They accuse the firm of of deception for not disclosing its shaky financial position contrary to the Consumer Act 2012.
The investors say Cytonn stopped paying their monthly interest in June 2020.
Three investors have filed a case against Cytonn investment over their Sh 46.7 million investment.
Charles Nzioki Kanyaa, Harrison Kaloki Kanyaa, Robert Munyao Kanyaa want the firm to pay them over sh 46.7 million which they had invested in the firm plus interests.
The applicants accuse Cytonn representatives of knowingly making deceptive misrepresentation of returns to them, well aware of the true shaky financial position of the firm.
The three claim that on diverse dates, the representatives of Cytonn made representations to them that they would receive handsome monthly returns if they invested substantial amounts of money with the firm.
“Pursuant to those representations, on diverse dates between 29th October 2018 and 30th October 2018 the defendants invested with the firm Sh 39 million at an agreed interest rate of 18 per cent payable monthly for a period of twelve months,” they state.
They claim that the representations were unconscionable, misleading and deceptive contrary to the provisions of the Consumer Protection Act, 2012 and amounted to unfair practices.
According to the three, upon maturation of the investment of Sh 30 million they had invested on 4th November 2019, they invested Sh 42 million on representations made by the representatives of Cytonns of a higher and better return at an agreed interest rate of 20% per annum, payable quarterly for a tenor of two years.
“The Defendants’ representatives sketched a portrait of a liquid, stable and financially sound Cytonn which can be trusted by investors with colossal sums of monies, with no history of non-payment to investors,” they argued.
The three claim that the firm routinely and regularly paid the agreed monthly interest, until June 2020 when in a fragrant breach of the investment agreement stopped paying the agreed monthly interest.
They wrote an email to Cytonn on or about 22nd June 2020 where they sought to unilaterally vary the contractual investment terms which was against the contractual terms.
“Being dissatisfied with the unilateral alteration of contractual terms, we wrote to them through our advocates, seeking a refund of the Principal sum plus all accrued interest thereof, which as at 31st December, 2020 amounted to sh 46, 792,603,” the applicants said.
According to them, Cytonn responded on 29th January 2021, citing temporary liquidity of the fund and for the very first time in their contractual relationship cited in partnership agreement as the governing document of the fund.
“The partnership document that was never availed to us at anytime prior to the breach of the investment agreement…non-supply of all the governing documents to amounts to unconscionable, unfair, unreasonable, unjust or otherwise improper trade practices such as deception, misrepresentation, unfair and fraudulent conduct, contrary to the express provisions of the of the CPA,” they argue.
According to the businessmen, Cytonn is in utter breach of the investment agreement and wants the court to grant them compensation for violating their consumer Rights.
Cytonn has been battling endless suits from investors who claim to have been shortchanged. In what is as a result of too much heat, the firm’s CEO recently threatened to sue against publications that paints the company in bad picture.
Cytonn recently sent a cease and desist letter to John Bosco Matheka.
The letter sent to a John Bosco Matheka (Jaybee Matheka) accused him of publishing defamatory articles against the firm.
“It was brought to our attention that you without proof or reasonable presumption on which to base your statements, published or caused to be published under your social media platforms various articles seeking to discredit the authenticity of the company and its operations’, the cease and desist notice read in part.
According to sources, John Bosco Matheka is a pilot and one of Cytonn’s clients who are irate and anxious about their investments that have been stuck with the firm since April 2020.
‘Cytonn Investments has chosen to sue a Kenyan pilot after he chose to vent his frustrations with the company on his social media pages over their failure to commit to refund his investments with the firm running into millions of shillings. Do you think Cytonn has any moral justifications to do this?This case should be very interesting for would be investors in Kenya’, Jaybee Matheka posted on his Facebook page.
By September 2020, the firm was separately sued by businessmen.
In a suit at filed the High Court in Nakuru, Kenneth Maweu Kasinga, through Konosi and Company Advocates, has sued Cytonn Investments over his unpaid investment dues.
In his affidavit, the plaintiff argues that Cytonn failed to honor the investment agreement that stated that he was to be made a partner and that Cytonn would process payments for his investments within three working days upon his investment’s maturity.
At Nairobi’s High Court Commercial and Admiralty Division, George Kirigi Thogo filed an insolvency petition. Mr Kirigi who had invested Sh12,994,883 wanted the firm wound up over failure to pay Sh14 million upon maturity of funds in one of its pools.
In December 2020, three businessmen wrote to Cytonn demanding over Sh6 million arising out of an investment they made in the company failure to which they have threatened to file a winding-up petition against the company in 21 days.
“Take notice that if the aforementioned amounts are not remitted to us in full within 21 days from the date of receipt of this Notice, time being of the essence, you will be deemed to have been unable to pay your debts within the meaning of Section 514 (1) (b) of the Insolvency Act.” According to the Star Newspaper.
In September 2020, having waited for their investments in vain, investors filed complaints with the Capital Market Authority (CMA) against Cytonn for failure to pay Sh122.8 million upon maturity of funds in one of its pools.
The 13 investors claimed Cytonn had delayed payments of between Sh500,000 and Sh25 million. This prompted CMA to petition the courts in the push to bar Cytonn from putting more cash in real estate projects.
The regulator expressed its concern that Cytonn High Yield Solutions (CHYS), one of the funds managed by the firm and debt security raised from investors dubbed Cytonn Project Notes pose risks to investing public.
It is at the backdrop of all this that the company has had to consistently have to defend themselves against the accusations of it being a Ponzi scheme given the complainants raised, the court battles.