Image: MoneywebImage: MoneywebCivil rights group AfriForum has approached the National Prosecuting Authority (NPA) to seize the assets of the Nova Property Group to prevent the group from selling the properties at below market values.
Nova is the so-called rescue vehicle of the failed Sharemax investment scheme in which around 18 700 investors invested approximately R4.6 billion. All Sharemax’s underlying property assets were transferred to Nova in terms of a Section 311 Scheme of Arrangement to manage. The proceeds were to be used to repay investors.
Advocate Gerrie Nel, head of AfriForum Private Prosecution Unit, said in a statement it has drafted an order of preservation to prevent Nova from selling properties at “far below the market value” and requested the NPA to bring the order before a court of law. He said: “The properties in question were acquired by the proceeds of unlawful activity, including money laundering and fraud, as contemplated in the Prevention of Organized Crime Act, 121 of 1998, as well as the Banks Act, 94 of 1990.”
Andre Prakke (forensic accountant), Iva Kautsky (her dad committed suicided in front of Sharemax office), Kallie Kriel (CEO AfriForum), Adv Gerrie Nel, and Herman Lombaard at a briefing on Monday. Image: Shutterstock
Nel said “Since the property was instrumental to committing the above-mentioned crimes against the investors, and because Nova has been in control thereof since 2012 (but this company was founded with the proceeds of illegal deposits that had been accepted by Sharemax from the public), AfriForum has requested that the NPA take these properties into its custody.”
This relates to a directive the Reserve Bank issued in 2010 in which it found that Sharemax contravened the Banks Act and ordered the repayment of investors. Nova was then established as a vehicle to repay investors.
AfriForum contends that the Nova scheme is illegal as it did not absolve Sharemax’s contravention of the Banks Act and its underlying assets were acquired with the proceeds of crime. The statement said the Private Prosecution Unit also found evidence that the board members of Nova pay themselves excessive salaries, and pay themselves before paying debentures holders.
“It also seems that Nova is getting rid of buildings in an attempt to avoid liquidation. The actions of the Nova board are unscrupulous, and we have therefore been compelled to draft this application and send it to the NPA to keep investors from suffering further losses,” Nel added.
Nova has fallen into financial difficulty over the past few years. The company’s auditors have qualified both its 2018 and 2019 financial results and also expressed its concerns that the company was not able to continue to operate as a going concern. The auditors also said it was concerning that Nova was selling properties to finance operational expenses.
However, the Nova board denied the auditor’ concerns and said the company was in a sound financial position.
Read:
Nova: Insolvent, or in a sound financial position
Irba reports Nova to Sars and CIPC
Standard Bank closed Nova’s bank accounts
The Villa shopping centre in Pretoria – Nova’s single biggest asset:
Kallie Kriel, the CEO of AfriForum, said “many of the investors in this scheme are elderly people with meagre resources who hoped to make an income by investing their nest eggs. The board of Nova/Sharemax have lived the high life at the expense of these people and as a civil rights organisation, AfriForum cannot allow that they are not held accountable. This scheme can be equated to the operation of a crime syndicate and for this reason their actions have to be stopped immediately.
More to follow.
AUTHOR PROFILE
Ryk van Niekerk
Financial journalism is in Ryk's blood. He has been in the industry for 20 years, and is looking forward to the next 20. Ryk has won numerous journalism awards, including several Sanlam Financial Journalist of the Year category awards and the coveted Radio Journalist of the Year award in 2016. He was also acknowledged as the National Press Club’s Editor of the Year in 2013. Ryk is also the anchor of the largest national business radio show in South Africa, RSG Geldsake, and hosts other dedicated personal finance and entrepreneurship shows. He is a well-known public speaker and facilitator, and a regular political and economic commentator on many South African television and radio platforms. Ryk has an MBL and M.Phil in Journalism – both achieved cum laude.
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Citizen Alert ZA
South Africa has the second highest murder rate in the world. It is a favourite hangout for organised crime syndicates from every corner of the world..CORRUPTION...Who Cares ? . No fear No Favour - The Truth sets you FREE...........
Sunday, February 23, 2014
Sharemax sues over Basson's book- A History news report - 2008- Sharemax property investors misled by 'copy-and-paste error'
Special investigations
Author: Julius Cobbett|
21 August 2008 16:00
Photo: Willie Botha
The litigious property investment company seeks to prevent publication of new book.
Attorneys for property syndication company Sharemax have again sprung into action, this time to prevent the publication of former journalist Deon Basson's book Public Interest Warriors.
