‘That man buried me alive and I hoped he was going to rot in jail,’ says Ponzi scheme victim

Ponzi kingpin Patrick Stapleton, now serving 10 years behind bars for fraud, used shop-stewards to identify his victims — targeting workers who had been paid out for retrenchments and retirement who, because of his crime, are now living on state pensions.

This emerged in a social worker's report handed to the Durban specialised commercial crime court during sentencing proceedings before Durban magistrate Garth Davis recently. Thabile Mbuyazi interviewed several of those who were defrauded by Stapleton of R11.5m.

One victim, a 67-year-old night security guard, attended court every day of the four-year trial. Others also attended court proceedings every day. They clapped when Davis refused Stapleton’s application for bail pending leave to appeal the sentence.

Evidence was the shop-stewards made the introductions and were paid a commission, or “finders fee”, by Stapleton for every person who invested in his company, Dynamic Group CC.

However, it was not possible to bring charges against any shop-steward.

Mfaniseni Mkhulisi, 68, told Mbuyazi he worked for Assmang Manganese in Cato Ridge. He received R400,000 as a severance package. Stapleton, “who was working with the company’s shop-steward to recruit the retired and retrenched employees”, visited him at his home.

He was told he would get R1,500 interest every month but the capital would remain untouched. He invested R100,000. He received the interest for two months and then it dried up.

Stapleton stopped taking his calls and vacated his office.

Over the years, he spent the balance of his package on household expenses and now survives on a state pension.

Jabulani Shanga, 63, worked for Dunlop. When it closed, he was retrenched. He too was approached at home by a former shop-steward who introduced him to Stapleton. He invested R100,000.

My health has deteriorated since then and I sometimes wake up during the night and stay awake till the morning thinking about this

—  Buzani Virginia Mkhize

Stapleton tried to persuade him to invest more but he refused. He received interest of R1,500 for three months and now also lives on a state pension.

Two other former Dunlop employees told similar tales.

Patrick Mpungose, who invested R120,000, said Stapleton’s crime had affected him “terribly”. When he contacted Stapleton, he “became rude and said he does not have money to pay him”.

All said they had been financially devastated by Stapleton’s fraud and wanted to see him punished.

Mbuyazi noted Stapleton, 66, complained of ill health, “but it can be noted that most of his victims are also old and sickly but he did not show compassion for their health when he robbed them of their only sources of income”.

She said he had not shown remorse — alluded to by the magistrate who commented during sentencing that Stapleton “had denied any wrongdoing and believes had the authorities not interfered he would have been able to sell the intellectual property and would have paid the investors”.

Stapleton, who has a BSc degree, told Mbuyazi he had “vast entrepreneurial experience acquired from working in different companies over the years”.

It was not mentioned during the trial that this was not his first Ponzi scheme. Stapleton was one of the director’s of Edwafin, which sold “debentures” to unsuspecting investors. About 1,600 people lost about R230m after the company was placed in liquidation in 2009.

Soon after, he and fellow Edwafin director Don Hutchinson launched a new financial services company, “Dynamic Management Company”.

Buzani Virginia Mkhize, of Pinetown, said she was not happy with the sentencing, considering the damage and suffering she endures. She invested R90,000 of her R160,000 payout after working for Rainbow Chicken.

“I don’t want to talk about Patrick — it makes me so emotional to even think or hear his words. You know, I worked for 29 years and I wanted to do a lot of things at home, and that money was going to sustain me and my children. That man buried me alive and I hoped he was going to rot in jail,” she said.

“Imagine that I invested R90,000 and only got paid twice. The payment was not even more than R10,000 in total.”

Mkhize said Stapleton came to her and told her if she invested her payout she would get more money in return. She said at first she didn’t like the idea but her colleague spoke highly of Stapleton and said she was being paid.

“It was an issue of hearsay and the biggest mistake I made was to trust a colleague. I thought I was going to make a profit out of it and people claimed they were getting paid every month,” she said.

The intellectual property and high-risk nature of the investment was not explained in any meaningful way. Those involved took advantage of the lack of sophistication of most of the investors

—  Magistrate Garth Davis

“I’m just earning a government pension, which is not enough considering that had Stapleton not robbed me, I would be living a normal life. Life is difficult now and everything is upside down at home. It’s like I’ve never worked before and I feel bad whenever I look at my house now. It’s life that I failed my children.

“My health has deteriorated since then and I sometimes wake up during the night and stay awake till the morning thinking about this. His arrest doesn’t mean a lot to me because we are not getting anything from it, but it would be better if we could get compensation.”

Davis, in sentencing Stapleton, noted that between August 2009 and June 2014 the largely unsophisticated investors ploughed their retirement funds, retrenchment and severance packages into the company on the back of promises of high returns — for example, R9,000 a year on an investment of R50,000 — “something almost unheard of”.

“The investors believed there was a strong underlying sustainable business enterprise behind their investment. There was not.”

Analysis of the bank statements showed there was insufficient income generated from these businesses to sustain Dynamic Group CC and dividends to earlier investors were sourced from new investors until the inevitable implosion.

“The intellectual property and high-risk nature of the investment was not explained in any meaningful way. Those involved took advantage of the lack of sophistication of most of the investors,” the magistrate said.

Liquidator Eugene Nel told TimesLIVE Premium no meaningful funds were recovered in the liquidation process.

“We also supplied the [police] commercial crime unit with our investigations. However, nothing ever came of it.”

Additional reporting by Sakhiseni Nxumalo