Judge orders Ponzi-like currency scheme investigated

The High Court wants police and prosecutors to investigate an online Ponzi-like scheme called One Coin One Life that is run by two men identified as Steve Mwendwa and Emmanuel Gatobu.

Justice James Makau ordered that the investigations focus on how seasoned lawyer Jane Nyaboke Njagi lost Sh867,000 to the fraud.

Mr Mwendwa allegedly borrowed and invested Sh2.2 million in the online business on behalf of Ms Njagi to buy 1,283 digital coins.

Mr Mwendwa has been demanding the debt since 2018, leading to the lawyer’s arrest in what Justice Makau described as "a clear abuse of power due to the connection of Mwendwa with the powers that be".

Ms Njagi was scammed sometime in August 2018. In court papers, she says Mr Mwendwa approached her and introduced her to One Coin One Life.

He told her that the venture was lucrative and that he had invested Sh900,000 and made a profit of Sh47 million in a short period.

Huge profits

She was also told that prominent personalities, including a sitting member of Parliament and a Cabinet secretary, had invested in the business and raked in huge profits.

She was also informed that the business would go public by October 2018 and she could become a life member if she invested.

Mr Mwendwa told her that he was a shareholder in One Coin One Life and that he was entitled to a 10 per cent commission of the investment made by any member he recruited into the business.

He said he had an account with One Coin One Life that had 500 coins that he was selling. She expressed interest and said she was willing to open an account and buy the digital coins for Sh770,000.

He took her to One Coin One Life offices at Norwich House on Moi Avenue in Nairobi and she was taken through cryptocurrency training.

At the offices, Ms Njagi met Mr Gatobu, who introduced himself as the CEO of the company.

Mr Gatobu explained how the business worked and informed Ms Njagi that if she invested Sh777,000, she could make a profit of about Sh1.6 million by October 8, 2018.

She deposited Sh777,000 in an account at the Meru branch of KCB Bank in the name of Stephlinks Holdings Ltd.

She deposited another Sh90,000 as fees for opening and operating an account with One Coin One Life. Mr Gatobu acknowledged receiving the money but never issued her with an official receipt despite numerous demands.

One week later, Mr Mwendwa called and informed her that he had borrowed Sh2.2 million from his wife and invested it in the business on behalf of Ms Njagi.

Demanded refund

Mr Mwendwa then demanded a refund on account of the purported investment.

But Ms Njagi informed Mr Mwendwa that she was unaware of the debt because she had neither instructed him to borrow the money nor asked him to invest in the business on her behalf.

That was the genesis of her tribulations.

Ms Njagi contacted Mr Gatobu to inquire about Mr Mwendwa's outrageous demand. Mr Gatobu informed her that Mr Mwendwa was neither a shareholder nor an account holder in One Coin One Life.

Ms Njagi told the court that Mr Mwendwa then started blackmailing her with a view to forcing her to acknowledge the purported Sh2.2 million debt.

He threatened to expose the lawyer as a fraudster through social media for allegedly failing to refund the money. She also threatened to have her arrested and invite the media to cover the matter.

He also threatened to use his uncle, a sitting MP, to help get her arrested, and to inform her family that she had borrowed money and refused to repay.

The lawyer was summoned to the Parliament Police Station on September 1, 2018 in connection with the complaint. She was released on police cash bail and ordered to appear in court on September 13 to answer to a charge of obtaining goods by false pretence.

Ruling in favour of the lawyer, Justice Makau faulted the police for bringing criminal proceedings against her without giving her an opportunity to tell her side of the story.

Ulterior intentions

"The criminal proceedings seem to be made to secure ulterior intentions as it appears the police, DCI and DPP are well bent to use the State machinery to intimidate and harass Ms Njagi, which is a clear indication of violation of her rights and misuse of State resources," Justice Makau said.

He observed that the Directorate of Criminal Investigations and the Directorate of Public Prosecutions were acting in bad faith and in a discriminatory manner by putting police and DCI officers at Mr Mwendwa’s disposal for his "selfish purposes".

"This court notes further that the petitioner is a senior advocate of this court of more than 40 years’ practice and her rights are likely to be infringed on flimsy and fictitious charges. Her reputation stands to be damaged before her clients on charges that are meant to achieve certain goals," the judge said when he issued a prohibition order against the criminal proceedings.

"I note further that her right to practise as an advocate stands to be violated without justification because she risks being arrested and charged with an offence instigated by Mwendwa with an aim of settling some ulterior scores."

The court said that, even assuming the advocate had borrowed money from Mr Mwendwa, this was a civil claim not a criminal matter.

"A civil engagement cannot be criminalised where no evidence has been placed on record to warrant criminal culpability. A civil claim can only be handled before a civil court but not in a criminal court," said the judge.

For his part, Mr Mwendwa told the court that a woman named Beatrice Cherono, who had introduced him to One Coin One Life, approached him seeking to sell her account with 1,283 coins for Sh2,252,000.

He informed Ms Njagi of the opportunity to buy the coins as she had expressed her interest in investing in the business. But she did not have the money at that point and asked to be given two days to buy the account.

Needed money urgently

But because Ms Cherono allegedly needed the money urgently, Mr Mwendwa told Ms Njagi that he would pay on her behalf Sh850,000 that he claimed he had borrowed from his wife. The lawyer allegedly agreed to refund the money two days later.

When the two met two days later at Barclays Bank in Nairobi West, Ms Njagi told Mr Mwendwa that the money she was expecting had been held up.

They agreed that he would issue post-dated cheques to Ms Cherono for the balance of the purchase price. Ms Njagi promised to refund him once she got the money.

Mr Mwendwa claimed that Ms Njagi failed to refund the money and eventually started dodging his calls.

[email protected]