Police officers have discovered a sophisticated fraud network where con artists obtained almost KES 500 million through M-PESA overdraft service, Fuliza by Safaricom.
This is perhaps one of the biggest of such cons reported in recent times in Kenya, where the facility was used to access the loans without Safaricom’s knowledge for a while.
Fuliza allows customers to access funds even when their M-PESA wallet is empty for services such as Buy Goods and Paybill. Recently, the telco allowed customers to withdraw cash from the facility for personal use, which expanded its use cases and removed the limit where users had to just pay for services or buy airtime only.
Now in a thread published by the DCI on Twitter, it has emerged that the funds were lost as a result of a carefully planned scheme carried out by eight young men based in the Nakuru and Trans-Nzoia regions.
Reportedly, Isaac Kipkemoi, Gideon Rono, Maxwell Ributhu, Gideon Kirui, Moses Rono, Collins Kipyegon, and Edwin Cheruiyot were apprehended at a flat in Kiamunyi, and the primary instigator, Peter Gitahi, was taken into custody in Kitale, Trans-Nzoia County after a thorough operation conducted by the authorities.
Found in possession of thousands of SIM cards
The young men who were discovered with a large number of Safaricom and Airtel SIM cards used fake identity card numbers to register the SIMs before borrowing money through the platform using fraudulent means.
How this was possible is puzzling, considering authorities such as the CA have been patching loopholes in the whole SIM card registration exercise. However, it has since emerged that the individuals were well-connected, and had access to M-PESA agents, who are allowed by law to register SIM cards.
However, it is not clear how they managed to access identification numbers to register such a big number of SIM cards without alerting authorities.
DCI started its inquiry into this intricately planned fraud after a report was submitted to the Banking Fraud Investigations Unit (BFIU) in August 2022. The report was made after the managers of the fund noticed a sharp and irregular increase in Fuliza loan applications that far exceeded their expected performance and the borrowers were failing to repay the loans.
Investigations further reveal that in January 2022, over 123,000 new mobile phone numbers signed up for Fuliza and obtained loans. However, the SIM cards were either fraudulently deactivated or switched off, and attempts to contact the customers proved unsuccessful.
Access to the National Registration Bureau database
Further investigation revealed that the SIM cards were fraudulently registered by one of the suspects, Peter Gitahi, who is believed to have access to the National Registration Bureau database. He is suspected of creating fake information such as ID numbers,
Early inquiries suggest that after generating the numbers and establishing them, he would then sell them to his partners in Nakuru, who would go on to carry out the scam.
Fake Safaricom agents
Also, DCI discovered that some of the lines were registered as Safaricom agents, where the borrowed funds were deposited into personal bank accounts under the guise of M-PESA float.
The suspects would start by borrowing money and repaying it to improve their credit scores until the SIM cards reached their limits and would borrow one last time before discarding the SIM card.
One identity card was used to register five lines in this bold SIM scam carried out by young men aged between 24 and 30 years.
Tools of work
During the raid, the detectives seized 14 mobicom phones used for registering MPESA user SIM cards, 6 laptops, more than 40 mobile phones, 7 routers, several Safaricom lines, over 1000 Safaricom subscriber registration forms, over 200 ATM cards from all major banks, car contracts, and other pieces of evidence.
Interrogations are still ongoing.