Ironically, the action might have the effect of focusing further public attention on the offending book. It could also have the effect of further depleting the time and financial resources of Basson, a longstanding opponent of Sharemax. The two have been involved in extensive litigation. Sharemax accuses Basson of writing articles that are false, defamatory and damaging. Basson accuses Sharemax of poor disclosure and excessive fees on its investment products, among other things.
Sharemax's attorneys Botha, Willemse and Wilkinson applied to the High Court on Tuesday to interdict Basson from printing, publishing, distributing or selling his book. Alternatively they sought to prevent certain chapters being published, which they believe are damaging to Sharemax.
The interdict application was based on an affidavit made by Sharemax MD Willie Botha. According to Botha, Basson's book creates the false impression that Sharemax directors are greedy, untrustworthy, dishonest and opportunistic. Botha also objects to Basson lumping Sharemax with failed and fraudulent investment schemes.
Botha argues that Sharemax is a licenced financial services provider and is authorised to sell unlisted shares and debentures. He says Sharemax has successfully marketed more than 50 property syndications worth approximately R4bn. Botha says that many investors have realised capital gains on their investment in addition to earning income.
He claims that that Basson failed to find comfort in the fact that Sharemax has been assisted by "reputable commercial attorneys" Weavind and Weavind and auditors PricewaterhouseCoopers and ACT Solutions.
The affidavit also contains startling allegations against Basson. Botha claims that Basson tried to "torpedo" a transaction which saw Sharemax investors agree to sell some of their properties. He also accuses Basson of being "in cahoots" with people in the liquidations industry and of promising to write articles that would cause harm.
Basson denies these allegations and responds that what Sharemax might see as a "torpedo", he sees as doing research. "They see you talk to someone and then claim you're in cahoots with them," says Basson. "As far as I'm concerned it's all nonsense."
Botha says that Basson has to this day refused to disclose who is paying his costs of defending Sharemax's legal action against him. Basson denies he is being externally funded and says he's paying all his costs himself.
Basson says he will respond to the interdict application in due course. He adds, cryptically, that it's about time that "many people in the media and at regulatory authorities wake up. Some of them are in for a surprise".
Click here to download Sharemax's interdict application.
Topics: Willie Botha, Sharemax, Deon Basson
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The Money Whisperer
Author: Magnus Heystek|
01 February 2013 13:20
Opinion: Deon Basson was right about Sharemax
Sharemax is a Ponzi scheme, a Ponzi scheme, a Ponzi scheme, a Ponzi scheme….
There - I’ve said it, and for the first time it can now be said without fear of being threatened with bullying letters from one of the phalanx of lawyers used by Sharemax over many years.
This is the one consequence of the ruling by the Financial Advisory and Intermediary Services (Fais) Ombud Noluntu Bam, who finally had the courage to blow open the festering sore known as the Sharmax Property Syndications with a courageous and honest ruling that sets in motion far- reaching consequences, both legal and financial, for the advisors, directors and other parties associated with this.
The other consequence is that, unless this ruling is somehow overturned by the Financial Services Board (FSB) Appeal Panel or another court, the floodgates are now well and truly open for financially dispossessed investors, particularly in the Zambezi Mall and The Villa, to pursue their claims through the offices of the ombud.
These two schemes in particular had all the characteristics of a Ponzi scheme: investors handing over money in order to get a little bit of their money back. This could only continue as long as there were other investors in the back of the queue to pay the investors in the front of them.
In total about R2.5bn was invested into these two schemes, most of it now simply gone….
For the late Deon Basson this vindication comes too late. His legal battle with Sharemax was a direct cause of his sudden death by heart attack. I was friends with Deon Basson since our days at Beeld in the early 80’s and we often - not often enough now in hindsight - had a beer and a burger, chatting about many things, lately more often than not about his research on Sharemax and his continuing legal battles with it.
For the record: Sharemax was suing him for R20m in damages for alleging that the financial model of Sharemax was unsustainable and in effect…..a Ponzi scheme. I think his estate needs to consider a damages claim against Sharemax and its directors.
His career path in financial journalism took him to the Financial Mail, Finansies en Tegniek and Finance Week amongst others, in the process winning an unprecedented six Sanlam awards for financial journalism. In the end he stopped entering this competition, he told me once, because he was afraid of being labelled a “windgat”.
Along the way he also was made a honorary professor in accounting at the University of Pretoria.
What was worth mentioning was that Sharemax did not sue the publications that carried his articles but Basson in his private capacity, thereby avoiding a long and drawn out legal battle with media giant Naspers. I understand that Naspers abandoned Basson in his financial hour of need. He won most of his Sanlam awards while working for this group and each time he won they would brag about “their” top journo, but when the chips were down they were nowhere to be seen.
