'Africa’s most successful trader' Jacques Magliolo accused of fraud, running a ponzi scam | Fin24

'Africa’s most successful trader' Jacques Magliolo accused of fraud, running a ponzi scam

Feb 17 2019 12:35
Mandy Wiener
Jacques Magliolo

Jacques Magliolo.

Investigative reporter Mandy Wiener interviewed numerous individuals who claim to have lost money after investing with Jacques Magliolo. Its estimated at least two dozen individuals could have lost millions in the process.

Africa’s Most Successful Trader’ and ‘international bestselling author’ Jacques Magliolo is being accused of fraud and running a Ponzi scheme.

Magliolo is an economist, stockbroker and corporate advisor who has been interviewed as an expert in the media and has published more than seventeen books on investment advice. These include Richer Than Buffet, The Penny Share Millionaire and The Millionaire Portfolio.

The Hawks have confirmed they are investigating a case of fraud against Magliolo which was opened in Parow in Cape Town in September last year.

Magliolo insists he was not running a Ponzi scheme, had no intention of defrauding any of his clients and is being targeted by a defamation campaign aimed at smearing his reputation. He is in the process of launching a lawsuit against a former client for defamation.

Jacques Magliolo

Criminal Case being investigated

Fin24 has interviewed numerous individuals who claim to have lost money after investing with Magliolo, who have all joined as complainants in the criminal case. Several have given affidavits to the investigating officer. Its estimated at least two dozen individuals could have lost millions in the process.

Plettenberg Bay commercial diver Marc Louw brought an application for Magliolo to be sequestrated in 2017. The High Court in Cape Town handed down an order in May 2018 sequestrating the investment advisor and corporate strategist.

Louw’s journey with Magliolo began in July 2015, when he read two of the financial gurus books and went on to his website seeking more information about a mentorship programme that he runs. Louw says he sent him an email and he replied almost immediately "informing me that the deadline for applications was allegedly closing at the end of the next week. I had to invest money through him in order to qualify and the mentorship fee would be payable over and above any investment".

"He convinced me to invest, absolutely risk free, in some very impressive initial public offerings ‘IPO’ he was allegedly about to launch. He said that he had vast experience in IPO listing and these would ‘blow out the water’. One was related to a paper mill in Swaziland. I went ahead and transferred a further sum of R150 000," says Louw in his affidavit. 

In total, he invested the sum of R268 000 "on the express term that my investment would be repayable within twelve months with a minimum growth of at least 25%". But when his investment matured, the money was gone.

"Twenty seven months later I have not yet seen a cent of my investment back despite countless demands. Whenever I managed to contact him, he would prevaricate; he was either sick, no cell phone signal, having car problems, struggling with his ‘crazy ex-wife’, had meetings in Johannesburg, had meetings in Port Elizabeth, had meetings with corporate clients, etcetera. His trading activities have all the characteristics of an illegal Ponzi scheme. The listed publications under his belt and his alleged years of expertise in the financial markets appear to be no more than bait with which he lures investors into transferring funds to him."Jacques Magliolo

Magliolo: There is no fraud or ponzi scheme

Magliolo says it was never his intention to defraud his investors. The reason he couldn’t pay out clients was because SARS froze his account and he couldn’t access his cash.

"What happened was the international laws of transfer of monies between countries changed. In the past money would flow from international sources into an account and the account would be audited and then it would get paid out. Except that what I tried to explain to Marc and a number of others is the money was being held up by these changes. I had to change it to go through a third party, through a lawyers trust account and then to be audited and paid out and SARS then would be notified about those transactions," he explains.

He claims that R700 000 was frozen in his Nedbank account, which included money owing to Marc Louw. 

Magliolo says he was further restricted from accessing his money when the sequestration went through and a lawyer from audit and consulting firm Mazars took over as trustee.

"Once sequestration took place, Mazars froze my account and I was told under no circumstances to contact any clients and that all monies that would be earned in future had to be declared to Mazars and Mazars would then make the payments."

"You can’t have it both ways. You can’t say I want my money, don’t pay me..."

Magliolo also argues that the sequestration never should have gone through because his advocate offered Louw a full and final settlement including all interest owed to him, on the eve of the order being handed down. Magliolo says he was expecting a large payment from his US publisher for royalties owed to him from his book sales and he was going to use this to repay his clients. However, Louw turned this settlement down. Louw has confirmed this but says Magliolo is being disingenuous because he attempted to settle with others despite not having the means to do so.

"Marc wanted his money, he wanted it now. The advocate said he would get paid in ten days. The money he would have been paid … and that was more than enough to cover all of Marc’s fees. He has ulterior motives for this to have happened. You can’t have it both ways. You can’t say I want my money, don’t pay me, I want you sequestrated and now I’m going to go to the media and say you haven’t paid me."

'I wanted to grow money to educate blind daughter'

Hilton Gourley works as a maintenance planner in Musina in Limpopo. He too had read Magliolo’s books and turned to him for mentorship so that he could make enough money to provide the best possible education for his blind daughter.

