How silver-tongued gold scammers mint billions from foreigners

Fake materials confiscated by police during the arrest of ten people suspected of dealing in gold trade, on May 13, 2019. [File, Standard] Despite efforts by the Directorate of Criminal Investigations (DCI) to dismantle fake-gold syndicates, scammers have made Kenya their playground. The case of Stephen Magero, who was arrested on Sunday for allegedly conning a Pakistani national, is the latest in the growing list of fake-gold merchants who especially target foreigners. The suspect was picked at Sultan Suites in Ngong View Estate, Nairobi, following investigations into a complaint by Mira Ahmed that he been defrauded $34,800 (Sh4.5 million). Magero is said to have presented the complainant with 500 grammes of counterfeit gold and received the payment in cash. Subsequent testing revealed it was fake, prompting Ahmed to report the matter to the Karen Police Station. A search at Magero's office led to the recovery of 10 bars of suspected fake gold, smelting machines and related apparatus, a mining certificate under the name Chawanda Minerals, a weighing machine, two plastic boxes containing sand and several assorted documents. Since January, DCI has handled similar cases with complaints totaling $2,539,500 (Sh328 million). Last year detectives put the figure of the complaints at $13,123,000 (Sh1.7 billion), while the amount stood at $21,695,000 (Sh2.9 billion) in 2023. As most cases drag in court, the suspects out on cash bail, with some of them continuing to prey on unsuspecting buyers and sellers in an intricate web of deceit wrapped in several layers to create legitimacy. Roped into the scams are rogue police officers, judiciary officials, advocates, private security guards, bank employees, Immigration staff, mining and Customs officials. According to detectives who have handled the cases, victims are never asked to pay the whole amount of the value of the gold at once. "At every stage of the process, the fraudsters introduce charges and obstacles all at the expense of the victim. For instance, you're told money is needed for inspection, to pay mining and Customs officials, for insurance, and even storage, then there is the transportation cost," says an investigator. At times, the victim will be told that the gold, being high-value cargo, has been held by the authorities and a certain amount of money must be paid to secure its release. "Unlucky victims are asked to pay five per cent of the value of the gold before delivery. But in most of the cases we have investigated, the fraudsters milk money from victims through fictitious charges and obstacles. The promise to victims that they will pay for the gold once it is delivered is just a sweetener to win trust," adds the detective. Such was the case with Tanner Caldwell, an American who lost about Sh29.3 million. The US citizen flew to Kenya to buy gold having been made to believe the country has enough supply of the precious mineral. On arrival in Nairobi on April 3 last year, Caldwell met his would-be merchants at a high-end hotel to plan for the purchase of of 3,370 kilogrammes of gold. With the global price at about $115,300 (Sh14.9 million) per kilogramme, the American was pleased the offer of $50,000 (Sh6.5 million) was the real deal. Caldwell even witnessed the smelting process at the seller's office. A day or two later, he was taken into an office at Gate 53, Chalbi Drive in Lavington, Nairobi, where he signed a sales and purchase agreement. On April 25, 2024, the vendors introduced the American to Toureg Insurance Brokers Ltd to transit cover, David Onyango Ochanda posing as the director. An addendum to the original agreement was signed to include insurance charges, and an invoice was issued for $226,012.76 (Sh29.1 million). Four days later, he wired $225,968.64 (Sh29.3 million) to the firm's bank account and jetted out of the country ready to pay about Sh21.9 billion for the 3,370 kilogrammes once the consignment is delivered. The gold, however, never arrived. Upon inquiry, Caldwell was taken in circles until he got frustrated. He flew back to Kenya and lodged a complaint at DCI headquarters. Detectives from the Operations Support Unit (OSU) arrested Onyango on August 15 while the other suspects are still at large. The matter is currently in court. Not even the powerful have been spared. Not long ago, the First Lady from a West African nation was in the country to launch a complaint. Though detectives were mean with details, it is understood the First Lady was conned elsewhere, but the fraudsters keen to squeeze every penny out of the woman, re-routed the crime to Kenya. The scammers, mostly Kenyans working in cohorts with accomplices from Democratic Republic of Congo, Nigeria and Cameroon, have established international links in Dubai, Turkey, Ireland, US, Canada, South Africa, Liberia, Ghana, Uganda, Tanzania, Philippines, Malaysia, and Togo, among other countries. According to DCI Director Mohamed Amin, the fraud involves several players. "As a security agency, we're concerned and have really done well to stop the fraudsters. We have been able to downgrade their activities locally, and in fact some of them have migrated to other countries following enhanced surveillance here," Amin told The Standard. He expressed concern that their efforts are sometimes frustrated by the fraudsters and victims who conspire to defeat justice. "We've had instances when victims, despite being conned millions, side with the criminals while others refuse to co-operate and testify in court." According to a detective, some victims don't travel back to the country to testify against the suspects due to costs. "In some cases, threats received from the suspects. We are therefore forced to request for virtual hearings from the courts that face a lot opposition from the defence making it impossible to proceed," adds the investigator. According to investigators, the sub-sector has weaker regulatory frameworks than those governing the use of reserve currencies like the dollar in the global banking system. Further, as the demand rises, so do the number of fraudsters. Fraudsters prefer Kenya because it lies along the transit hub for the illicit trade that entails smuggling gold from DRC. Foreigners take advantage of the instability and poor regulations in DRC to purchase gold at a substantially lower price and re-sell it for massive profit in their home countries. Also, Kenya's geopolitical position makes it a safer travel destination than the DRC. As a result, detectives have established that there are two parallel gold-related happenings in Kenya - the illicit trade, which includes actual gold from the DRC, and the fake-gold scams. "Specifically targeted by the gold scam cartels are the police, judiciary, advocates, banks, Immigration Department, Parliament, airports, Mining ministry and the private security industry," says a detective. It is not unusual for the gold fraudsters to employ the bait-and-switch ploy as was the case of city lawyer arrested on August 8 following a complaint by Bruno Fettweis, a Canadian, over a $618,000 (Sh79.8 million) scam. The victim was lured into a fake gold export deal involving 250 kilogrammes, allegedly set for shipment to Dubai aboard a private jet. On April 15, a proforma invoice of $318,400 (Sh41 million) was issued and funds wired to the law firm. The Canadian was later asked to send an additional $300,000 (Sh38.8 million) to a cryptocurrency wallet. But no gold was delivered. Earlier, Francis Talla Ouafo alia Allain, a Cameroonian, had been arrest over the case. He was arraigned on July 31 at the Milimani Chief Magistrate's Court. In a similar incident, Lupemba Lorenzi Olivier, a Congolese, appeared at the Milimani Law Courts in connection with a fraudulent gold deal targeting a Gabonese. Another suspect, Kelvin Otieno Onyango alias Kevo Sonko, the alleged director of Swift Taxis Logistics Ltd, was arrested for his alleged role in the same fraud. He is said to have transferred $140,000 (Sh18 million) to an escrow account. The case is among several being investigated by OSU. In June last year while meeting Federal Bureau of Investigation Director Christopher Wray in Nairobi, Amin said detectives had dealt a blow to the fraudsters commonly known as "wash wash" gangs. "We have had successful prosecutions. Out of a total of 71 reported cases we were able to identify, arrest and prosecute 64 people, some Kenyans and others are foreigners," said the DCI boss. Amin accused some lawyers of being part of the scheme to help launder the illicit money. "These fraudsters do collaborate with some rogue lawyers and they open escrow accounts whereby the money is then withdrawn immediately from those accounts." Meanwhile, DCI has stored material evidence impounded during arrests, including fake dollars, in two 40-feet containers.

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