The Sharemax lawyers used all the dirty tricks in the legal profession, making the shenanigans of the lawyers in The Good Wife look like the actions of Mother Theresa.
Funded by an endless supply of money they served papers on Basson, often changing their pleadings, requesting postponements etc., all with one objective in mind: to silence Basson and wear him out, both physically, mentally and financially.
In one court appearance the Sharemax lawyers even tried to use Basson’s health (he suffered from a bi-polar condition) in an attempt to discredit his testimony and analysis of their accounting methods.
A week before his death I had lunch with Basson. He gave me some chapters of his unpublished manuscript on Sharemax called “Public Interest Warriors” in order to get my view and to check some facts. There was no need: his facts were meticulously researched.
He also admitted during this lunch that Sharemax was getting to him. Financially destitute, abandoned by his erstwhile employers, most of his friends as well as the regulatory environment, his last words to me were:” Ek is tam, hulle ‘grind’ my nou....”
A week later he was dead, a sudden heart attack.
After his death Sharemax bought the manuscript of Basson’s book from his estate for an amount rumoured to be R400 000. His wife, also suffering financially, had no choice but to sell.
But Sharemax could not stop the tidal wave of exposés now coming at them from many quarters, particularly Moneyweb, the Afrikaans radio station RSG , Finweek and finally at the death, Beeld and Rapport.
The other English newspapers were missing in action in all of this. If you google ‘Sharemax’ on the Business Day website you find only five references to Sharemax, two of them written by the late Ian Fife who wrote about the possibility of Bonatla buying Sharemax. Nothing else about one of the largest financial scams in South African history.
It is my view that Business Day simply ignored this story, as did most of the English press, due to the fact that most of the distressed investors were old, white Afrikaans pensioners, and they could not be bothered with their fate.
It is furthermore my view that were more black investors the victims of the Sharemax scam, the regulators, including the FSB, the Department of Trade and Industry, the Reserve Bank and the Hawks would have stepped in a long time ago. A group of 4 000 Swazi military veterans have lost all their money in this scheme.
Mention has to be made of two other activists in all of this: forensic accountant André Prakke and Moneyweb’s Julius Cobbett.
Cobbett has been streets ahead of any other journalist in his articles on Sharemax and Picvest, the other large failed property syndication. I tried to get other journalists interested into the growing debacle at Sharemax. Cobbett was the only one who got out of his air-conditioned office and travelled more than 40 kilometres to a derelict and dusty shopping Sharemax syndication called The Fern, next to Dainfern where I live.
We were joined for a short lunch by André Prakke, who also worked tirelessly behind the scenes with his razor-like analysis of the financial engineering taking place at several Sharemax developments. In almost all instances could he point out that investors’ interest payments were being funded or supplemented by a secret slush fund, the hallmarks of a Ponzi scheme.
The Fern was a R40m syndication marketed by the Sharemax brokers at the time, with the prospect stating that it was an “upmarket shopping centre fully let with a steady stream of wealthy shoppers from Dainfern and surrounding areas…..”
The only problem was that the shopping centre was virtually empty, the anchor tenant Pick’nPay had left months ago and all that was left was a rag-tag collection of estate agents, hairdressers, a pizza joint and an ATM. Quite simply: they were lying, and so did Willie Botha, previous MD of Sharemax when he was quoted by Cobbett in one of his articles in response to his questions on The Fern.
On further analysis I established that The Fern had a bond of R28m with Nedbank at a fixed rate of 14, 5%. It was broke and underwater but still it was being marketed by Sharemax. Furthermore, on reading through the prospectus it took a while to establish that you were not investing in the property itself but merely lending money to a different company via a debenture which in turn lent the money to Sharemax.
On the phone-in radio programme on RSG, which I hosted Friday evenings from time to time with Andries van Zyl, we were often, particularly in 2010 and 2011, asked our views on the merits of investing in a Sharemax development. The answers were always the same: do not touch it with a bargepole!
Rather invest in a listed property fund, the best performing asset class over ten years or more if you wanted to invest in property, was my view.
This naturally drew the ire and legal threats from Sharemax who insisted on a meeting with Moneyweb and me. A date and time was agreed upon and Sharemax sent a list of 11 representatives from Sharemax who would form their delegation, including Willie Botha.
Feeling a little outnumbered we wrote back to state that apart from Andries van Zyl, executive producer Janine Bester and myself we would like to include André Prakke in our team. The meeting was immediately cancelled with no further explanation. Very soon thereafter the SA Reserve Bank stepped in and declared the scheme to be in contravention of the Banks Act and forced Sharemax to stop taking money from the public. This was the beginning of the end.
