Don’t Fall Prey: Experts share red flags to watch out for in Ponzi Schemes

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The Association of Certified Fraud Examiners (ACFE), Southwest Nigeria Chapter, has warned anti-fraud professionals and investors about the dangers of Ponzi schemes, cautioning that such opportunities are often indicative of fraudulent operations. At a recent training, Chairman of the ACFE Board, Prof. Godwin Oyedokun, advised participants to exercise extreme caution when evaluating investment opportunities that promise rapid and exceptionally high returns.

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Oyedokun expressed concern about the rising number of investment scams in Nigeria, citing the collapse of CBEX and the subsequent emergence of similar schemes. “Ponzi schemes disguise themselves as legitimate investments, portray a single investment vehicle, and often claim earnings from fake profits,” he said. “Pyramid schemes, on the other hand, emphasise recruitment, require buying in, and lack real products.

Oyedokun identified some red flags for investors, including “high, consistent returns, secretive strategies, complex explanations, and pressure tactics.” He also cautioned investors against greed and emphasised the importance of financial education and responsible behaviour.

Dr. Kennedy Iwundu, a facilitator at the training and a forensic accountant, stressed the need for a collaborative approach between fraud examiners and lawyers to dismantle Ponzi schemes and seek justice for victims. “Together, they can trace funds, identify irregularities, and provide expert testimony in legal proceedings,” he said.

The President of the ACFE South West Nigeria Chapter, Dr. Lydia Ajayi, emphasised the importance of the training, calling for more sensitisation and knowledge updates for both investors and fraud examiners. “By sharing expert insights and best practices, we aim to create a more vigilant and informed community that can spot and stop these schemes,” she said

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