Charles Ponzi, the Italian fraudster who claimed to have immigrated to the United States with only two dollars and fifty cents, built his fortune as a conman and promoter during the 1920s Florida real estate boom, pulling off one of the most infamous frauds in history that earned him more than $240 million.

Ponzi used a fake name and a front company to conceal his past. He sold swampland to unsuspecting buyers, promising that a luxury metropolis would be built on it and that they would be heavily compensated by the government before construction began.

Ponzi lived lavishly before he was eventually arrested, jailed and deported back to Italy. He later died in a charity hospital in Brazil, where he was buried in a public cemetery with only $75 to his name.

His rise before his eventual downfall may have inspired many people, among them Joseph Mwai, the founder and director of Nyumbani Concepts Limited, a Nairobi-based off-plan real estate developer at the centre of a multi-million-shillings dispute that has left investors seeking elusive refunds and staring at incomplete housing units.

"Historically, real estate is a very lucrative industry when you look back at the history of America, especially Charles Borelli and the margins he made. I think the model if well implemented whereby, if you buy cheap plots and sell them at a profit is still viable especially in satellite towns," Mr Mwai told the Nation in January this year during an interview at Nation Centre in Nairobi after allegations of fraud involving his company were brought to our attention.

For context, the man Mr Mwai referred to as Charles Borelli is Charles Ponzi.

Mr Mwai is an emphatic marketer and persuasive entrepreneur but is now battling allegations about his operations. On September 27, 2023, he struck a deal with Virginia Wanjiru Muhu, the registered owner of land parcel LR No. 128/581, to transfer ownership to Nyumbani Concepts Limited in exchange for 40 housing units.

Joseph Mwai founder and managing director Nyumbani Concepts Limited — Joseph Mwai, founder and managing director of Nyumbani Concepts Limited.

Documents seen by the Nation show that the n agreement was executed as a joint venture because Mrs Muhu, now 65, was financially constrained and could not fund the development on her own.

Also Read: Anatomy of a scam - Why Kenyans keep getting conned and how to avoid it

The project was expected to deliver 204 housing units and eight shops. One-bedroom apartments were being sold for Sh4.99 million, while two-bedroom units were priced at Sh6.5 million.

Mr Mwai subsequently launched a marketing campaign targeting both local and diaspora buyers. He enlisted celebrities who promoted the development as being located off Waiyaki Way, although it is situated deep inside Dagoretti South Constituency, near the border with Kikuyu Constituency.

The marketing information also promised high-speed lifts and a basketball court. Today, however, the site consists of an abandoned structure that has remained stalled since April 2023.

Peter Kimwere is one of the alleged victims who says he pumped in Sh3.8 million, hoping for a two-bedroom apartment. He told the Nation last week that they have now been forced to form a Special Purpose Vehicle (SPV) and approach a bank, targeting to secure Sh700 million to complete the project on their own.

He says the project was “packaged as a cheap sale and this attracted very many people.”

“In this particular case, so many things went wrong. We are now looking for financiers to have the project completed and we require around Sh700 million for the six blocks. The title has been taken from Nyumbani Concepts Limited and we are working to have it returned to the original owner, who was a partner in the joint venture, so that we can now deal with her directly,’’ Mr Kimwere, who is the chairman of the newly established Special Purpose Vehicle (SPV) that brings together all the stakeholders, told the Nation.

An SPV is a separate, legally independent company created to handle a specific project or task.

Evance Omondi is another investor who says he lost money. He is now the Investors' Representative and Interim Secretary under the Special Purpose Vehicle, handling communication.

He told the Nation that he put in Sh6.3 million and regrets that the success of the project solely relies on the cooperation between the investors and the legal owner of the land.

''We are on the edge but we are determined and hopeful that we will get the financier and complete the project on our own,’’ Mr Omondi told the Nation.

Both Mr Kimwere and Mr Omondi admit that the contracts between investors and Nyumbani Concepts Limited were tied to arbitration in case of any dispute arising, and admit that moving to court at this stage could be tricky.

Also Read: How I fell for a con artist in my youth

A few kilometres from the Nyumbani Heights project, which has now stalled for nearly five years, the Nation visited Boma Phase 2 in Thogoto, Kikuyu Constituency, which was being developed by Nyumbani Concepts Limited. It sits abandoned, and out of close to 50 maisonettes where investors were promised three-bedroom houses, none was completed, with investors now digging into their own pockets to finish the project.

Last Sunday, Bernard Kamau told the Nation that he put in Sh6.3 million. He had been promised a three-bedroom house that never materialised, even after fulfilling his contractual obligations.

''I gave up chasing for the completion of the project because it was abandoned at the ground level. To be honest with you, I started from scratch and as you can see, the whole area is like a bush. I think we are only two people who have fully finished construction on their own and I have less than three neighbours,’’ Mr Kamau told the Nation.

''We have even decided to rename the project Southern Forest View Estate Kiriti,’’ Mr Kamau told the Nation.

The development has poor road infrastructure and is deep inside Dagoretti South.

Stalled projects developed by Nyumbani Concepts Limited.The project is named Nyumbani Heights. — Stalled projects developed by Nyumbani Concepts Limited. The project is named Nyumbani Heights.

