Two more charged in connection with BHI Trust Ponzi scheme

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Two men appeared in court this week on fraud and money laundering charges in connection with the collapsed BHI Trust Ponzi scheme.

Sona Pillay (54) and Michael Philip Adam Haldane (55) appeared in the Palm Ridge Commercial Crimes Court on Monday for a bail application. They were not asked to plead to the charges.

The court postponed the case to 10 June when a formal bail application will be heard. Pillay and Haldane were remanded in custody.

Hawks spokesperson Colonel Katlego Mogale said in a statement that the investigation by the Directorate for Priority Crime Investigation has linked the pair “to the Ponzi scheme”.

Their arrests follow the conviction and sentencing last week of Craig Warriner, the former trustee and fund manager of BHI Trust. He was found guilty of 206 counts of fraud and a further charge of contravening the FAIS Act – operating without an FSP licence. Sixty-year-old Warriner was sentenced to 25 years in prison.

Read: AfriForum criticises Craig Warriner’s plea deal for lack of disclosure

Chickens come home to roost

The High Court in Johannesburg provisionally sequestrated BHI Trust in October last year. Shortly thereafter, Gert de Wet and Sumaya Mohamed from Kaap-Vaal Trust were appointed as the joint provisional trustees by the Master of the High Court.

In February this year, BHI Trust was formally sequestrated. The Master issued a certificate officially confirming De Wet and Mohamed as the final trustees on 15 April.

A report submitted under section 81 of the Insolvency Act in May by the joint trustees showed that creditor claims amounted to nearly R2 billion, whereas potential assets and recoveries (as of the provisional trustees’ appointment on 30 October 2023), totalled slightly more than R414 million.

Potential assets/recoveries listed in the report included Amalgum Investments 108 (Pty) Ltd (about R5m) and Rubicon Administration Services (Pty) Ltd (about R30m).

The section 81 report also revealed that the joint trustees had obtained a search and seizure warrant under section 69 of the Insolvency Act for data directly related to BHI Trust from the computers and devices of Global & Local employees.

Read: BHI Trust ‘was run as illegal scheme from inception’

Haldane is the founder of Global & Local, whose FSP licence was suspended in March. He resigned from the company in December last year.

Gerhard van Deventer, the FSCA’s head of enforcement, told Moonstone last month that the suspension related to the relationship between BHI and Global & Local.

He said Global & Local is one of the FSPs that placed clients with BHI Trust.

 

Read: Warriner hit with 30-year debarment as FSCA’s BHI probe continues

Pillay is a director of Rubicon Administration Services.

According to the charge sheet in the State’s case against Warriner, Warriner directed Rubicon Administration Services to issue investment certificates signed by him to beneficiaries, promising a 10% annual return and yearly profit withdrawals.

In terms of the agreement, Warriner was entitled to 10% of all capital gains “on such investment, as well as to the interest generated on the banking account of BHI Trust on all balances from time to time”.

Robbing Peter to pay Paul

“Warriner misrepresented to the clients that their funds were invested in several investment ‘strategies’. A relatively small percentage was invested/ traded in securities. The balance of the funds was kept in an interest-bearing money account which generated interest for Warriner,” the charge sheet reads.

It goes on to state that beneficiaries deposited their investment funds into a Nedbank Corporate account Saver money market account. The bank records from 1 January 2020 to 30 November 2023 (the analysis period) show that only about R584m of the nearly R3bn received was transferred to JSE broker Afrifocus Securities (Pty) Ltd for securities trading, representing less than 20% of the total.

Additionally, about R576m was transferred back to the BHI Trust money market account from Afrifocus during this period. However, the securities trading did not yield sufficient profits to justify the returns presented to clients.

“Warriner misrepresented to the clients/investors of BHI that the deposited funds were profitably traded. The clients received monthly statements reflecting their apparent returns. The contents of these statements were fabricated,” the charge sheet reads.

Warriner used new investors’ funds to pay out existing beneficiaries, but “in or around 2023 the accused’s position of utilising new depositor’s funds to pay out other investors was no longer sustainable due to lack of available capital in the BHI Trust”.

Further arrests anticipated

Pillay was arrested on 31 May after he tried to flee overseas, where he was refused entry and sent back to South Africa, where he found the Hawks investigating team waiting for him at OR Tambo International Airport, while Haldane handed himself over on 3 June, Colonel Mogale said, adding that more arrests are expected.

