Court Convicts Two Companies for Illegal Investment Schemes

Justice D.I. Dipeolu of the Federal High Court in Ikoyi, Lagos, on Monday convicted two firms—FARM360 Limited and MCBHADMOS Trans-Atlantic Trade Limited—for engaging in capital market operations without the required regulatory licences.

In a statement issued by the Economic and Financial Crimes Commission (EFCC), the Lagos Zonal Directorate 2 of the Commission confirmed that the companies had been arraigned on June 16 on a five-count charge. The offences bordered on running collective investment schemes without authorisation from either the Central Bank of Nigeria (CBN) or the Securities and Exchange Commission (SEC).

The EFCC alleged that between 2021 and 2022, the firms collected over N80 million from unsuspecting investors, failing to refund the principal or pay any promised returns.

One of the counts reads:

“That you, FARM360 LIMITED and MCBHADMOS TRANS-ATLANTIC TRADE LIMITED, sometime between 2021 and 2022 in Nigeria, within the Judicial Division of this Honourable court, being companies incorporated in Nigeria, failed to obtain a valid licence from the Central Bank of Nigeria to carry on your business of Investment management and you thereby committed an offence contrary to Section 57 of the Banks and Other Financial Institutions Act 2020 and punishable under Sections 57(5) of the same Act.”

A plea of “not guilty” was entered on behalf of the companies. Prosecution counsel, Abdulhamid Tukur, presented Nnadikwu Izuchukwu Collins, an EFCC investigator, to review the facts.

According to Collins, the EFCC received a petition on October 21, 2022, from a group of investors accusing FARM360 and MCBHADMOS of falsely presenting themselves as players in agriculture and forex trading, promising “mouth-watering returns on investments.”

He added: “In the course of investigations, letters of investigation activities were sent to the Securities and Exchange Commission, banks, the Central Bank of Nigeria, and then the Corporate Affairs Commission, respectively. Responses were received from the above institutions and were analysed accordingly. The response from the SEC and CBN revealed that the defendants, FARM360 and MCBHADMOS RANS-ATLANTIC TRADE LIMITED, are not licensed to deal in investment and forex trading business in Nigeria.”

Further findings showed that “The response from Fidelity Bank showed that the sum of N80,000,000.00 (Eighty Million Naira) got from the investors was utilised for personal use. The directors of the companies are all at large, and efforts are being made to apprehend them.”

The prosecution tendered several documents in evidence, including bank statements, letters and responses from regulatory institutions, and the petition from the investors. The documents were admitted and marked as exhibits by the court.

At the conclusion of Monday’s proceedings, Justice Dipeolu found both companies guilty on all counts and imposed a fine of N5 million on each of the five charges.

In a separate ruling, the court also convicted Quintessential Investment Company Limited on two counts of illegal capital market operations, following its arraignment by the EFCC’s Lagos Zonal Directorate 2.