How conmen prey on retirees

Experts advise retirees to scrutinise every investment opportunity with a fine toothcomb to avoid being conned. Photo/FILE 

By KARANGA KARIUKI

You are a retiree and have just received you lump sum payment or about to. Beware, because there are ‘hawks’ waiting to swoop down on your life’s savings and leave you empty-handed, say experts.

The window of indecision between having one’s pension and investing it is all that swindlers need to strike, says Mr Peter Alushula, a loans officer with a bank.

Mr Jeff Mwirigi, a retired civil servant, has repulsed several fraudsters since leaving employment.

“These people have been approaching me with ‘hot tips’ on how we could team up and sell various things around. One even tried to convince me that he was a regional director of a multinational empire, in which I would have become one among some select investors in Africa,” he says.

Swindlers

But unlike Mr Mwirigi, Mr Moses Kimani* was not so lucky. He had just retired from a teaching job and received his lump some pension, when he decided to go into a new venture that would have made him an instant millionaire, or so he had hoped, and the envy of the village.

He had also disregarded “village counsel” that advised him to invest in tangible enterprises, and chosen the glittery uncertain path instead.

It had started while he was chasing his dues in Nairobi, where he had formed an acquaintance with “a kind man” whom he would meet in the corridors of government offices.

This fellow had told him how a lucrative trade in the seeds of a certain tree with medicinal value was slowly making millionaires out of people in some parts of the country.

All he required was to invest Sh200,000 for a load of the seeds from some ‘ignorant farmers’ who did not know they were sitting on a gold mine, the man had said.

Mr Kimani had been given a contact in Meru who would help buy the seeds and a “mzungu” in Nairobi who would ship the merchandise to Europe, ostensibly for extraction of an HIV and Aids cure.

By the calculations he and this man did, his initial investment of Sh200,000 would earn him Sh700,000 with only the first shipment.

“Unknown to my family, I quietly visited Meru, talked with the ‘seed broker’ who had the sample size worth Sh200,000,” says Mr Kimani.

A deal was struck and when he returned home, he transferred Sh200,000 to the broker secretly. “In the following days, I sent the sample to the man who was in Nairobi haggling with the acquaintance exporter,” Mr Kimani says.

Computer test

“This ‘kind’ man called one evening to say the deal had gone through. A computer test had shown that the seeds were of the quality the buyer wanted, he had said, but added that the mzungu needed another sample because it was uneconomical to ‘airfreight’ the few sacks he had received from a few investors, like me,” Mr Kimani says.

He then returned to the broker in Meru, coughed another Sh200,000 and sent another stock to Nairobi. The big payment would be sent to him once the consignment reached Europe, he had been told.

“When I went to my bank to transfer another Sh100,000 for ‘offsetting warehouse’ costs at the airport on behalf of the mzungu, a bank teller causally asked me what I was up to with all the cash transfers. I told him of the seeds investment and he laughed — I was the third retiree to make huge funds transfers that day and over the same story!”

When Mr Kimani called his ‘kind’ acquaintance and the ‘seed broker’, his calls did not go through. The two had changed their phone numbers and all contact ceased. It was futile even when he reported the rip-off to the police.

But his many investment safaris to Meru and Nairobi stopped. To the relief of everybody, he salvaged the modest balance of his pension and sacco savings and invested in tangible “village projects”.

Mr Kimani’s and Mwirigi’s stories are neither the first nor the last scams we shall hear about. At least the two saw the traps before they had sunk their savings, but not every retiree is that lucky.

Some dishonest people routinely defraud senior citizens of their entire life’s savings, taking advantage of their fears, hopes, trust and unfulfilled financial ambitions. This loss of personal finances coming in one’s sunset years, often aggravates most medical conditions associated with old age and quickens the death of such conned people.

Personal finance experts say the line between legitimate and illegitimate business is often blurred. A scam may start as a legitimate cooperative, like the giant pyramid schemes that took an estimated Sh2 billion of people’s money, including retirees a few years ago.

According to Ms Benta Ochieng’, a banker in Nakuru, swindlers often copy methods used by law-abiding firms like the microfinance or cooperative institutions, to develop business modules that suck in unsuspecting senior citizens.

“For example, some firms pushing consumer goods like herbal products on a multilevel marketing strategy may have the potential for scams,” says Ms Ochieng’. She advises retirees to scrutinise every investment opportunity with a fine toothcomb to avoid being conned.

“You can hire financial experts to assess every venture before committing your money,” she says. Ms

Ochieng’ cautions against getting sucked into all sorts of deals that are too good to be true.

“Often, swindlers will allude to people known to an intended victim as beneficiaries of their grand ideas and one should cross check such claims,” she says.

Mr Alushula, the loans officer, says some retirees fall prey to conmen because they lack a clear investment plan. “Just like power, money abhors a vacuum. To avoid losing their money to fraudsters, retirees should prepare financial plans years before their retirement,” he says.

He advises people to transfer their pension from their bank accounts directly to their investment projects without withdrawing it first, as this reduces the temptation of falling for fabulous con deals.

Ms Maureen Njambi, an insurance broker, advises senior citizens to ask all possible questions before sealing any financial or investment deals. “Fraudsters often have no physical addresses. Frequently, they operate from an individual’s house and use a personal mobile phone money transfer number,” says Ms Njambi.

Retirees should be suspicious of firms whose top management cannot be reached through one phone number, but are on different mobile phone lines. “This means they are a cast of thieves spread all over the country,” she says.

According to Ms Njambi, the newest and hottest scams currently are the ubiquitous seminars that are touted to “change one’s life, but have a rider of facilitation and membership fees, because the organisers want to ‘transform’ the attendees into investors they can manipulate and rob in the course of time,” she says.

*(We have not used the subject’s real name for fear of the embarrassment the story can cause him and family)