"About two to three years ago, I invested with a binary options company and lost all the money. I realized I really need some training in the market so I reverted to the book. So I got in contact with Jacques. I told him that I need to start getting money together because my daughter was born blind and I needed to get money together to get her the best choice of school," says Gourley.

"The mentorship started but there’s no structure to his training, he just told me to read his books three to four times. He gave me these assignments over the phone but it was just questions. Within a week after I transferred the money into his account, I was contacted by Marc Louw and they dropped this bomb on me."

"I started questioning Jacques about where’s my money and he said they hadn’t matured so I couldn’t withdraw. I was willing to pay the penalty for early withdrawal to get my money back. He dreamt up one excuse after another excuse. The total including the mentorship was R380 000. I did not see a single cent, not a drop in the bucket. I submitted an affidavit for the sequestration and I was privy to his bank statements and I can see where my money went into his bank accounts and I can see him spending it on his luxury life."

Magliolo’s bank statements formed part of the court record during the sequestration application and Gourley’s payments can be clearly detected. So too can personal expenses from Magliolo’s account at various stores including Wellness Warehouse, Twisp shops, various laundromats, pet stores and restaurants including Hussar Grill and Natures Deli.

Jacques Magliolo

Magliolo’s explanation regarding Hilton Gourley is that he wants to pay him but he can’t because his hands are tied by the sequestration order.

"Hilton I’ve known for many years. He invested directly in my company and he invested in research. His aim was to make enough money to move from Limpopo, where he is, to Worcester so he can take his daughter to a specialist school. That was his aim and is still the aim except I have been forbidden by Mazars to talk to anybody. I have been told I can’t give anybody preferential treatment, I can’t pay any individuals and I can’t talk to him."

For the stockbroker, this is a relationship of trust that has been compromised. "There’s a trust issue. These guys trust me and I take that very seriously. For me investment for clients has taken place as a result of these guys buying my books and I don’t make money out of mentoring, out of all these things, simply taking the money and giving them the benefit of expertise."

Magliolo was ‘very convincing’

When Sheldon Duke was five-years-old he suffered a traumatic brain injury as a result of being knocked over by a car and this still has an impact on him today. Duke met Magliolo at a business conference where he was the guest speaker. Duke attended to learn more about investments.

His step-sister Janys Orelowitz says Magliolo convinced Duke to trust him.

"Sheldon is too trusting of people.  On meeting Magliolo, he convinced Sheldon that he had the answers as well as that he had Sheldon’s best interests at heart. Sheldon has a very trusting nature so he fully bought in to their [Magliolo and his wife] fraud and took all his money out of a secure and solid investment house and handed it over to Magliolo."  

Duke had received a third-party payment following his accident which was placed in a trust until he was 21. His step-father had helped him manage the money subsequently, but he had passed away.

"Sheldon closed up secure investments, and transferred an amount in excess of R570 000.00, to Magliolo, over the period August 2017 to March 2018, believing that Magliolo would give substantial returns on these investments," explains Orelowitz.

"The monies lost by this fraud perpetuated by Magliolo were meant to be invested so as to sustain Sheldon throughout his lifetime!"

"Magliolo was very convincing and Sheldon parted with the total proceeds of money he received from a childhood car accident.  In March 2018, he even received a performance note showing that he had made profit of over R365 000.00, on a capital investment (as at that date) of R250 000. Sheldon lost the full amount. The monies lost by this fraud perpetuated by Magliolo were meant to be invested so as to sustain Sheldon throughout his lifetime! He never received one cent back from Magliolo."

"Magliolo is sequestrated. Investigations have revealed that the money did not go to a separate investment account but rather went to Magliolo’s personal bank accounts and that no investments whatsoever were made on Sheldon’s behalf.  It simply appears from the bank statements that Magliolo utilized the money for his own purposes including his own living expenses."

But Magliolo denies that Sheldon Duke was not capable of making his own decisions about his money and in fact, he assisted him to make money by advising him on investments.

"I made him a huge amount of money by advising him. In the past I had no control of the money with other stock brokers. Sheldon made a disaster with property deals, came back to me and said can you help me recoup the money. He doesn’t have mental issues. He’s a wise guy. He was born with physical disabilities. His mother told me he was absolutely fine. The idea was to put the money into transactions that were safe and make him money over time. When the sequestration order came through all funds were frozen. I have an action now to reverse this action against me because it needn’t of happened," he explains.

‘Absolutely no idea where money has gone’

The responsibility for unravelling the alleged fraud has fallen to Thomas Van Zyl from Mazars in Cape Town who has been appointed as the trustee of Magliolo’s personal insolvent estate. He has been attempting to try and liquidate assets and find what money he can in bank accounts to pay creditors and do an investigation.

"I got no cooperation from him," says Van Zyl. "He’s obligated in terms of the Insolvency Act to provide me with a statement of affairs in which he details what assets he has and a breakdown of income. I obviously am guided by that as it’s a declaration. He has not given me a declaration. I’m left to my own devices to try and investigate what assets he has if any."

Van Zyl says he has only been able to establish that Magliolo has around R20 000 and a written off vehicle that’s in the possession of a panelbeater. 

