Tannenbaum's wife could face arrest

Warrants of arrest may be issued for more family members of the accused R12.5-billion Ponzi scheme mastermind Barry Tannenbaum, including his wife Debbie and brother Michael, sources close to the investigation said this week.

Documents seen by Business Times relating to the Frankenfell Ponzi scheme investigation suggest that other members of the Tannenbaum family may be charged, and that the flow of funds to family members has been under close scrutiny.

Darryl Ackerman, Barry and Debbie Tannenbaum's lawyer, said there is "no concern at all" about other family members being arrested.

"I don't believe they have any involvement at all. Debbie certainly has not been involved in anything untoward," he said.

Barry and Debbie Tannenbaum moved to Australia at the end of 2008. Ackerman refused to say whether they are still based in Runaway Bay, a small holiday town on the Gold Coast in Queensland.

This week, the Randburg magistrate's court issued a warrant of arrest for Dominique Rees, wife of another key role player, lawyer Dean Rees. She will face numerous charges, including theft, racketeering, money laundering and fraud, National Prosecuting Authority spokesperson Mthunzi Mhaga said.

Dominique Rees was involved in Abated Investments, a British Virgin Islands-registered company operating from Hong Kong that allegedly recruited investors for Tannenbaum's scheme. In 2008, she was part of a five-day cruise for potential overseas investors on the à50000-a-day luxury yacht Tommy in Saint Tropez on the French Riviera, where she handed out her business card.

French champagne to the value of R350000 was consumed on the yacht, a source close to the investigation revealed. Investments of more than R100-million were allegedly raised during the trip.

The scam, which caught out a number of SA's top business people, appears to have started around 2003 through the financing of furniture deals, destined for UK-listed Westcity Holdings plc, a property development company where Tannenbaum's brother Michael is financial director.

It later evolved into a scheme whereby investors were made to believe they were financing the importation of raw materials required for the local manufacture of pharmaceutical products, with promised returns of as much as 200% per year.

Michael Tannenbaum allegedly also provided guarantees to some investors, notably Meir Levin, "a slick New York lawyer" who has lived in the US for more than 20 years.

Levin's losses in the scheme total an estimated $825-million (R5.9-billion at current exchange rates). Despite the extent of his damages, he has not yet provided information to investigators, another source close to the investigation said. It seems investigators are looking at the possibility that he acted as an agent for Tannenbaum to lure US investors.

Mannie Witz, Levin's advocate, said Levin's losses were between $5-million and $7-million, leaving aside notional returns. "He definitely never acted as an agent or lured investors for Tannenbaum - that is speculation by investigators who have never spoken to me or Levin regarding the matter."

Witz said Levin would give "110% co-operation" to investigators, and that he had not had meetings with them to date because he was based in the US and investigators had been focusing on local investors.

"We have told the task team when they want to meet he will give them full co-operation.

"All Levin's investments were with Barry Tannenbaum only, backed by signed signatures from Michael Tannenbaum. It appears from our investigations he was involved with his brother and originally investments were for furniture for developments in Canary Wharf," Witz said.

"It was all done on a basis of guarantees. Michael now claims that guarantees, other than the first few, were forged," Witz said.

Investigators have made significant progress since the first warrants of arrest - for alleged masterminds Barry Tannenbaum, Rees and lawyer Darryl Leigh - were issued in October last year.

Leigh has forfeited assets worth R44-million, deemed to be proceeds of a crime. To date, 880 investors, 127000 transactions and 17 accused, "and the list is growing", have been identified.

Extradition proceedings for Tannnenbaum and the Reeses (who now live in Lausanne, Switzerland), are expected to start next year.

According to Ackerman, Tannenbaum has a permanent residence permit for Australia.

This may hamper efforts to get him to stand trial in SA, as no extradition agreement exists between the two countries.

Crimes were allegedly also committed through an Australia-registered company. These are now being investigated by the authorities.

Adrian Lackay, spokesperson for the South African Revenue Service, has questioned why the scam was not picked up much earlier.