Court Finds MozzartBet Guilty of Involvement in Fraud

Appeal Court Upholds Sh256 Million Money Laundering Ruling Against Betting Giant

The Court of Appeal has delivered a crushing blow to betting company MozzartBet Kenya Limited, dismissing its appeal to recover Sh256 million that was declared proceeds of crime in a landmark money laundering case.

In a 37-page judgment, appellate judges Francis Toiyott, Fred Ochieng, and Aggrey Muchelule ruled that the betting firm failed to provide satisfactory explanations for its suspicious financial dealings with Kimaco Limited, a company the court found to be a shell entity created for money laundering purposes.

The Scheme Unraveled

The case centered on MozzartBet’s payment of Sh256,851,910 to Kimaco Limited, allegedly for software development services.

However, the Asset Recovery Agency (ARA) successfully demonstrated that Kimaco was nothing more than a front company lacking the technical capacity to deliver on its purported contracts.

“We hold that there was sufficient evidence, on the statutory threshold of balance of probabilities set by section 92 of the Act, to implicate MozzartBet as well and it cannot benefit from protection of a third party,” the judges ruled.

The court found that Kimaco had filed nil returns with the Kenya Revenue Authority during the period in question, indicating it was not engaged in legitimate business activities.

Despite receiving the massive payment, MozzartBet confirmed that Kimaco had never delivered the promised software solutions.

Directors Implicated in Money Trail

The investigation revealed a complex web of financial transactions that ultimately benefited MozzartBet’s directors.

The court heard evidence of suspicious payments made by Kimaco to two MozzartBet directors: Emmanuel Charumbira (Zimbabwean national) and Musa Cherutich Sirma (Kenyan national).

Funds were also traced to Branimir Melentijevic, a shareholder of MozzartBet Africa, the majority shareholder of the Kenyan betting firm.

The court noted that some money initially paid by Kimaco to Pescom Kenya eventually found its way to Melentijevic through payments of USD 69,964.30 and USD 34,599.00.

The Money Laundering Operation

State counsel Githinji painted a picture of an elaborate money laundering scheme during the High Court proceedings.

He argued that Kimaco was incorporated as a Special Purpose Vehicle (SPV) to launder funds under the guise of software supply and ICT services.

The prosecution demonstrated that once MozzartBet transferred funds to Kimaco, they were quickly moved through various accounts.

Pescom, a signatory to Kimaco’s accounts, authorized transfers from Kimaco’s DTB and Co-operative Bank accounts to Pescom’s NCBA bank account, where the funds were then distributed to individuals connected to MozzartBet.

Court’s Scathing Assessment

The appellate judges employed colorful language to describe the obviousness of the criminal activity, stating: “The evidence revealed that Kimaco received payment under suspicious circumstances, made out payments in similar circumstances and concealed its business from the Tax authority. Is it not said that ‘if it walks like a duck, swims like a duck, and quacks like a duck, then it probably is a duck’?”

The court emphasized that the case went beyond simply having an unexplained gap between income and lifestyle.

The evidence showed a pattern of suspicious transactions, concealment from tax authorities, and the use of shell companies to obscure the true nature of financial activities.

Defense Arguments Rejected

MozzartBet’s legal team, supported by Kimaco’s lawyer Patrick Lutta, argued that the funds originated from legitimate betting operations.

They claimed that DCI investigations had shown MozzartBet generated Sh17,057,136,032 from betting sales and had received a clean bill of health regarding criminal implications.

The defense also argued that the software was not delivered due to the frustration of contract caused by ARA’s preservation orders.

However, the court found these arguments unconvincing given the totality of evidence presented.

This ruling represents a significant victory for Kenya’s anti-money laundering efforts and sends a strong message to the betting industry about regulatory compliance.

The case highlights the sophistication of modern money laundering schemes and the determination of authorities to pursue proceeds of crime.

The Asset Recovery Agency’s success in this case demonstrates the effectiveness of civil forfeiture proceedings in combating financial crimes, even when criminal prosecutions may be challenging to pursue.

What’s Next

With the Court of Appeal’s dismissal of the appeal, MozzartBet’s options are now limited.

The company could potentially seek leave to appeal to the Supreme Court, though such appeals are typically reserved for matters of significant constitutional or legal importance.

The Sh256 million will remain with the state, representing one of the largest successful asset recovery cases in Kenya’s fight against money laundering in the betting sector.