Ponzi victims pursue law firm after attorney's suicide

03 June 2018 - 00:00 By TANIA BROUGHTON

It has been more than seven years since once highly respected Durban attorney Colin Cowan's stupendous fall from grace.
Seated in his garden in his Morningside home in November 2010, he fired a bullet into his head.
It was the catalyst for what was to become one of the South Africa's worst law firm scandals - one that, this week, will be back to haunt the firm Cowan was associated with.
After Cowan's death, some of the city's wealthiest men and women scurried to find out what had happened to the money they had given him for the "bridging finance scheme" he ran from the offices of Garlicke & Bousfield, one of the oldest and most prestigious law firms in Durban.
But most of it was gone.
In his suicide note, addressed to his colleagues at the firm, Cowan, 71, admitted his wrongdoing: "I have committed fraud and compromised the firm by doing so. I am deeply sorry that I breached the trust placed in me."
He exonerated the firm from any involvement in the scheme.
But those who invested millions of rands were not so forgiving of the firm. Cowan, they said, had operated as a consultant from its offices.They had received letters on the firm's letterhead, some of them signed by directors undertaking to repay their deposits.
They want their money back, and are going to court to get it.
The firm said Cowan was "acting on a frolic of his own" and was running an illegal Ponzi scheme.
"We were as much victims of his fraud as everyone else," director Christine Seger told the Sunday Times this week.
She recalled the moment of silence held at the firm on hearing the news of Cowan's suicide - "and then came the shock of what he had been doing. He was a consummate fraudster," she said.
"We have spent eight years digging and delving. The firm's trust account was only involved in a tiny slice of what was a very large and complex Ponzi scheme which, from what we have been able to establish, involved more than 70 participants and a spider's web of accounts, some of them offshore," she said."Nobody at the firm was enriched ... we were hoodwinked."
This week, the first case to go to trial will begin in the High Court in Pietermaritzburg.
Merlin Stols, in court papers, said he had provided R7-million in funding, of which R2-million was paid into the trust account of Garlicke & Bousfield in early October 2010 - a month before Cowan committed suicide.
Stols claims he only invested after obtaining approval from a director of Garlicke & Bousfield. It was to be a short-term loan with a high, but lawful, interest return.
His attorney, David Randles, said his client's case was simple.
"Our client made a deposit, alternatively had a written agreement with Garlicke & Bousfield, which they must repay," he said.
There are other claims waiting in the wings. At the time of Cowan's death, the financial extent of his crime was reported to be anything from R100-million to R200-million - but as for exactly how much was involved, said Seger, "no one knows and no one will ever know".PONZI SCHEME
Colin Cowan used money from new investors to provide a super-high return to existing investors
The once-respected attorney put a gun to his head and ended his life
One of Durban’s oldest law firms, at which Cowan was an executive consultant..

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