Court orders final forfeiture of N6.67bn mortgage bank shares linked to Ponzi scheme

The Federal High Court in Ikoyi, Lagos, has ordered the final forfeiture of about N6.67 billion worth of a mortgage bank’s shares and other funds described as proceeds of a Ponzi scheme.

The 2,041,087,747 share units of Livingtrust Mortgage Bank Plc, formerly known as Omoluabi Mortgage Bank Plc, were traced to Cititrust Holdings Plc, a suspected Ponzi scheme operator, and its subsidiaries, a statement from the Economic and Financial Crimes Commission (EFCC), said Wednesday. The shares were valued at about N6.67 billion (N6,674,356,932.69).

The statement added that the judge, Friday Ogazi, issued the forfeiture order on Tuesday. In addition to the forfeited shares, the judge also ordered the final forfeiture of about N42.5 million (N42,461,096.66) and $26.44 in cash, both traced to Cititrust Holdings Plc and its subsidiaries.

The final forfeiture order followed the court’s earlier order of interim forfeiture of the assets. In the earlier ruling, the court ordered the publication of the interim forfeiture order in a national newspaper inviting any interested parties to show cause why the assets should not be finally forfeited to the victims.

EFCC’s lawyer, Ahmad Usman, informed the judge that the commission had published Cititrust Holdings Plc and some of its subsidiaries as part of the companies being prosecuted for operating as a Ponzi scheme.

In March, PREMIUM TIMES reported EFCC’s publication of 58 Ponzi scheme operators, including Cititrust Holdings Plc.

Mr Usman said the mortgage bank’s shares and the seized funds were found to be proceeds of several investors’ funds.

Final forfeiture proceedings

Moving the application for the final forfeiture of the assets on Tuesday, EFCC’s lawyer, Mr Usman, chronicled the history of the now forfeited shares until they were acquired by Cititrust Holdings.

“The shares were initially purchased from Osun State Government by Cititrust, using some Special Purpose Vehicles (SPVs) and later harmonised and transferred to the name of Cititrust Holdings Plc,” he added.

The respondent, Cititrust Holdings Plc, however, filed a motion and an affidavit opposing the EFCC’s application for the final forfeiture of the assets.

But the judge dismissed Cititrust’s application and the affidavit, which it filed to show cause why the assets should not be permanently forfeited to the federal government.

In his ruling, the judge affirmed there was merit in EFCC’s application and went on to order the permanent forfeiture of the assets. Adjudging EFCC’s application meritorious, the judge ordered the final forfeiture of the assets to the victims.

The judge also ordered that the victims be paid what is due to them and the remainder, if any, be forfeited to the Federal Government of Nigeria.

The thriving scam

Ponzi schemes thrive in Nigeria, despite repeated warnings by law enforcement agencies and financial regulatory bodies against dealing with unregistered investment platforms offering too-good-to-be-true returns on investments.

Platforms like the Cryptocurrency Exchange (CBEX), which recently collapsed, prey on the allure of quick and high returns—offering as much as 100 per cent profit within a month.

CBEX, like many others, operated under the guise of legitimacy, using referral bonuses and promises of AI-powered trading to attract investors.

However, as with all Ponzi schemes, the system relied on a fragile balance of deposits and withdrawals, which inevitably tipped when withdrawals exceed deposits, leaving countless victims in financial distress.

PREMIUM TIMES reported on Wednesday how the recent crash of CBEX left many victims in tears.

This mirrors the infamous MMM crash in 2016, where Nigerians lost billions.