Ponzi Scams continue to entrap South Africans
Ponzi schemes of all sorts are over 150 years old and the reason that they have held such great success is that people continue to fall for them. This is no more true than the uptick in Ponzi schemes in SA, and for every criminal busted by the FSCA (Financial Sector Conduct Authority), it seems more just appear. The key in protecting yourself is to know what to look for and be suspicious for promises of any get rich quick scheme.
Ponzi schemes are named after Charles Ponzi, who, in 1920, created a fraudulent promise for early investors for a non-existent business. Investors were to give their money over for “international reply coupons”. Ponzi said he could purchase these from other countries at a discount and then in the U.S. Redeem them at face value, making a large profit. In reality he was simply paying early investors with the money he got from later investors. However, according to Wikipedia: Some of the first recorded incidents to meet the modern definition of the Ponzi scheme were carried out from 1869 to 1872 by Adele Spitzeder in Germany and by Sarah Howe in the United States in the 1880s through the “Ladies’ Deposit”. Howe offered a solely female clientele an 8% monthly interest rate and then stole the money that the women had invested. She was eventually discovered and served three years in prison. The Ponzi scheme was also previously described in novels; Charles Dickens‘s 1844 novel Martin Chuzzlewit and his 1857 novel Little Dorrit both feature such a scheme.
In other words, criminals will be creative in the methods that they use to steal from their victims. In today’s digital world, threat actors use every tool in the toolbox: email, text messaging, social media platforms, hijacking the profiles of others, and even AI.
FSCA has increased their diligence against these kinds of schemes.The most notable bust was in 2024 for the debarment against two BHI Trust executives for the investment scandal involving ZAR 3 billion (GBP 130 million). This ripoff involved Mauro Forlin and Michael Haldane, two Global & Local Asset Management executives; both of whom have been banned for thirty years from working in the financial services sector. In a statement by the regulator: “The BHI Trust was not an authorised financial services provider (FSP), although it conducted financial services in contravention of the law. Haldane and Forlin did not properly assess the appropriateness of the BHI Trust product in relation to its client risk profiles, in some instances, pensioners with no other source of income.”
Additional more prominent figures involved in Ponzi scheme crackdowns by FSCA have included twelve individuals from SA financial services industry, some of which were behind the My Wealth Method and My Wealth Dias schemes. These were unauthorised share-trading scams making ridiculous profit promised of up to 49% returns on investment. In another high profile case, the FSCA shut down the CBI X SA and CBI Association, run by Coenraad Botha. Botha had promised investors they would get between 1%-4% weekly returns; however, investors got nothing as the money was never invested. Botha was fined ZAR 216 million (GBP 9.4 million) and banned for ten years from the financial industry.
FSCA additionally cracked down on the itradefxlive bogus trading scheme which was started by Sandie Shezi. Shezi received a ZAR 1 million (GBP 44,000) penalty and debarment from the financial industry for ten years. Another one was Shaheen Khan who marketed foreign currency investments without the required licenses. Khan was received a ten year ban and was fined ZAR 4.5 million (GBP 196,000).
Da Vinci was requested to investigate QZ Investments. QZ Asset Management marketed itself as an innovative financial institution leveraging Big Data and Artificial Intelligence (BDAI) for trading and asset management. It claimed to offer unparalleled returns of up to 400% and guaranteed the safety of investor capital. The scheme targeted individuals and institutions primarily in Africa, promising financial growth through seemingly sophisticated technology and investment opportunities.this included an elaborate set up and
“Cybercriminals continue to develop their ploys with more and more sophistication. Many develop well-designed websites, marketing plans, and professional looking and sounding sales pitches to get investments. DaVinci Cybersecurity assists in recognising the threat actors and protecting our clients from losing their hard-earned money.”
Sharon Knowles, CEO DaVinci Cybersecurity
Source:
https://www.sabric.co.za/stay-safe/ponzi-pyramid-schemes
https://en.wikipedia.org/wiki/Ponzi_scheme
https://iclg.com/news/21624-south-african-ponzi-scammers-disbarred-for-30-years