For his efforts Prakke had to suffer the continued legal threats from the legal bully boys employed by Sharemax. Prakke tells me that a week after Basson’s death he received a phone call from a Sharemax-lawyer with the ominous warning: you‘re next. He has never been sure if it was in reference to Basson’s death or the possibility of a lawsuit.
The Ombud’s ruling also has dire consequences for Weavind and Weavind, the Pretoria legal practice into whose trust account the investors’ billions paid in terms of an explicit undertaking that no money was to be released until the properties (Zambezi and The Villa) have been transferred into the investors’ name. As we know now the billions of rands that came into the account left it almost immediately.
Likewise the auditing firm ACT Solutions have some answering to do. They too have been reported to IRBA, the Independent Regulatory Board for Auditors, to explain their role in this unravelling property scheme.
This is not the last word on the Sharemax- saga. Expect similar developments in regard to Picvest, another failed property syndication which is currently under business rescue. Here too the final words have not been spoken.
*Magnus Heystek is a director at Brenthurst Wealth.
Topics: SHAREMAX, PONZI, FSB, FAIS, OMBUD, OMBUD NOLUNTU BAM, ZAMBEZI MALL, THE VILLA, DEON BASSON
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Law firm: Summons against Sharemax
Home News Commercial Law firm: Summons against Sharemax
14 Jan 2011
Weavind & Weavind, the attorneys acting for Sharemax Investments has launched a R9-million damages claim against Pierre Hough, managing director of Chase International, Chase Consulting, financial planner Toffie Risk and Johanna Margaretha Magdalena Bosman, an investor in Zambezi Retail Park syndication.
The firm is claiming R2-million while its seven directors are each claiming R1-million from Bosman, Hough and Chase Consulting because of damages that they allege were a result of Bosman’s conduct.
In its particulars of claim, Weavind & Weavind list a number of statements alleging that funds deposited into the firm’s trust account had been stolen. The allegations were apparently made in affidavits drafted in support of a complaint to the Law Society of Northern Provinces and a criminal case.
Weavind & Weavind says the allegations are wrongful and defamatory and implied that the directors were implicit in the theft and shared the proceeds. It claims the statements were made with the intention to defame the firm and its directors and injure their reputation.
Hough, who had assisted in compiling the affidavits, said that the damages claim lacked substance and merit and he confirmed that all the respondents named in the Weavind & Weavind application would defend the action.
He said the damages claim was aimed at scaring off other investors in the syndication to prevent them from lodging claims against the law firm.
Jaco Fourie, a senior legal official within the disciplinary department of the Law Society of the Northern Provinces says the organisation is awaiting a response from Hough to the allegations made by Weavind & Weavind. Once it has received the response it will present its evidence to a disciplinary committee of the law society.
A case of fraud was opened against the firm after Sharemax defaulted on monthly payments to investors in September last year. The commercial crimes unit is investigating the case.
Readers' Comments Have a comment about this article? Email us now.
It was the illegal release of the trust funds that started the whole feeding frenzy and made a joke of all the investor safeguards provided for in the Unfair Business Practices Act.
Go for them Pierre. You have a lot of support out here - how about us starting a fund to pay a bounty on each one of those involved being put behind bars. - L. Oldacre
Hi, lees News 24 van vandag,kyk in watter weelde leef Botha en Brand,hoe kan hulle met die bedrog wegkom terwyl ek en my vrou, altwee pensionarise, van dag tot dag moet leef op genade,ek kan ook my eiendom verloor,het nie meer n inkomste nie en ons leef op R2,000 n maand.Mense,hoe werk die wet dat skelms ons geld kan vat en daarmee gegkom?
Ek wat n leek is weet nie watter kant toe nie,het probeer werk kry maar is te oud,het 10 jaar terug n hartomleining gehad.Het ook nie geld om n saak te maak nie,glo nie dit sou in alle geval gehelp het nie.WAT kan ek doen,groete. - Willem
Pierre Hough · Chairman and CEO at La Lucia Property Investments Limited
Big deal! I am informed by a Moneyweb journalist that Weavind & Weavind have struck a deal with the NPA in order to avoid prosecution for their part in the Sharemax fraudulent scheme.
They will apparently turn state witness against the directors of Sharemax. As far as the damages action is concerned, they withdrew their claim against Toffie Risk and Retha Bosman in dubious circumstances, and they have done absolutely nothing about taking the damages claim against me any further.
It was a smoke screen, a red herring to detract investors from also not filing complaints against them.
I look forward to see the outcome of all this and who gets egg in the faces.
Reply · · 19 September 2013 at 01:51
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Investors are after Sharemax’s legal firm
Home News Commercial Investors are after Sharemax’s legal firm
22 Oct 2010
The attorney acting for Sharemax’s investors, Kobus Schabort has sent a letter of demand to Weavind & Weavind demanding that it repays R1,55-million to 11 investors who deposited money into the firm’s trust account.
