Several American investors are counting losses after a fellow American defrauded them of $7.2 million (Ksh788.3 million) for a for a fake desalination project in Kenya.
Verley Lee “Rocky” Sembritzky, Jr. is said to have promised that a desalination exercise would return at least Ksh2.2 billion every year, on top of giving Kenyans clean drinking water.
Unsuspecting investors gave their money towards the project, but instead he used the money to buy luxury cars, jewelry, and watches, a condominium for his then-wife and pay off personal credit cards with $2 million (Ksh219 million).
Mr Sembritzky had promised that the plant would ” utilise everything and waste nothing, eliminate pollution, protect marine life”.
The US Securities Exchange Commission (SEC) now wants the man charged with fraud, saying the project was a hoax and a similar project testing failed in 2017.
“Sembritzky knew, however, that when the process, as described in the PPM (private placement memorandum), was tested at some point before 2017, it did not work…Sembritzky knew his representations and omissions to investors about the process were, at a minimum, misleading,” SEC said in court papers.
At least Ksh2.19 billion was to come from American investors, while a total of Ksh19.1 billion would come from Kenyan investors.
A share was costing Ksh19.2 million.
The monies were to be deposited in the Bounty and Ocean Harvest bank accounts. Immediately after receiving the money, he withdrew approximately $6.4 million (Ksh700 million)in form of cash withdrawals or transfers to his personal accounts.
Only about $650,000 (Sh71.1 million) of investor funds reached the projects accounts in Kenya.
“Because Defendants took nearly all of the investor funds for Sembritzky’s personal use, the Project Entity did not receive those funds for the pre-construction costs described in the PPM,” added SEC.
He however said that the money he used for personal uses was part of a projected $15 million (Ksh1.6 billion) Intellectual Property License Payment listed in the private placement offer.