Executives of Purpose Black ETH Trading S.C. appeared before the Federal High Court Lideta Criminal Bench, continuing to face criminal charges related to allegations of fraud and corruption. Since February 17th, the prosecution has introduced witnesses to provide testimony in support of their case, scheduled to continue until the first week of March.
The case centers on Purpose Black's marketing and share issuance practices, spearheaded by Fisseha Eshetu (MD). The company marketed a scheme involving the proposed construction of the "KeGeberew Tower," a 115-storey building, and offered a three-bedroom apartment as a purported "gift" to purchasers of company shares. Shares were initially sold at 1.5 million Br, later increasing to 3.5 million Br.
Defendants CEO Ermias Birhanu (PhD), Sophia Negash, Wasihun Wagaw, and the corporate entity, Purpose Black, appeared before the court, with the exception of Fisseha Eshetu (MD).
The prosecution argues that individuals were misled into purchasing shares under the belief they were acquiring ownership of apartments. This dispute forms the basis of the criminal charges.
Presiding Judges Tadesse Admassu, Kidist Getachew, and Abdulkarim Shimbo, have heard testimony from multiple witnesses, including individuals who claim to be victims of the alleged scheme. Over 12 witnesses have provided testimony so far, responding to queries from both the prosecution and defense. Their testimony has focused on their understanding of the real estate venture and their perception of the company's marketing practices.
The prosecution alleges Purpose Black misrepresented the terms of the investment, promising a four-year construction timeline for a real estate project on land near Mexico Roundabout, followed by dividend payments. However, the agreement with BGI Ethiopia for the land transfer was terminated, leaving approximately 1,750 shareholders with unresolved investments.
Witness Mahlet Akalu testified on February 25th, stating she invested in the company based on social media advertisements. Along with her husband, they sold their property in Dire Dewa City Administration for 800,000 Br and moved to the capital, believing they were purchasing an apartment. Mahlet said that she made payments before reviewing the contract, relying on representations made by company agents and the perceived persona of Fisseha.
However, she stated that her confidence diminished after a period of inactivity. She further testified that she was requested to remit payments before being provided with the contract. Driven by a desire for housing and reassured by the perceived number of participants, she complied with the payment request.
Upon subsequently reviewing the contract, she claimed observing provisions relating to both real estate acquisition and share ownership, which caused her confusion. She testified that a company representative characterised the share component as a supplementary benefit. She later concluded that she had been misled into believing she was purchasing real estate, rather than acquiring company shares.
"I was targeted at a time of vulnerability," she said.
The prosecution presented evidence indicating that the agreement between BGI Ethiopia and Purpose Black, where the construction was supposed to take place, collapsed due to payment deficiencies and disputes over capital gains taxes. Witnesses testified that Purpose Black subsequently sought alternative land locations.
Witnesses further testified that they were led to believe they were purchasing apartments, not shares.
BGI Ethiopia planned to relocate from its 30,000 sqm facility in Mexico Roundabout and made a deal with Purpose Black to transfer the property, with the latter intended to acquire the property for five billion Birr. However, BGI cited a "lack of genuine commitment" and cancelled the transaction two months before the court battle began.
BGI executives stated that Purpose Black failed to provide the required payment upfront. Purpose Black, in turn, accused BGI of refusing to pay capital gains taxes.
After learning the deal had collapsed, Mahlet went to the company for answers. Mahlet said her confusion deepened when Purpose Black abandoned its original construction plan and started seeking alternative sites in prime locations to fulfil its commitments to shareholders.
"I was made to believe they were looking for alternatives," she said.
She testified that the final letdown came when Fisseha fled the country, leaving behind an unfinished project and countless unanswered questions. With little hope of recovery, many shareholders gave up. She and others have since demanded refunds but claim they have been denied.
During cross-examination, defendants and judges asked Mahlet whether she had read the contract in full. She admitted she had not, despite her scepticism.
As marketing continued, Purpose Black announced that share prices would rise for latecomers, potentially reaching 55 million Br. Two years later, however, prosecutors argued that the shareholders had been left with nothing. The promised development never materialised.
The executives face accusations of fraudulent marketing, corruption, and misuse of funds.
Adding to the company’s troubles, Purpose Black’s founder, Fisseha, recently left the country, citing threats and pressure. He held an online press conference to defend the company’s credibility.
The court has dismissed charges against the fourth, fifth, sixth, seventh, ninth, and tenth defendants, including Tefera Hailu, Million Seyoum, Naol Dadi, Birhanu Wonde, Seifu Maru, and Tensaye Tesfaye.
Ermias defended himself, claiming that after Fisseha fled, he sided with shareholders to resolve the situation. He asked witnesses to support his claim, but they disagreed. They said they had been wrongly threatened for speaking to the media and that Ermias had done little to help.
Before the executives’ arrest, shareholders had met with them, seeking to sell their shares and recover their investments. A buyout agreement was drafted, and a follow-up meeting was set for August 31, 2024. However, the executives were arrested the day before, and the meeting never occurred.
Another witness, Aweke Hune, 42, a car dealer, testified that he was also a victim of Purpose Black’s real estate scheme. Hoping for a better future, he claimed he sold his house and invested all his savings in the company. Three days after being told the purchase included an additional bonus, he testified, he signed the contract. However, he stated that Purpose Black refused to show him the contract before he made the payment.
Aweke told the court he learned about the offer through social media. He claimed to have read the contract only after committing to the deal. Later, he said to have discovered that the company had not secured the necessary agreements, exposing the fallout between BGI and Purpose Black.
“What we were told on social media and what we were actually presented with were not the same,” he said.
Purpose Black’s lawyers questioned Aweke’s experience with real estate transactions and asked whether he had read the full contract. He admitted signing it without reviewing the details, a point the defence used to challenge his credibility.
Two months ago, defence lawyers petitioned the court to partially unfreeze company funds held in bank accounts unrelated to share or real estate sales. The court released 60 million Br for administrative expenses. Executives also sought approval to appoint asset administrators to manage the funds and oversee company operations. The court initially granted their request.
However, on February 20, prosecutors successfully appealed the decision. The court reinstated the injunction on all company finances and revoked the approval for an asset management team.
PUBLISHED ON
Mar 02, 2025 [ VOL
25 , NO
1296]
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