The deposits were paid to be part of The Villa property syndication but construction of this centre has been halted after Sharemax stopped paying funds to the project developer, Capicol.
Weavind & Weavind has 21 days to respond to the letter of demand and Schabort says that should he not get a response then he would initiate legal proceedings to liquidate the legal firm.
He says that the investors first had to execute a claim against Weavind & Weavind before making any claims against the fidelity fund of the Law Society of the Northern Provinces.
Sharemax has apparently raised billions of rands for development of the 30 property syndications it has been involved in over the past 13 years but last month the Registrar of Banks stepped in and appointed statutory managers to manage the repayment of funds to investors from its syndications after the Sharemax funding model was found to contravene the Banks Act.
Weavind & Weavind has been identified as the attorneys acting for the property syndication scheme in the prospectuses issued for The Villa and Zambezi Retailer Park. However, these properties have apparently not been transferred to the syndication vehicle. The withdrawal of funds from an attorney’s trust account is prohibited unless the properties have been transferred.
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21 May 2013
Sharemax property investors misled by 'copy-and-paste error'
Sharemax's directors told their auditors they made a "copy and paste" error in the prospectus of the Zambezi property syndication that misled investors about the security of their investments.
This is revealed in the latest determination by Noluntu Bam, the Ombud for Financial Services Providers, in which she orders an adviser, who is an accredited Certified Financial Planner, as well as Sharemax and four of its directors, to make good the loss suffered by an elderly woman who invested in the scheme.
Click to enlarge
The Zambezi property is now an empty shopping centre, and millions of rands need to be spent to rectify problems with the roads around the centre, the ruling reports.
Investors stopped receiving payments in 2010.
In her latest ruling, Bam relates replies from Advoca Auditors, then known as Act Audit Solutions, to her questions about whether the auditors reported the transfer of investors' funds out of the trust account of Sharemax's attorney, Weavind & Weavind, to the developer of Zambezi as an irregularity to the Independent Regulatory Board for Auditors (Irba).
The transfer was irregular because the Zambezi prospectus stated that investment funds would remain in the trust account of Weavind & Weavind until the property was transferred into investors' names.
Click to enlarge
Property syndicates are also required to keep investors' funds in an attorney's trust account until the property is transferred to the syndicate. This is in terms of a general notice issued under the Consumer Affairs (Unfair Business Practices) Act by the Department of Trade and Industry (DTI) in 2006.
The promise that funds would be held in a trust gave some peace of mind to investors such as 73-year-old Mrs B, who invested R490 000 in Zambezi on the advice of her financial adviser, Edward Carter-Smith.
Bam says most investors would not have participated in the syndicate had they been informed their funds would not enjoy the protection of an attorney's trust account.
But despite the DTI's notice saying it applied to all property syndications, Advoca told Bam it obtained legal advice that the general notice did not apply to the Zambezi syndication or Sharemax's other troubled scheme, The Villa.
Click to enlarge
Advoca also told Bam that the Sharemax directors said the transfer of the money from their attorney's trust account was no reportable auditing irregulatory because the reference to the money being held in trust should not have been in the prospectus and was a "bona fide 'copy and paste' mistake" made during the drafting of the prospectuses.
Bam says it is "startling" that the directors are claiming there was a mere mistake in the prospectus, as it was a material clause and the prospectus had been issued repeatedly between 2007 and 2010.
The ombud says the claim is disingenuous and against the probabilities.
She says the auditors do not give any details about when the error was discovered and what action, if any, was taken to inform investors.
Bam says the auditors did not accept the directors' explanation and reported the matter to Irba anyway. However, they did not report the matter timeously, she says, and they ought to have known that investors' money was being lent to the developers of Zambezi, who used the same funds to pay 14 percent interest back to Sharemax.
In an earlier determination, on a complaint by Mrs S, a widow who invested R649 000 in Zambezi, Bam also asked Sharemax's directors to explain the irregularity, and reported Weavind & Weavind to the Law Society.
Click to enlarge
In her latest ruling she says she found their explanation "unacceptable".
The only reasonable conclusion that can be drawn from the directors' conduct is that they were "involved in a scheme calculated to defraud members of the public", the ombud says.
Bam says Sharemax was a Ponzi scheme and its directors broke the law.
For this reason, as in the earlier matter, Bam found Sharemax and its four directors, Gerhardus Goosen, Johannes Botha, Dominique Haese and Andre Brand, liable together with the adviser who recommended the scheme to the pensioners.
