Court Orders Magara to Repay $135,000 Lost in D9 Ponzi Scheme

A High Court judge has ordered Smart Protus Magara to personally repay more than $135,000 (approximately Shs 500 million) to two Tanzanian nationals. The ruling stems from funds lost in the defunct D9 Investment Club, identified as a Ponzi scheme.

Justice Bernard Namanya found Magara liable after he failed to account for the money deposited into his personal Equity Bank account by Goodluck Francis Kway and George Kessy. Magara had claimed the funds were used to purchase electronic currency, but the court found his explanation unsubstantiated.

The two investors met Magara in Kampala, where he allegedly presented the D9 scheme with promises of significant returns, reportedly $400 for every $1,000 invested. Based on these assurances, Kway invested $58,098 and Kessy invested $79,945, totaling $138,043 deposited into Magara’s account.

Kway and Kessy reported that they received neither their promised returns nor their initial principal investment. Their attempts to recover the funds, including a formal notice to sue, were reportedly ignored, leading them to file the lawsuit.

Magara had denied ownership or promotion of the D9 Investment Club, identifying himself as a regular member of an offshore online platform. He argued that the money was for e-money transactions, not an investment entrusted to him, and that the scheme’s collapse in 2017 was beyond his control, also causing him financial losses.

However, Justice Namanya was not convinced, noting Magara’s lack of evidence, such as transaction records or proof of e-money transfers, to support his defense. The court also dismissed Magara’s reference to the official receiver process, as there was no proof that the plaintiffs were recognized or compensated.

The court concluded that the plaintiffs successfully demonstrated that $135,016 was deposited into Magara’s personal account, and he failed to provide an adequate accounting or refund. Consequently, Magara was ordered to repay the principal sum, plus 20 percent annual interest from 2022 until full payment, and cover the legal costs of the suit.

Source: https://observer.ug/news/court-orders-magara-to-refund-135000-lost-in-d9-ponzi-scheme