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RADP / Pulse Ghana  >  news  >  business

Gov’t shouldn’t compensate ‘Ponzi scheme’ victims -Kofi Bentil

Magdalene Teiko Larnyoh

A Ponzi scheme is a form of fraud which lures investors and pays profits to older investors by using funds obtained from newer investors.

Kofi Bentil
Kofi Bentil

“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,” Mr. Bentil added at a forum organized by Media General on Ponzi schemes.

READ ALSO: George Quaye’s resignation and the deepening woes of Menzgold

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Investors are often made to believe the profits are coming from product sales, or other means, and remain unaware that other investors are the source of profits.

Meanwhile, a private Legal Practitioner, Ace Ankomah, has said Ponzi schemes thrive because of the poor enforcement of laws in the country.

He is, therefore, demanding that the laws are applied to prevent people from deceiving unsuspecting members of 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.

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.

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The gold firm owned by Nana Appiah Mensah has been in the news lately for what the Bank of Ghana cautioned the general public not to deposit money at the firm.

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This caused a media war between the regulator and authorities of Menzgold.

Menzgold responded that they were not taking deposits and called on the general public to disregard the news.

The SEC later decided to investigate Menzgold and subsequently issued a statement for Menzgold to shut down with immediate effect in the trading of gold until further notice.

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In a letter dated September 7, 2018, which was signed by the Deputy Director General of SEC, Paul Ababio said that “the SEC hereby directs Menzgold Company Ltd to shut down immediately the business of trading in gold collectibles with guaranteed returns to clients which constitutes, in essence, dealing in securities with neither the necessary license nor disclosure authorised by the SEC.”

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Even though Menzgold accused the SEC of exercising bad faith, they shut down operations and promised to resume on September 28, 2018.

However, Menzgold has sued the two regulators on September 27, 2018.

This leaves many wondering if the firm will begin operations on the stated date.

Magdalene Teiko Larnyoh Magdalene Teiko Larnyoh A feminist at heart and a lover of art. She loves to write on business, politics and health.

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