A Ugandan court has ordered a man to refund more than USD 135,000 (approximately UGX 500 million) to two Tanzanian investors after finding him personally responsible for funds they lost in the collapsed D9 Investment Club, a scheme widely regarded as a Ponzi operation.
In a judgment delivered by Justice Bernard Namanya, the Civil Division of the High Court ruled that Smart Protus Magara failed to account for money paid into his personal Equity Bank account by Goodluck Francis Kway and George Kessy. The court rejected his claim that the funds had been used to purchase electronic currency, commonly referred to as E-money.
The dispute arose from investments made in the D9 Investment Club, an online investment platform that attracted participants across Uganda and several other countries with promises of unusually high returns before eventually collapsing.
Court records show that Kway and Kessy met Magara in Kampala, where he introduced them to the investment opportunity. He allegedly assured them that an investment of USD 1,000 would generate a return of USD 400.
Convinced by the proposal, Kway deposited USD 58,098 into Magara’s personal bank account, while Kessy transferred USD 79,945, bringing the total amount paid to USD 138,043.
The two investors told the court they never received the promised profits or recovered their original investment. They said repeated requests for a refund, including a formal notice of intention to sue, yielded no response, prompting them to seek legal redress.
In his defence, Magara denied owning or promoting the D9 Investment Club. He described himself as an ordinary participant in an online platform registered outside Uganda and argued that the money deposited into his account was payment for E-money rather than an investment under his control.
He further claimed that he had transferred the E-money to the investors’ online accounts and maintained that the collapse of the D9 platform in 2017 was beyond his control. Magara also told the court that he personally suffered financial losses when the scheme failed.
However, Justice Namanya found that Magara had not provided sufficient evidence to support his defence. The court noted that he failed to produce transaction records from the D9 platform, account statements confirming the alleged E-money transfers, or any documentation showing that the investors received value equivalent to the funds they deposited.
The judge also dismissed Magara’s reliance on the Official Receiver process established after the collapse of the scheme, observing that there was no proof that the two Tanzanian investors had been verified or compensated through that process.
After reviewing the evidence, the court concluded that the investors had proved, on a balance of probabilities, that they deposited USD 135,016 into Magara’s personal account and that he failed to account for, refund, or properly apply the money for their benefit.
Justice Namanya consequently held Magara personally liable and ordered him to refund the money. The court also awarded interest at 20 percent per annum from 2022 until the full amount is paid, in addition to the costs of the suit.
The D9 Investment Club was one of several investment schemes that collapsed after luring investors with promises of exceptionally high returns. Like many Ponzi schemes, it relied on funds from new participants to pay earlier investors before eventually failing when the inflow of new deposits could no longer sustain the payouts, leaving thousands of people across the region nursing significant financial losses.
English 