The Head of Communications at gold trading firm, Menzgold, Nii Armah Amarteifio, has urged the company’s customers to disregard claims that it is operating a Ponzi scheme.
According to him, the company does not solely rely on investments from new clients to pay the matured returns of existing ones, as they’re engaged in other ventures from which they generate revenue to pay customers.
Speaking on Eyewitness News on Tuesday, Mr. Armah Amarteifio added that the company has consistently been engaging its customers in order to assure them that their investments are safe.
“We told them [our customers] that we are not a Ponzi scheme. Our consultant was the one who addressed that issue and he told them that he has worked in the capital market for years. He told them that when he sees a Ponzi scheme, he can identify it.
“From all we are doing, it doesn’t look like a Ponzi scheme, unless there’s evidence to show that what we are doing is a Ponzi scheme. So we are not running a Ponzi scheme. “
When asked where Menzgold will find money to pay its customers their returns since they aren’t able to trade anymore, Nii Armah Amarteifio responded “we’ve been here for four years, four good years. We’ve made money”
“The problem I have with people is that, they think the only thing we engage in is the Gold vault market. We do gold exports as well, we do the gold vault market and we do gold commemorative coins. If you want us to design gold with your name inscribed on it, we’ll do that as well,” he added.
What is a Ponzi scheme?
A Ponzi scheme is a form of fraud which lures investors and pays profits to older investors by using funds obtained from newer investors.
Investors may be led to believe that the profits are coming from product sales, or other means, and remain unaware that other investors are the source of profits.
Menzgold – The story so far
A letter from the Securities and Exchange Commission (SEC) in September ordered Menzgold suspend its gold trading operations with the public.
According to the SEC, Menzgold has been dealing in the purchase and deposit of gold collectibles from the public and issuing contracts with guaranteed returns for clients without a valid license from them.
The SEC’s directives and the responses from the company have received mixed public reactions with some applauding the regulator for its actions, while others have described it as a witch-hunt.
The regulator added that Menzgold’s actions are in contravention of “section 109 of Act 929 with consequences under section 2016 (I) of the same Act.”
The company has however been cleared to continue its “other businesses of assaying, purchasing gold from small-scale miners and export of gold.”
After initially indicating that it was still open for business, the company eventually suspended any new business related to its Gold vault market temporarily.
The initial September 19 date the company had set for reopening was pushed back to September 28, as talks between Menzgold and the regulator continue.
Menzgold then hired a UK law firm , Baker & McKenzie LLP, to legally confront the SEC.
The latest development, however, which was to come as a relief to their customers, is Menzgold’s suit against the Securities and Exchange Commission (SEC) and the Bank of Ghana.
The company in its suit is seeking from the court an order directing the two institutions to stop interfering in its business.
Menzgold among other things asked the court to stop the Bank of Ghana and the SEC from publishing what it described as “derogatory notices” against its business.
Will Menzgold’s customers be paid?
Following the postponement of a number of scheduled payments to its customers, Menzgold stated that clients who wish to terminate their investment transactions with the company, will receive a full payment of their investment in 90 days if the ongoing misunderstanding with statutory institutions is resolved.
“Similarly, customers wishing to terminate their business with Menzgold are free to do so and should be rest assured of their full payment in 90-days as stipulated…” the statement said.
Menzgold further indicated in the statement that “it may not be possible to pay all customers 50% of the total value of gold traded” as suggested.
It was however quick to add that the company’s board has directed management to “assess the company’s potential cash flow and determine the exact percentage that can be realistically honoured by the company to all customers in four (4) weeks.”