Real estate scams are on the rise, and one of the most notorious schemes recently uncovered is PWAN REAL estate investment model. PWAN stands for Property World African Network. Securities and Exchange Commission (SEC) has studied the PWAN investment model and classified it as a Ponzi scheme. This alarming development has raised serious concerns for investors around the world who have trusted the company with their money.
In this post, we looked at the details of the PWAN Ponzi scheme, how it works, and the warning signs you need to watch out for to protect your investments from other fraudulent real estate investment institutions.
What is PWAN?
PWAN, also known as the Property World African Network, was once marketed as a real estate investment opportunity. The company attracted investors with promises of high returns, often claiming that you could earn up to 400% returns on your investment in a short period.
However, what seemed like a lucrative offer turned out to be a classic Ponzi scheme. The Securities and Exchange Commission (SEC) officially declared PWAN a Ponzi scheme, warning the public to stay away from investing in their model.
How Does PWAN’s Ponzi Scheme Work?
PWAN’s business model was simple but deceptive:
- Fake Properties: PWAN attracted investors by presenting unapproved and illegal layouts/estates, offering them for sale. Most of their investors are always not aware of the status of their promised estates;
- Unrealistic Promises: They promised incredibly high returns on investment, which tempted many unsuspecting investors;
- The Ponzi Cycle: Rather than using the invested money for legitimate property development, PWAN used funds from new investors to pay off earlier investors, creating a false sense of profitability;
- Unapproved Estates: In Anambra State, PWAN was found to have the highest number of illegal and unapproved estates. This makes their properties not only fraudulent but also potentially worthless;
Red Flags of a PONZI Scheme in Real Estate:
Understanding the red flags of a Ponzi scheme can help protect you from falling victim to scams like PWAN. Here are some warning signs to look out for:
- Unrealistic Returns: If a real estate investment promises returns that seem too good to be true, they probably are. PWAN promised returns of up to 400%, depending on their package you are going for. Those unrealistic ROI are not sustainable!
- Lack of Transparency: Legitimate real estate investments are usually transparent about property details, legal documents, and the development process. PWAN hid these crucial details. If their investors knew that most of their claimed estates are without government approval, they would not invest. But this truth is hidden from the unwary investors.
- Recruitment-Based Investment: A key feature of Ponzi schemes is their reliance on recruiting new investors to keep the system running. PONZI SCHEMES use a referral bonus system to encourage investors to bring in more people, which is a major red flag.
- Unapproved Properties: Always check if the properties you are investing in are approved by the relevant authorities. PWAN’s properties are flagged as illegal in Anambra State.
The Importance of Legal Protection in Real Estate Investment
In Nigeria, a legitimate real estate investment company entrusted with managing investors capital for interest MUST be registered as a Real Estate Investment Trust (REIT) if they are handling public investments. REITs are regulated by the SEC and ensure that investors are protected. PWAN, however, was not registered as a REIT, making their operations illegal.
For a real estate company to legally accept funds for investment, they must adhere to regulatory guidelines and be fully transparent in their operations.
Final Thoughts: Stay Safe from Real Estate Scams
The PWAN Ponzi scheme is just one example of the many fraudulent activities taking place in the Nigerian real estate sector. It’s crucial for investors to be vigilant and ensure they are only dealing with legitimate, registered companies. If an offer sounds too good to be true, it probably is.
By following the tips in this article, you can protect your investments and avoid falling victim to scams like PWAN.
Remember, your real estate investments should bring you peace of mind, not stress and regret.
If you’ve had any experiences with PWAN or other real estate scams, please share your story in the comments below. And don’t forget to subscribe to our newsletter for more tips on protecting your investments.
At Encumbered Properties, our mission is to help you make safe and informed property investments decisions.
In summary, before you buy any property or invest through any real estate company anywhere in the world, always:
Verify the company’s status;
Verify the property’s status on EncumberedProperties.com;
Consult a real estate lawyer; and
Avoid untraceable cash transactions.
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This article was put together by Madueke Enwere: a property lawyer, a real estate investor, and a senior police officer and by God’s grace, the founder, encumberedproperties.com