on greed and the short-sighted quest for overnight wealth. Not that there is a minimum time-frame to justify accumulation of wealth. You could argue that if it could come instantaneously, why not? The reality, however, is that experience has shown that even the best investments have a gestation period. Also, even super-profits have a limit. When the timing and quantum of offered returns become unreasonable and unrealistic, why wouldn't a sane person ask simple questions? How can anybody, in all seriousness, justify investing with those organisations. Dear friend, if you have ever done it or could possibly do so, this is a strident call to wake up and face reality. Chasing quick, overnight wealth would seem the surest way to sink into even deeper poverty. Most times, you will end up losing your capital and getting poorer. It is misplaced glorification to call those actions 'investing'. Those victims of the wonder banks did not invest. They simply gambled and blindly too.

We've Said it Before
Well, we don't need to repeat what has been said before, so you may want to read our past article "Quick-returns, Money-doubling Schemes: A Wise Investor's Response". That article highlights major trigger features of scam investment schemes and advises investors to be wise and protect their capital. It's a disaster to simply feed someone else fat, while you pine away. Learn to identify genuine investments which stand a good chance of yielding reasonable returns, over time. For one, you must understand the business that your money gets invested in and how it turns out the earnings from which it pays the returns you are promised. That business ought to be plain enough to be understood by average folks. When it becomes some complicated or esoteric business strategy, you need to think again. Here we are not talking of the office they operate. It's the business into which they invest money to generate earning to service money you intend to put in.