Erich Weisz, the Hungarian-American master of deception – better known as Harry Houdini – died on October 31, 1926 after a 35-year-long career that saw him labelled the greatest magician and escape artist of all time.
Houdini’s acts as a magician saw him dazzle even the most skeptical human beings, and made some believe that his achievements were supernatural.
It was only after his death that some secrets on his escape acts started to emerge. For instance, a loose link in the chains that would bind him during an act, or hiding keys in his hair to unlock restraints and subsequently amaze audiences.
To prove his invincibility, Houdini once asked university student Jocelyn Gordon McGill to strike his abdomen several times and that there would be no pain.
After several blows, Houdini finally stopped the university student as another punch was mid-air. As it turned out, Houdini was at the time suffering from appendicitis and the blows to his abdomen escalated the condition and led to his death.
In August 2014, Edwin Harold Dayan Dande started his career as corporate Kenya’s Harry Houdini with his Cytonn Investments. Mr Dande managed to persuade more than 4,000 individuals and a group of foreign corporate investors to put billions into his wide array of projects.
Mr Dande and his friends started incorporating investment companies under his Cytonn Group, promising high reward for investors who were willing to take low risks by simply pumping their money into the various products on offer, and leaving the rest to him and his team.
Two weeks ago, High Court judge Alfred Mabeya saw through Mr Dande’s nine-year-old gimmicks and called an end to the grand illusion by ordering for the liquidation of Cytonn High Yields Solutions LLP (CHYS) and Cytonn Real Estate Project Notes LLP (CPN) – the bread and butter of Mr Dande’s Cytonn Group.
The judge’s decision followed an insolvency petition by four Cytonn High Yields Solutions investors who have now become the Jocelyn Gordon McGinn of Mr Dande’s story.
And just like Houdini, some of the gimmicks Cytonn has employed in the past decade are coming to light after the liquidation order.
In this case, Mr Dande’s silver tongue is what loose chain links were to Houdini. Mr Dande seems to have the skill and capability to sell ice to Alaskans.
On his personal social media pages, he aggressively promoted Cytonn and its products, thereby convincing the brightest minds.
Lawyers, doctors, accountants and other professionals placed their feet on the bear trap that snapped mercilessly just a short while afterwards.
Harry Houdini’s funeral was attended by an estimated 2,000 people.
The funeral of CHYS and CPN will have more than double the number of mourners as investors, lenders and other creditors hover around the grave that is liquidation, in the hope of recovering even a pittance of their dues.
But unlike Houdini’s funeral, majority of mourners will be filled with anger, not sorrow.
An unremorseful Mr Dande, when reached for comment, held that Justice Mabeya and investors are the ones who have sealed the undesirable fate of CHYS and CPN.
In a telephone interview with the Sunday Nation, Mr Dande said that Cytonn Investments Management PLC will continue with its business despite the damning High Court ruling that has spelled the end for its sister companies.
“The investors already decided to terminate CHYS/CPN when they voted to take them into administration in 2021. The administration did not progress. The judge then chose to terminate CHYS/CPN through the official receiver. Our next course of action is as before – to offer the official receiver the same support we offered the administrator to end CHYS/CPN as per the investors’ resolution.
“Cytonn group will continue with its business of real estate development, real estate management, hospitality and regulated fund management,” Mr Dande said. He insists that Justice Mabeya did not allege any fraud on the part of the Cytonn Group.
Despite the intensely sophisticated modus operandi of companies and products under the Cytonn Investment Management PLC, Mr Dande’s operations have a stark resemblance to those of pyramid schemes.
For starters, most investors were not informed that CHYS and CPN were independent of the parent company.
Justice Mabeya put an end to this confusion by stating that “they are all Cytonns”. The judge’s words mean that Mr Dande and his group can no longer use the separate registration of products under different companies to confuse members of the public
Pyramid scheme
The second trick Cytonn used was spreading disinformation to create confusion over whether the CHYS and CPN products were regulated by the Capital Markets Authority.
The most obvious similarity with pyramid schemes, however, is how Cytonn paid the early adopter’s dues handsomely and on time, but sunk with billions of the Johnny-come-lately.
On the authority of Justice Mabeya’s ruling, it is not a stretch to call the two Cytonn products one of the biggest fraud schemes in Kenya’s history.
Mr Dande resigned from British American Asset Managers (BAAM), an investment unit of the Britam group, alongside three colleagues – Shiv Arora, Elizabeth Nkukuu and Patricia Wanjama – in August 2014 as they sought to compete with their former employer.
They registered a number of companies under their Cytonn Investments Group, and even did the unthinkable when they snapped up one of their employer’s newest clients – Acorn Group – that intended to pump Sh40 billion in various real estate projects.
“The original plan was for BAAM to raise funds for our real estate projects. But when the core team left, we decided to work with the original team which was involved in the development of the projects,” Acorn Group CEO Edward Kirathe said at the time.
Cytonn is largely made up of two investment arms – Cytonn High Yields Solutions that promised to invest funds it collected from the public and give returns of up to 18 per cent, and a guarantee of low risks. This arm collected over Sh11 billion from 3,116 investors over the years.
Cytonn Real Estate Project Notes was to be a typical property development investment. Buy property off plan and reap the benefits in whichever way you wish, be it by renting out or moving in. The project collected Sh4.1 billion from 886 investors over the years.
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