A company trading as Unlisted Securities South Africa, which allowed advisers and brokers who were not qualified to use its licence to sell Sharemax to investors, was also held liable.
Sharemax has appealed the earlier matter.
Bam says Mrs B complained that she and her 71-year-old husband were in poor health and had told Carter-Smith she was a conservative investor and did not want "all her eggs in one basket".
Carter-Smith told Bam that Mrs B had invested in the PIC (Picvest) property syndicate previously and she found the Sharemax syndicate better suited to her needs.
Carter-Smith told Mrs B she could earn a 50-percent return on Zambezi in the first year, and the risks were as remote as that of the banks collapsing
Bam says that, as an adviser with 25 years' experience, CarterSmith should have realised that a return of 50 percent "is ridiculously extravagant" and questioned how it was possible.
She says Carter-Smith failed to comply with the code of conduct under the Financial Advisory and Intermediary Services Act by failing to give advice "honestly, fairly, with due skill, care and diligence".
She says Carter-Smith failed to apply his mind to the fact that Mrs B was a pensioner, unable to tolerate risk, and she had asked for her capital to be guaranteed with some growth and an income. Carter-Smith asked Mrs B to sign a disclosure document that made it clear that Sharemax represented a risk to capital and that income was not guaranteed.
He also failed to offer Mrs B alternative products, Bam says.
Personal Finance
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Sharemax law firm register new company
Home News Commercial Sharemax law firm register new company
13 Dec 2010
Weavind & Weavind, the firm of attorneys who act for Sharemax, has registered a new company W and W Associates with the same physical address and auditors as Weavind & Weavind.
The Law Society of the Northern Provinces has apparently not been informed about the new registration. All new law firms are required to register with the law society and obtain a fidelity fund certificate.
Weavind & Weavind recently received a letter of demand for the repayment R1,55-million from a group of Sharemax investors who had deposited money into the firm’s trust account for The Villa and Zambezi Retail Park property syndication.
The letter of demand is a precursor to a possible liquidation application.
Raiford Johnson, a senior partner at Weavind & Weavind confirmed that the new company had been registered but claimed that it had done so to meet any future needs the company might have in terms of expansion or diversification.
He says that none of the directors or employees of Weavind & Weavind have any intention of practising in any other capacity than as directors and employees of Weavind & Weavind.
The dispute with Weavind & Weavind and 11 Sharemax investors is related to a government notice issued in 2006 that prohibits the withdrawal of funds from a trust account before the properties in a syndication have been transferred to the syndication vehicle.
However, neither Zambezi Retail Park nor The Villa were transferred although money was allegedly paid to Sharemax. Weavind & Weavind says the government prohibition does not apply to the firm.
An investor has lodged a claim fro R200k with the fidelity funds of the Law Society and the Attorneys Insurance Indemnity Fund. The same investor has apparently opened a fraud case at the Brooklyn police station in Pretoria.
The case has been transferred to the commercial crimes unit.
Sharemax defaulted on its payments to investors in September this year and all construction work at The Villa and Zambezi Retail Park has been halted. Apparently 40 000 shareholders have invested about R4,5-billion in property syndications marketed by Sharemax.
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CITIZEN ALERT ZA
SOUTH AFRICA HAS THE SECOND HIGHEST MURDER RATE IN THE WORLD. IT IS A FAVOURITE HANGOUT FOR ORGANISED CRIME SYNDICATES FROM EVERY CORNER OF THE WORLD..CORRUPTION...WHO CARES ? . NO FEAR NO FAVOUR - THE TRUTH SETS YOU FREE...........
MONDAY, FEBRUARY 4, 2013
Sharemax attorneys deny ombud’s claims of irregular conduct
Sharemax attorneys deny ombud’s claims of irregular conduct
February 4 2013 at 08:00am
By Roy Cokayne
Comment on this story
inlsa
Legal issues sorrounding Bonatla's proposed acquisition of Sharemax.photo by Simphiwe Mbokazi 099
Roy Cokayne
Sharemax Investments’ attorneys, Weavind & Weavind, have labelled allegations by the financial advisory and intermediary services (Fais) ombud that the firm contravened the Attorneys Act and a government prohibition as “gratuitous and unfounded”.
Raiford Johnson, Weavind & Weavind’s managing director, said on Friday that the firm rejected the contention it had contravened a government notice issued in 2006 prohibiting the release of investor funds held in trust for investment in property syndications before the properties being syndicated had been transferred into the syndication vehicle.
In a determination released last week, Fais ombud Noluntu Bam concluded that Zambezi Retail Park, which was promoted and marketed by Sharemax, was “nothing more than a Ponzi scheme” in which investors were paid interest out of their own funds.