According to News24, the prosecutor told the Commercial Crimes Court that Pillay was arrested at Heathrow International Airport in London and brought back to the country last week. He was on his way to Las Vegas in the United States.

The State alleged that Haldane was a flight risk because he does not own assets in South Africa, is married to a foreigner, and has business interests outside the country.

Haldane’s lawyer denied his client is a flight risk, saying Haldane was in Japan when he heard that Warriner had been arrested last year. She said Haldane immediately returned to South Africa and contacted with the investigating officer. “He has been co-operating with the investigation ever since,” the News24 report quoted her as saying.

Creditors’ challenging choice

The initial creditors’ meeting took place on 3 April at the Randburg Court, but proof of creditors’ claims was withdrawn after creditors’ representatives were informed that contributions might be required.

In a circular dated 11 April, the trustees notified creditors that they had the option to retract verified claims. Alternatively, if creditors choose to move forward, the trustees will acknowledge their claims, providing a seven-day window for withdrawal. This put creditors in a challenging position. In the worst-case scenario, they might face substantial financial losses if asset recovery falls short. Conversely, effective asset recoupment could lead to full repayment of creditors and additional coverage of costs.

Read: BHI Trust creditors face a dilemma: double down or stand down

As of 7 May, the number of concurrent creditors stood at 1 034, with claims totalling R1 972 699 961. According to the trustees, 115 claimants (claims totalling R214 934 344) have advised the trustees/creditors’ proxies that their claims should not be submitted for proof if a danger of a contribution exists.

The second creditors meeting, originally scheduled for 15 May, was postponed to 12 June to allow the Master to review all submitted claims.

14 thoughts on “Two more charged in connection with BHI Trust Ponzi scheme

  1. The FSCA’s functionaries must also be prosecuted and the State must stand in for the loss suffered by innocent investors, not the professional investors, such as the grandpa’s and ma’s the pensioners and the like.
    Brokers must follow Warriners route and demise!

    1. The bank, being the authorized dealer, should also be held accountable. It astounds me that banks has no scrutiny over the large amount of flows into ans out of these accounts without checking with the FSCA or the company directly about their nature of business etc. Africrypt is another example where the BANK AS AUTHORISED DEALER, plays a role with large tranches, surely with all their tech and algorithms must pick this up.

      1. Good point. The banks turn a blind eye to these activities but are so petty about other minor things….

  2. We. The honest investors really need help…we have lost our total income.
    Haldane, Caddy Cost , leech and all those involved should be made to return our funds before being jailed…

  3. I belief those creditors who benefitted from BHI TRUST must be made accountable. They should not be allowed to withdraw.
    I would also like to know if there has been any outcome in tracking the BHI TRUST computer system that would have provided all the creditors accounts.
    Has any foreign assets been recovered. If Michael Haldane has assets overseas that he benefitted from this fraud can this not be frozen until further investigation takes place.
    All we need is for one fraudster to come out with the TRUTH.

    1. The “creditors” are the people who “invested” and who BHI owes money too. The people that have cashed out are not creditors although the administrators should be going after them to recoup their illicit gains.

  4. My husband is 76 years I am 73 years all our hard earned money taken by warriner and his thugs worked all our lives thought we would have a comfortable retirement now we are a liability to our children and our grandson my heart is broken

    1. How long ago did you “invest” and who advised you to invest with Warriner?

  5. Some one needs to help us pensioners to get our money back we can’t work at our age so what will the future be for us

  6. In Lenasia Ashwin Balaram aka “King Bilraj”, Sohail Manga, Pieter and Banoo women from this area are running a Ponzi Scheme. They are claiming Life policies on people who passed away from ‘supposedly’ heart-attacks and COVID. Please investigate the number of deaths in Lenasia Extension 2,4,6 and 11 since 2020 and that helicopter has been circling Lenasia. They are claiming Life policies from Momentum and Liberty Life for people who were not insured pretending to be their family. There is a open-air network on all day linked to Bikraj Productions.

  7. Despite Warriners apparent “High !ife” no doubt much of the illegal gains were stowed overseas. Need to check overseas assets of all involved including spouses.

    1. To add insult to injury, I was at Warriner’s old school yesterday. There is a TV in the tuckshop with a sticker “kindly donated by the Warriner” family. It should have read “donated with the proceeds of crime”.

  8. I do not know if it’s just me or if perhaps everyone else encountering problems with
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  9. Global and local broker is responsible. Please pay.

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