Carmol 'Ponzi scheme' mastermind may have dashed to Dubai

One of South Africa's largest alleged Ponzi schemes appears to have collapsed after the Reserve Bank launched an investigation into Carmol Distributors, the petroleum company that offered investors spectacular annual returns of 96%.

With the business's activities having been suspended, the scheme's alleged mastermind, Yunus Moolla, appears to have fled the country - reportedly to Dubai, where he owns property, according to a source close to the Moolla family.

In response to a list of questions from Business Times, the central bank issued a brief statement on Wednesday confirming that accounting firm EY had been appointed "to conduct an investigation into the business activities of Carmol and Innovatech", for apparent contravention of the Banks Act.

Last week, Carmol's attorneys, Ayoob Kaka, advised investors that "the operations of Carmol have been suspended" following a court order obtained by the bank and that "Carmol can unfortunately not make payments of the monthly returns" to its investors.

Prinasen Dhaver, the CEO of Innovatech , which pooled investor funds for deposit with Carmol, confirmed that EY had searched his offices on Monday and seized electronic items such as cellphones.

Dhaver said the accounting firm had confirmed that the raid was associated with its investigation of Carmol.

In November, Business Times exposed Carmol as a scheme that was operating in breach of the Consumer Protection Act and the Banks Act.

Documents seen by Business Times reveal that Carmol had offered returns of up to 8% a month on minimum investments of R100000, through "profit-share" agreements ostensibly to fund the purchase of fuel.

In South Africa, it is illegal for businesses to offer investors returns that are more than 20% above the repo rate, which is 5.75% at present. It is also illegal for a business to take deposits without a banking licence and for any individual to profit from an outlawed scheme.

Dhaver - who at one time was close to senior Carmol staff - said the firm had attracted more than R450-million from about 2500 investors.

Now sources close to the matter suggest Carmol may have received as much as R1-billion.

If these figures are accurate, Carmol may be the most lucrative "Ponzi" scheme in South Africa since investors ploughed roughly R12.5-billion into Barry Tannenbaum's nonexistent pharmaceutical business. Tannenbaum's scheme collapsed in 2009.

According to an investigator based in Mauritius, who has asked to remain anonymous for fear of prosecution, Moolla has travelled to the Indian Ocean island to buy assets and move money to that country.

The investigator claims that Carmol International is registered in Mauritius - and Dhaver says it is also registered in Dubai and London.

Numerous investors have reported that since Carmol stopped paying out its spectacular monthly returns early this month, its offices in Durban have closed and its representatives cannot be reached.

One investor, who deposited R100000 with Carmol in November, said: "I am sitting here very depressed. They have just gone awol.

"The sad part is a lot of people within the churches, pastors, have invested. You can't believe in this day an age they would rob from people like that."

Carmol attracted investors largely through word-of-mouth, often among churchgoers in KwaZulu-Natal.

The business also held frequent investment conferences at the Coastlands Hotel in Durban.

Investors say they joined after hearing friends and family describing their fantastic returns.

In addition to Moolla's alleged overseas assets, proceeds from the scheme have allegedly been spent on a fleet of luxury cars, including a R3.5-million Mercedes-Benz SLS AMG Black Series.

Moolla, his assistant, Duran Govender, and Ayoob Kaka Attorneys did not respond to requests for comment.

EY has declined to provide any information on its investigation "due to confidentiality obligations".

However, it has said investors with information about Carmol should contact (011)772-4100.