Eighteen years after they were arrested, and 10 years after their criminal trial began, brothers Pieter and Louis Henderson have been sent to prison for fraud and theft involving more than R6m, in what was labelled as a Ponzi scheme.
Pieter Henderson, 57, who lived on the KwaZulu-Natal south coast, was sentenced to an effective 15 years in prison, and his brother Louis, 54, who lived in Ballito, to an effective 12 years. The sentence was imposed by Durban Commercial Crime Court magistrate Sitembiso Maphumulo late last month, after a marathon trial in which they appeared in court on more than 240 occasions.
The brothers were running the scheme from an office in Durban’s CBD under the name of Forex International, which was shut down by the SA Reserve Bank in 2002 when “investors”, including pensioners, cried foul.
They were arrested in 2003.
Pensioners were lulled into a false sense of security as their friends and relatives were receiving payments on a regular basis.
— Adv Ashika Haripersad
Earlier this year, they were convicted of charges of contravening the Bank Act, in that they were taking deposits while not properly registered as a bank, fraud, theft and reckless and negligent trading.
The delays in the trial were mainly at the behest of the brothers. They changed lawyers several times and eventually defended themselves.
The judgment alone took more than 20 court days to deliver and Covid-19 also contributed to some of the delay.
Expert evidence during the trial was given by forensic auditor Eckhard Volker, who said most of the money was lost due to their ineptitude in trading and repaying proceeds to old investors and commission from new capital “like a traditional Ponzi”.
About 12 of the 360 investors, who lost all of their money, also testified.
In spite of being directed in 2002 by the bank to repatriate remaining funds held in their trading account in Mauritius, they refused to do so, and when they did eventually comply, there was very little left, only R254,000.
However, in mitigation of sentence, the brothers asked for time to repay the money.
The prosecutor, state advocate Ashika Haripersad, argued before the court that if they had the money, and the intent, they would have paid back what they had fleeced by now.
Both had little earning potential, which had been further reduced by the pandemic.
Other aggravating factors were the “unnecessary delays” in the trial and their lack of remorse.
They had “completely ignored” the directive to repatriate funds from Mauritius – an indication of their lack of sympathy for the investors.
Those who testified had expressed their grief and anguish at losing everything and the impact it had on their daily “bread and butter”.
“The state disputes that there was no intention to defraud. The offences were committed over a protracted period of time and the scheme collapsed when there were no more funds to meet their obligations,” Haripersad said in her written argument.
“The accused did not play open cards with the court when they claimed they had not used the money for personal gain. The offences were committed out of greed, not need.”
She said the schemes attracted the needy who were looking for the best possible returns to offset the ravages of inflation.
“Pensioners were lulled into a false sense of security as their friends and relatives were receiving payments on a regular basis.”
In a pre-sentence probation officer’s report handed in to court, social worker Thembelihle Gwabe said during her interview with Louis Henderson, he maintained his innocence and that “no one was prepared to listen to his side of the story” and the goal was not to commit a crime.
But she said direct imprisonment was “appropriate and unavoidable”, considering the seriousness of the crimes and the fact that he still denied responsibility.
“The social worker is of the opinion that a custodial sentence would allow him an opportunity to reflect and acknowledge the wrongfulness of his actions. Furthermore it will address the best interests of society and portray a clear picture to like-minded individuals that offences of this nature come with severe punishment.”
Social worker Nokukhanya Mdletshe, who compiled the report on Pieter Henderson, noted that he too maintained his innocence.
“He did say that he feels sorry for the people that lost money ... but that he intended to appeal the matter. This may therefore be viewed as an unwillingness to accept responsibility for his unlawful actions.”
Mdletshe, who had interviewed Volker, said the brothers had “stubbornly” refused to heed instructions to repay the money when it still existed and that had aggravated the losses to the innocent investors who had relied on misrepresentations to invest in the fraudulent scheme.
She too recommended a sentence of direct imprisonment.
Magistrate Maphumulo agreed the only appropriate sentence was one of direct imprisonment. She refused their application for leave to appeal, and they have begun serving their sentences.
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