The determination followed a complaint by Gerbrecht Siegrist, a 67-year-old pensioner from Tigerpoort in Pretoria, who invested R580 000 in Zambezi but is now destitute.
Bam ordered Siegrist’s financial advisor Cornelius Johannes Botha, trading as CJ Botha Finansiele Dienste, Sharemax Investments, FSP Network, Sharemax and USSA director Gert Goosen and Sharemax directors Willem Botha, Dominique Haese and Andre Brand to jointly and severally pay Siegrist R580 000.
Johnson stressed that the complaint related to the role of all the respondents to the complaint, which did not include Weavind & Weavind.
The issues of the determination did not concern his firm “in any way, shape or form”.
Johnson said it was unclear why Bam had found it necessary to accuse Weavind & Weavind of irregular or inappropriate conduct because these were “completely irrelevant to the issues she was required to determine”.
Bam recommended the Law Society investigate the trust account of Weavind & Weavind to establish how and under what circumstances investors’ funds were paid out of the firm’s trust account.
“It is clear the attorneys did not comply with the Attorneys Act and the Law Society guidelines. Nor did the attorneys comply with the investor protection provisions of the Government Gazette,” she said.
Bam said that in the prospectus and the marketing of the Sharemax product, two significant representations were made to the investing public: that their funds would be deposited into the trust account of the attorneys where they would enjoy protection; and that the attorneys, acting independently, had “satisfied themselves that the whole scheme was compliant with the prevailing laws”.
She said the attorneys claimed that the government notice was not applicable to the Sharemax schemes but the firm did not provide any legal or factual basis indicating why the government notice did not apply to the firm.
Bam said Weavind & Weavind’s view on this was also contrary to what was stated in the prospectus and there was a duty on Sharemax and the firm to disclose in the prospectus that the government notice did not apply to this transaction.
Johnson said the government prohibition was only applicable to “public property syndication schemes”, which referred to schemes in which investors were invited to participate by investing in entities “whose sole assets are commercial, retail, industrial or residential properties”.
“The investors who participated in the Villa and Zambezi Retail property syndication were not invited to invest, nor did they actually invest, in the property investment companies themselves. Their investments were in the investment companies’ holding companies, which did not own commercial, retail, industrial or residential properties at all, but only a share in and a claim against the subsidiaries who did own properties of that nature.”
Johnson said the properties were also not the subsidiaries’ sole assets, which also included rental businesses and other property, “such as furniture, equipment and so forth”.
The Law Society had already investigated several complaints against Weavind & Weavind and all allegations made against the firm had been rejected as “being without merit”, Johnson added.
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By Paul
Kruger on 4 Feb 2013
in Compliance
and Legislation
It has become a hackneyed phrase to term an event “ground breaking”.
In this instance, I think it applies.
We have for a very long time voiced our concern over the fact that
determinations were only made against the intermediaries involved, especially
where investments were made in what the media dubbed “toxic
investments”.
In her latest determination, the FAIS Ombud included the directors and
associates of Sharemax in resolving a complaint from a client.
The respondents in the case were:
Cornelius Johannes Botha – the intermediary who placed the investment
Sharemax Investments Pty (Ltd) – product provider and promoter of
investments involved
FSP Network trading as Unlisted Securities South Africa (USSA)
Gerhardus Rossouw Goosen – Sharemax director and compliance officer, and
both director and key individual of USSA
Johannes Willem Botha – director of Sharemax
Dominique Haese – Director, key individual and representative of Sharemax
Andre Daniël Brand – director of Sharemax
I extracted the three
pages containing the issues investigated, and the Ombud’s findings. I strongly
recommend that readers take the time to read it. Please click
here to download it.
The first issue investigated by the Ombud concerns whether non-compliance
with the FAIS Act by the advisor led to the alleged loss by the complainant.
For the first time, it also set out to determine “…the role and consequences
of the second to seventh respondents conduct in this investment, in their
capacities as licensed FSPs, product providers and principals in terms of
Section 13 of the Act.”
In addition, it wanted to determine the consequences of any breach of the law
by the last six respondents.
The findings of the Ombud would be termed “guilty on all charges” in normal
legal language. The list of findings contain the following:
The intermediary contravened the Act by recommending an inappropriate
product.
FSP Network is responsible for the consequences of its representatives.
Sharemax failed to make a full disclosure of the scheme in the prospectus
and investors were misled.
“The directors of Sharemax and FSP Network were aware of the fact that the
scheme was both illegal and not commercially viable and yet they recklessly
took investors’ funds.”
The final conclusion reads: “The directors of Sharemax and FSP Network must
be held personally liable for the complainant’s loss.”
The determination had to be divided in two sections in view of the size of
the document.
