Detectives from the Banking Fraud Investigations Unit in Kenya have uncovered a large-scale scam where scammers obtained close to 500 million Kenyan shillings through a popular mobile phone platform supported by mobile communication service provider.
The service provider lost the money through its Fuliza overdraft service, which allows customers to complete their M-PESA transactions even if they don’t have enough funds in their accounts.
The men based in Nakuru and Trans-Nzoia counties were found behind the scheme and arrested in a coordinated operation by the detectives.
The young men were found in possession of thousands of Safaricom and Airtel SIM cards. They were used to fraudulently generate identity card numbers to register the SIM cards and take out loans through the Fuliza application.
The investigation began after a report was filed with the Banking Fraud Investigations Unit in August 2022, when the fund managers detected an unusual spike in Fuliza loan uptakes significantly higher than their performance scale. The borrowers were not repaying the loans.
According to detectives, over 123,000 new mobile phone numbers opted into Fuliza. They took out loans in January 2022, and the SIM cards were either fraudulently vacated or switched off, and efforts to reach the customers were futile.
After further investigation, detectives realized that the SIM cards had been registered fraudulently by one of the suspects, Peter Gitahi, suspected of having access to the National Registration Bureau database and developing falsified identity numbers for use in the scam.
Gitahi would sell the numbers to his accomplices in Nakuru, who would perpetuate the fraud.
Some of the lines were registered as Safaricom agents, and the borrowed funds were deposited into personal bank accounts belonging to the individuals disguised as M-PESA float.
The suspects initially borrowed money and repaid it, improving their credit scores, until the SIM cards reached their limits, and they would borrow for the last time before disposing of the SIM card. One identity card was used to register five lines in the scam.
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The suspects lived in a luxurious apartment in Kiamunyi and had acquired several high-end vehicles and motorbikes for their ease of movement.
During the operation, detectives recovered 14 mobile phones used in registering M-PESA user SIM cards, 6 laptops, over 40 mobile phones, 7 routers, assorted Safaricom lines, over 1000 Safaricom subscribers registration forms, over 200 ATM cards from all major banks, and car agreements among other exhibits.
The suspects are currently being interrogated for more insights into the high-level fraud, and will be arraigned in court soon.