Ponzi scheme ‘victims’ won’t get their money back

Investors who sunk their savings into an illegal Ponzi scheme, lured with promises of returns of up 1,000% over nine months, will remain out of pocket.

Durban high court acting judge Garth Davis has dismissed their applications for a variation of a previous court order in which more than R4.4m from the bank accounts of the Ponzi kingpin was declared forfeited to the state.

The five investors were seeking to vary that order to claim back thousands of rand they had lost when the scheme collapsed. They argued they were victims — and it was simply not fair they should suffer. But Davis said they had got involved in a scheme with “astronomical interest being promised”.

In their papers, they had not explained how they believed this could be legal and the common cause facts in the matter, did not suggest they were “unaware the scheme was illegal”.

The three applications were initiated by Shaun and Remanah Gadiah, Kevin Ramlall and Sarika Ramnarain (both being couples) and Evashni Singh. They were consolidated and heard by Davis earlier this year.

Evidence was the scheme was run by Mfundo Manci through his Crypto Mzansi Group mainly in the Durban area.

Manci — who remains a fugitive from justice — used social media to lure investors offering “abnormally large returns of investments”. In his solicitation he promised short term (six-week returns) as being between R3,000 and R20,000 on investments of between R1,000 and R10,000. This at a time when the repo rate was a mere 3.5%.

Davis said: “As is often the case, the promises were not fulfilled. Manci disappeared. The investors lost their money and laid criminal charges. Millions of rand were lost.”

In August 2022 an order was granted by the high court preserving R4.4m which was held in Manci’s bank accounts. In March 2023 the funds were forfeited to the state.

Davis said the Prevention of Organised Crime Act (Poca), prescribes a high court is obliged to make a forfeiture order if it finds, on a balance of probabilities, the property concerned was an instrumentality of an offence or the proceeds of unlawful activities.

Poca defines instrumentality of an offence as property which is concerned in the commission or suspected commission of an offence.

A clear crime has been committed. The applicants got involved in a scheme with astronomical rates of interest being promised. The common cause facts do not suggest they were unaware that the scheme was illegal

—  Garth Davis, Durban high court acting judge 

The applicants (the investors) submitted part of the forfeited money was “property of lawful origin”, being their personal savings. They said they were not criminals and there were no charges against them. They argued the asset forfeiture proceedings had been made possible by their statements, as complainants, to the police.

They said they are victims of crime, not perpetrators — and they had no grounds to suspect that they were investing and participating in an illegal scheme. But lawyers for the National Director of Public Prosecutions (NDPP) said they had contravened the Consumer Protection Act and were considered “co-perpetrators”.

It was submitted they knew, or ought to have known it was an illegal scheme, considering the promised returns “which were impossible to attain lawfully”.

The Gadiahs, in their affidavit, had said they had first invested R1,100 in August 2020. In December that year they received R12,000. They then invested R130,000 in March 2021. That was the last they saw of their money.

Similarly, Ramlall and Ramnarain invested R5,000 and received R15,000 six weeks later. They then invested a further R90,000.

Singh said she used money from a personal injury payout in respect of her child. Her initial investment of R20,000 grew to R30,000 within six weeks. She then invested another R140,000. The promised payout of R1.4m never materialised.

Davis said at first blush their claims of being treated unfairly seemed to be an attractive argument. However, he said, it was a criminal offence to merely participate in an unlawful scheme. He said the fact they claimed not to know that it was unlawful presented a dispute of fact which could not be properly resolved on the papers but neither party had asked for the matter to be referred to oral evidence.

He noted none of the applicants had countered the NDPP’s argument they must have known, given the high returns being promised.

“It was not necessary for the applicants to be criminally charged. Forfeiture is not founded on the basis of a conviction or even a charge. On the papers, the order of forfeiture in the circumstances was neither disproportionate nor arbitrary. 

“A clear crime has been committed. The applicants got involved in a scheme with astronomical rates of interest being promised. The common cause facts do not suggest they were unaware that the scheme was illegal,” Davis said, dismissing the application.