Photo credit: Simon Ciuri | Nation

The Nation has also learnt that before Nyumbani Concepts Limited was registered on July 8, 2019, with Mr Mwai as the sole shareholder and director, according to official government documents, he had registered Qualis Properties Limited on November 7, 2018. He later registered another outfit, Qualis Concepts Ltd, on November 18, 2024, which Mr Mwai said in an interview was a real estate agency and not a construction company.

He declined to comment on the fate of Boma Phase Two in Thogoto or whether there would be any refunds for the affected investors.

Ironically, the Daily Nation has traced Mr Mwai's digital footprint and established that his Master's in Business Administration thesis at United States International University-Africa (USIU-Africa), Nairobi, was titled Factors Affecting Completion of Off-plan Developments, in which he warned developers and investors to avoid the pitfalls that befell former real estate giants such as Suraya, Cytonn and Banda Homes, which went down with billions of investors' money.

In a follow-up interview with the Nation, Mr Mwai admitted there are challenges affecting the Nyumbani Heights project and emphasised that he is part of the stakeholders working to find a solution.

Also Read: Kamlesh Pattni, James Kanyotu's family and a church: How thousands lost Sh10bn in bogus land investment

''We are currently in the process of transferring the project title and assigning all relevant project agreements to the SPV to enable it to take over the implementation of the remaining works. What mainly affected the project include the escalating cost of construction, delays and inconsistencies in customer payments, and other market realities that affected the project's original execution plan,’’ said Mr Mwai.

In Nairobi and Kiambu counties, off-plan developments continue to attract lawsuits after developers allegedly used deception to short-change investors.

Mellen Bwari Okari, who resides in the US, is locked in a legal battle involving property worth Sh57 million after she bought five units, each worth Sh11 million, from Willstone Homes Limited through an off-plan arrangement.

Court documents show that on October 14, 2022, she entered into a sale agreement with Willstone Homes Limited for five maisonette units — numbers 19, 20, 21, 23 and 24 — in White Park Gardens. She then made a down payment of Sh10 million.

Ms Okari has now told the court she was surprised to learn that the project described in the sale agreement as being in Nairobi was actually in Mavoko, Machakos County. She also cited poor workmanship and delayed construction.

Also Read: Sh39bn fraud scam: US agents target Kenyan properties

Stalled projects developed by Nyumbani Concepts Limited.The project is named Nyumbani Heights.

Photo credit: Simon Ciuri | Nation

''The copy of the sale agreements, the description of the suite property is White Park Gardens in Kamulu (NAIROBI) and constructed on title Number. Nairobi Block 3/90489 whereas the annexed title is Title Number Mavoko Town Block 3/90489. At the date of filing the Notice of Motion dated 19th October 2023 the suit land was described in all the pleadings and/or correspondences (albeit wrongly), that is, Block 3/90489 did not exist then and does not exist even now. From a copy of the search and green card, it is evident that title was closed on 5th August, 2022 and subdivision was done into 26 parcels to which no information was availed to the plaintiff/applicant,’’ Ms Okari's advocate told the court.

The plaintiff has also told the court that at the time of execution of the sale agreement and when the suit was filed, Willstone Homes Limited knew Block 3/90489 did not exist and therefore could not form the basis of any transaction. Ms Okari says the agreement provided by Willstone Homes Limited described the suit property as being in Ruai East, Nairobi, while the title deed shows the project is in Mavoko, Machakos County. Willstone Homes Limited, in its replying affidavit, told the court it repossessed the units after the plaintiff failed to meet payment obligations based on agreed milestones.

Willstone Homes Limited is owned by flamboyant businessman Ejidio Kinyajui, who is the managing director. Other directors include Patrick Thuo Marigi and Victor Cosmus Muusya. The developer recently appointed Fabian Nzivo, the former boss of the collapsed Banda Homes, which went under with Sh5 billion of investors' money, as its Chief Executive Officer.

Willstone Homes Limited has already lost two applications for gag orders, both in the lower court and the High Court, seeking to stop Nation Media Group from publishing any story about the company. Judge Nixon Sifuna ruled that the defendant was attempting to muzzle the press.

Separately, former Tigania East MP Josphat Gichunge Kabeabea is in court after he was arrested by detectives from the Land Fraud Investigations Unit (LFIU), based at the Directorate of Criminal Investigations headquarters, following investigations into multiple complaints lodged by investors who lost close to Sh56 million through his company, Diamond Property Merchants Limited.

Under the scheme, investors were promised land in Kajiado complete with greenhouses, only to discover that the company had engaged in double allocation and that the parcels had been transferred to other individuals.

Mr Kabeabea was released on June 20 on a Sh1 million bond by a Nairobi court.

The evolution of off-plan scams reveals the desperation of people seeking to own property or land and the existence of a wide network of developers alleged to be using deception to defraud innocent buyers.

Developers such as Gakuyo Real Estate, Mahiga Homes, Mizizi Africa Homes, Cytonn and Lesedi Developers have found themselves dragged into court as investors continue chasing elusive refunds.

Ironically, most of the companies fighting fraud cases in court have websites filled with tips on how to avoid falling victim to land fraud scams.

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Sciuri@ke.nationmedia.com