How a Fake Investment Scheme Helped Drain Ksh14 Billion From a Sacco

Detectives from the Directorate of Criminal Investigations (DCI) have arraigned 19 suspects linked to a fraud scheme that allegedly led to the loss of more than Ksh14 billion from a Sacco through fictitious loans and a fake investment operation. 

In a statement on Tuesday, May 26, the DCI said the suspects, who include former and current Sacco officials, were presented before the court following investigations into alleged large-scale financial misconduct and embezzlement. 

"Detectives from the Directorate of Criminal Investigations (DCI) headquarters Investigations Bureau have today brought before court nineteen individuals linked to a sophisticated fraud scheme that saw a Sacco lose over Ksh14 billion," the statement read.

The agency said the investigation began after the Sacco Societies Regulatory Authority (SASRA) filed a formal complaint requesting a probe into alleged financial irregularities within the institution.

"The matter came to light after the Sacco Societies Regulatory Authority submitted a formal request to the DCI, urging an inquiry into serious allegations of financial misconduct and embezzlement by Sacco officials," the statement added.

Investigators revealed that the suspects allegedly worked together to manipulate records and illegally move members’ funds over several years.

"An immediate investigation unveiled a web of deceit, where Sacco officials acted in concert, blatantly violating their fiduciary duties. They manipulated financial records, irregularly transferred members’ funds, unlawfully disbursed loans, and failed to account for significant amounts entrusted to their care," the statement explained.

The DCI said detectives uncovered two major fraudulent schemes during the investigations. 

The first involved the manipulation of loan disbursement figures over a nine-year period, resulting in billions of shillings being lost through non-existent loans.

"Two interconnected fraudulent schemes were identified. The first saw a decade-long manipulation of loan disbursement figures from 2012 to 2021, leading to fictitious loans totalling an astonishing Ksh13,483,350,322," the statement further read.

The second scheme allegedly involved the creation of an Investment Cooperative Society Limited, which investigators say was used as a front to siphon Sacco funds under the pretext of land purchases and investment projects in Kitengela.

"The second scheme involved the illegitimate formation and operation of an Investment Cooperative Society Limited. This was a facade that allowed officials to divert Sacco funds, misappropriating Ksh750,766,304 under the guise of land acquisition and investment opportunities in Kitengela," the statement noted.

The suspects named in the case are Christopher Kahuno, Samuel Ndungu, John Kimani, James Kamau, Patrick Kimando, Francis Kamau, Benson Mwangi, Paul Wathika, Geoffrey Kamau, and Duncan Chege.

Others are Francis Wachiuru, George Mwihia, Daniel Lee, Joseph Gachunga, Boniface Muthama, Rosemary Njeri, Edward Duncan, Lucy Njambi, and James Mutaiga.

DCI said the accused persons are facing several criminal charges linked to the alleged fraud.

"They now face a barrage of charges, including conspiracy to defraud, stealing by directors or officers, fraudulent false accounting, obtaining credit by false pretences, failure to maintain proper books of accounts, and operating non-core investment businesses without statutory approval, among other offences," the statement concluded.

Appearing before the Milimani Law Courts, all 19 suspects pleaded not guilty to the charges. 

The court granted each of them a bond of Ksh200,000 with one surety; the matter will be mentioned again on June 22.

This comes days after DCI detectives arrested a suspect accused of fleecing a retired teacher with promise massive returns from lucrative gold investment.

The victim, a 61-year-old, encountered the suspect earlier this year when he was sold the investment idea.

Having bought it, he was ready to go out of his way to fulfill his end of the bargain with the suspect, identified as Dennis Kinoti.

According to a statement by the DCI Saturday, May 23, on diverse dates, between February 2026 and last month, wired monies to the suspect while chasing the deal.

Until April, the retired teacher had entrusted Kinoti with at least Ksh7.5 million, and it was at this point that he discovered the fraud.

Armed with the evidence of mobile money and bank transfers, he immediately reported to the DCI, whose detectives embarked on a thorough investigation.

The investigators would later catch up with Kinoti in Gakurine, Meru County. He was found with numerous SIM cards, suggesting he was operating a string of fraudulent activities.

"Following painstaking investigations and intelligence-led operations, detectives smoked out the prime suspect, Dennis Kinoti, from his hideout in the Gakurine area of Meru County, subsequently arresting him. A search conducted at the suspect’s residence led to the recovery of several Safaricom SIM cards believed to have been used in the fraudulent scheme," the DCI said.

Further probe by the DCI led to them discovering the suspect owning a vehicle believed to have been bought with the money obtained from the retired teacher.

The car, a Volkswagen Passat, was taken to the Meru Police Station, with the suspect booked there immediately as the investigators strove to conclude their investigations.

"Detectives also seized a grey Volkswagen Passat suspected to have been purchased using proceeds of crime. The vehicle was towed to Meru Police Station, where it is being detained as an exhibit as investigations gather pace," the DCI added.