General News of Thursday, 18 October 2018
Private Legal Practitioner, Ace Ankomah, has attributed the success of Ponzi schemes to the poor implementation of laws in the country.
He is therefore asking regulatory bodies to apply the laws to prevent unscrupulous characters from swindling the public.
“They have simply and repeatedly refused, failed or neglected to implement the law and that is the summary of the tragedy we call Ghana. A ponzi scheme is where fraud milks greed. If the investment sounds too good to be true, ask questions, read, go to companies’ registry and file a simple search on the company. Read the regulations, look for regulation 8 (c). Do not take deposits however you disguise it without a license. The law defines deposits. It defines deposit taking. It is comprehensive,” Ace Ankomah said at a forum organized by Media General on Ponzi schemes.
The Vice- President of Policy think tank IMANI Ghana, Kofi Bentil, has however absolved the government of any liability incurred by Ghanaians who invest in fraudulent investment schemes.
“Government has no responsibility, legal or moral to pay citizens for losses incurred as a result of engaging in illegal activity. Emotional notion, based on nothing that if you end up in DKM government should come to your aid.”
“There is no such responsibility and in certain situations I am aware certain people were paid some monies and one of these days someone should sue them for wasting our money. Why is that important? It is because you need to know that you really do not have any protection.”
What is a Ponzi scheme?
A Ponzi scheme is a form of fraud which lures investors and pays profits to older investors by using funds obtained from newer investors.
Investors may be led to believe that the profits are coming from product sales, or other means, and remain unaware that other investors are the source of profits.
Their comments come in the wake of agitations by customers of Menzgold over the non-payment of their investment in their transactions with the company.
Menzgold – The story so far
A letter from the Securities and Exchange Commission (SEC) in September ordered Menzgold suspend its gold trading operations with the public.
According to the SEC, Menzgold has been dealing in the purchase and deposit of gold collectibles from the public and issuing contracts with guaranteed returns for clients without a valid license from them.
The SEC’s directives and the responses from the company have received mixed public reactions with some applauding the regulator for its actions, while others have described it as a witch-hunt.
The regulator added that Menzgold’s actions are in contravention of “section 109 of Act 929 with consequences under section 2016 (I) of the same Act.”
The company has however been cleared to continue its “other businesses of assaying, purchasing gold from small-scale miners and export of gold.”
After initially indicating that it was still open for business, the company eventually suspended any new business related to its Gold vault market temporarily.
The initial September 19 date the company had set for reopening was pushed back to September 28, as talks between Menzgold and the regulator continue.
Menzgold then hired a UK law firm , Baker & McKenzie LLP, to legally confront the SEC.
The latest development, however, which was to come as a relief to their customers, is Menzgold’s suit against the Securities and Exchange Commission (SEC) and the Bank of Ghana.
The company in its suit is seeking from the court an order directing the two institutions to stop interfering in its business.
Menzgold among other things asked the court to stop the Bank of Ghana and the SEC from publishing what it described as “derogatory notices” against its business.
Will Menzgold’s customers be paid?
Following the postponement of a number of scheduled payments to its customers, Menzgold stated that clients who wish to terminate their investment transactions with the company, will receive a full payment of their investment in 90 days if the ongoing misunderstanding with statutory institutions is resolved.
“Similarly, customers wishing to terminate their business with Menzgold are free to do so and should be rest assured of their full payment in 90-days as stipulated…” the statement said.
Menzgold further indicated in the statement that “it may not be possible to pay all customers 50% of the total value of gold traded” as suggested.
It was however quick to add that the company’s board has directed management to “assess the company’s potential cash flow and determine the exact percentage that can be realistically honoured by the company to all customers in four (4) weeks.”