In section one, an explanation of what led to the eventual determination is
particularly scathing in so far as the role of FSP Network is concerned. In
particular, its failure to train representatives under supervision is
highlighted.
The Ombud is also convinced that there was no real “arms length” distinction
between Sharemax and FSP Network. Rather than act as a genuine broker network,
FSP Network was intent on selling only Sharemax products.
This determination is bound to raise substantial interest from both legal and
industry circles. One immediate focus is on the possible implications for
intermediaries who recommended property syndications as an investment medium for
clients.
In this instance, the intermediary was not absolved from blame. The question
that arises is whether other advisors, such as Deeb Risk, who were previously
instructed to refund clients, can now request joint responsibility from the
directors and promoters of Sharemax. The same applies to those yet to face the
wrath of the Ombud.
In a determination concerning an investment in the ill-fated Leaderguard
Securities, the late Charles Pillai stated that the directors of Leaderguard
wove such an intricate web of lies and deception that neither investors nor
advisors were able to discern between fact and fiction, or words to that effect.
This did not, however, prevent him from finding against those who invested funds
in Leaderguard.
We will be spending a lot of time dissecting this determination. It provides
a whole new perspective on culpability when investments go sour. Of particular
interest is the Ombud’s determination on which party is responsible for payment
to the complainant.
Perhaps, it is the start of a new era where the consumer will at last enjoy
the protection envisaged in the FAIS Act.
On Thursday, we discuss the view of the Ombud regarding the role of the
product providers and directors, and what the term “…jointly and severally, the
one paying the other to be absolved…” entails.
POSTED BY TANGO AT 9:02 PM
3 COMMENTS:
AnonymousFebruary 5, 2013 at 12:18 AM
IS IT IN THE INTEREST OF CORRUPT ATTORNEY'S TO AGREE WITH A JUDGEMENT AGAINST THEM BY THE OMBUDSMAN?
WE DID NOT THINK SO....
NOW FOR CRIMINAL PROSECUTION, SEIZURE & IMPRISONMENT!
ReplyDelete
Anonymous
February 5, 2013 at 3:07 AM
Comment as taken from FA News Editor:
"Forensic investigator, Pierre Hough, claims that an offer of compromise to Sharemax creditors won’t resolve problems facing investors in the scheme. Sharemax’s application for permission from the High Court to reach an offer of compromise with creditors may be halted according to Chase International managing director Pierre Hough. He says the planned offer of compromise is trying to legalise an illegal act and is prejudicial to the rights of prospective investors. Hough, who is a business strategist and specialist forensic investigator, alleges that there were no investors or shareholders in either The Villa or Zambezi Retail Park because a condition that had to be met for the scheme to become effective had not been fulfilled. He says this condition was that the properties be transferred to the syndication vehicle and this condition had not been met. He says that in terms of the government notice on property syndications, the money deposited by prospective investors into the scheme had to be repaid to them Hough says that the government notice is clear: the money deposited must be repaid to the applicants and he claims, the issue of share certificates to prospective investors is “highly irregular” and “possibly fraudulent”.( From the internet) Question:The money which was invested in tthe property syndiaction scheme was paid into Sharemax's attorney's trust account. Why must the broker repay the funds invested to the client. Should Sharemax not refund the investor the money they took in as an "investment " which was paid according to the prospectus into the attorneys trust account now that all has come to a standstill. The Zambezi Mall was officially opened last year April 2010.They have tenants ,but it is stated that the buildingwork is not complete.It does not make sense
ReplyDelete
AnonymousFebruary 5, 2013 at 8:24 AM
A potential investor would be an immediate fool to invest in this fraud ridden Ponzi scheme.....
Let the old investors be paid out their lost pensions before new 'fools' get raked in!
Is this a case of throwing good money after 'bad money?'
OMG what nonsense......
ReplyDelete
Posted by Tango at 6:30 AM
3 comments:
AnonymousMarch 27, 2014 at 10:09 AM
Hoe is dit moontlik dat nie een van hierdie direkteure van Sharemax nog nie agter tralies s nie ?
Dit lwil vir my voorkom of die " Boere Mafia " nog steeds die regstelsel in die Zuid Afrikaanze Republiek beheer !
Rus in Vrede Deon Basson ...hierdie ouens sal brand in die Hel !
ReplyDe
AthiambiwiedJanuary 19, 2017 at 1:14 AM
This is really fantastic! I really like the last painting!
Business Lawyers Johannesburg
ReplyDelete
AnonymousJanuary 19, 2017 at 4:55 AM
Yes the Sharemax Mafia wanted to keep all their corruption under wraps............
Let's expose every one of them.......
ReplyDelete
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