Smart Protus Magara, a Ugandan who fleeced two Tanzanian businessmen of Shs500 million through the D9 investment scheme, has been ordered to refund them all the money with interest after the court discovered that the money had been deposited into his personal bank account and was never properly accounted for.
Justice Bernard Namanya ruled that Goodluck Francis Kway and George Kessy, the Tanzanian businessmen, had proved their case on a balance of probabilities and were entitled to recover the money they deposited in 2017 after being introduced to the D9 investment platform.
The case is another reminder of the painful collapse of the so-called D9 Investment scheme, which promised people astronomical returns with little investment.
The scheme was promoted as an online investment platform in which members could earn substantial weekly profits by buying digital units known as E-money. Many people were told they would receive about Shs 1.4 million weekly for every Shs 3.7 million invested ($400 for every $1000), equivalent to 40%.
However, the platform collapsed in 2017, leaving thousands of investors unable to recover their money.
According to the court, Kway and Kessy travelled from Arusha, Tanzania, to Uganda between February 17 and 20, 2017, after learning about D9.
While in Kampala, they attended meetings at Fairway Hotel and Hotel Africana, where they met Magara and other people promoting the investment opportunity.
Kway told the court that Magara explained how the investment worked and assured those attending that investors would earn Shs 1.4 million for every Shs 3.7 million invested. He said the participants were instructed to deposit their money into Magara’s personal account in Equity Bank.
After returning to Tanzania, Kway said he contacted Magara, who gave him his account number. Believing the investment was genuine, he began transferring money in several instalments between February and April 2017.
The court heard that Kway deposited amounts ranging from about Shs5.5 million to more than Shs 60 million. By the end of the transactions, he said he had deposited a total of Shs 216 million.
On his part, Kessy testified that after attending the same meetings in Kampala, he also contacted Magara after returning to Arusha. Magara allegedly provided the same bank account into which Kessy deposited Shs 150 million before making another payment of Shs145 million, bringing his total to Shs 295 million.
The two men said everything appeared normal until shortly after their final payments.
They testified that the D9 organisation suddenly stopped operating and no profits were paid, and none of the money they had invested was refunded.
Kway and Kessy repeatedly contacted Magara by telephone, and he assured them that “the system would resume” and that both their investments and profits would eventually be paid. Those payments never came.
This prompted them to sue Magara seeking a refund of their money together with damages, interest and costs.
Magara denied all the allegations, telling the court that he never invited the two Tanzanians to invest, never promised them weekly returns and never accepted money on their behalf for investment.
Instead, he maintained that D9 Club of Entrepreneurs was an online company incorporated in Hong Kong and registered in Uganda as a foreign company.
He insisted that he was only an ordinary member and investor who also lost money when the platform collapsed.
Magara explained that D9 operated through electronic currency called E-money and that people who wanted to buy E-money sometimes deposited money into his bank account, after which he would transfer electronic units into their online accounts.
He argued that any money deposited into his account was payment for E-money and not money entrusted to him for investment.
Magara said that the photographs that were displayed in court showing him with Kway and Kessy at one of the meetings at Hotel Africana merely showed they attended D9 promotional events together and did not prove that they had entered into any agreement.
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Justice Namanya was not persuaded by Magara’s arguments and said that documentary evidence from Equity Bank, together with Magara’s own admission that the bank account belonged to him, proved that Kessy and Kway had deposited a total of Shs 500 million into his personal account.
He said the official receiver process that was undertaken after the scheme had collapsed did not prevent the two Tanzanians from bringing their own claim because they had never been included among the verified claimants.
Justice Namanya ruled that Magara had failed to produce convincing evidence showing that the money deposited into his account had actually been transferred into D9 accounts or converted into E-money for the benefit of the plaintiffs.
“There was no cogent evidence showing that the money was transferred to D9 Club of Entrepreneurs Ltd, credited to [Kessy and Kway’s] alleged E-money accounts, or otherwise applied for their benefit,” he said.
He concluded that Magara could not rely on the existence of D9 to avoid responsibility for money that had been paid into his personal account.
“I accordingly find that [Magara] is liable to refund [Kessy and Kway] the sum of Shs 500 million,” Justice Namanya ruled.
Justice Namanya also ordered that the money will attract a 20% annual interest rate from June 1, 2022 until full payment.