"Through the cooperation of creditors, I’ve established that he’s got three bank accounts. I’ve frozen all three. I think there’s about R20 000 collectively. I’ve come to discover he has a vehicle that was written off in the possession of a panelbeater. As it stands, the assets that we’ve managed to recover are minimal. So then I started to get information from other creditors that indicated he is using his wife’s bank account to trade through. Given this information, I’m going to attach assets in her name and freeze her bank account."

Van Zyl says it’s unlikely that any of the creditors will ever see their money again.  

"There would be a very, very minimal distribution, closer to 1c in the Rand if any, so not very good. I have absolutely no idea where it has all gone. I definitely think it’s gone."

FSB warning against Magliolo

In September 2017, the Financial Services Board issued a warning against dealing with Magliolo or his company Business Consultants International (BCI). It said that Magliolo and BCI advised clients to invest in United States oil options and preliminary investigations found that clients’ funds were used in other financial products.

However, Magliolo says he subsequently engaged with the FSB and it gave him an undertaking that the complaint lodged against him was withdrawn and the case closed.

A follow up with the Financial Sector Conduct Authority (FSCA), which has replaced the FSB, confirmed there had been no further complaints against Magliolo.

"We have checked our database and could not find further complaints against BCI nor Jacques Magliolo. In addition, he is currently not linked to any FSP," said Manasse Malimabe, Head of Preliminary Assessment Department in the Investigation and Enforcement Division.

The Hawks in the Western Cape have confirmed that a docket has been opened against Magliolo in Parow and the matter is under investigation. Captain Philani Nkwalase says no arrests have been made pending an ongoing investigation.

Magliolo says he is not aware of the Hawks investigation.

'Absolutely devastated by the lack of accountability'

Those who have been left out of pocket, are incensed and want justice to be done. 

Louw has made it his mission to ensure that no others are lured into what he believes is a scam.

"To date, I’ve managed to find about twenty other people. It ranges from R50 000 to R1million. A few have lost R400 000 or R500 000. The same operation. In my experience he kind of soft soaks you and he would have offered you some sort of investment. An IPO or some Forex options. Some sort of investment that would have entailed you depositing money in his account and you wouldn’t have seen that money again. He’s a helluva nice guy when you speak to him. He’s honest and open and gains your trust very quickly and sucks you in very quickly."

"I’m absolutely devastated by the lack of accountability that the legal structure gives you. This bastard took my money. Some poor black kid in Mthatha steals a cellphone and the legal system swamps him. This guy gets us to deposit hundreds and hundreds of thousands of rands, totally misrepresented himself, and he gets away with it. If I hadn’t have been able to cough up legal fees, there’s nothing I could have done. There is no regulation on this. I could write a newsletter and call myself South Africa’s most successful trader and off I go."

Hilton Gourley says he wants to see Magliolo in jail.

"This guy took me for a fool. If I get him in the street I want to kick him in the nuts. My daughter has got two chronic diseases, she’s six, and I don’t appreciate what he did to me. It’s unethical. How do you steal from a blind person? I feel like beating him all over the place. It’s frustrating. I sincerely hope something comes from this process. I am willing to go with Marc all the way."

Still doing it

Despite having been sequestrated last year and being investigated for fraud by the Hawks, Magliolo is still soliciting trainees for his mentorship programme.

When Fin24 sent an enquiry (using a pseudonym) to his email address, Magliolo responded within minutes with information about his training course. For R15000 + VAT, we were offered "12 months private training, skype sessions, ebooks, invitations to workshops and regular newsletters". While Magliolo was clear that the mentoring programme was only a training course, he suggested we could make a profit on 80% of our trades.

Jacques Magliolo

He disputes that he is misrepresenting himself by offering these courses and that he is not obligated to inform prospective trainees of the complaints against him and being sequestrated does not prevent him from earning a living. He says he has years of experience that put him in good standing, including as a Director and Head of Research at Global Capital Securities.

On his website and in his interview, Magliolo also claims to be busy with a PhD in Economics at Stellenbosch University. A simple query to the University showed this up to be a lie. SU says it has record of a student with his name and ID number being enrolled at the institution.

Magliolo says he wants to clear his name and is bringing legal action to reverse the sequestration. He is also pursuing a defamation case against Louw.

"I have never run a ponzi scheme. I wouldn’t know how to start one to be honest. I advise clients with what they need to do with their money. I am a corporate advisor, I’m a stockbroker. I just want all of this to away, so the money can flow back to clients. The sequestration must be reversed or Mazars must come to an agreement with the attorney to have this matter resolved. It is the influence of Marc and his attorney. I am in the process of putting all of this together and to bring a defamation action against him."

'I feel bad...'

Magliolo claims that Louw, through a campaign of defamation, has cost him over half a million rand in loss of income from research and corporate finance. He says Louw has sent his accountant emails under various false names, scared off potential business partners. He even suggests that Louw has threatened his wife and daughter but Louw vehemently denies this.

Magliolo says he just wants to put this episode to rest.

"I feel bad because it’s not just affected reputation and client’s livelihood. It’s bad for all the clients that have trusted me with their money. I am trying to resolve this matter by doing what I can within the law."

Van Zyl, the trustee from Mazars, has disputed Magliolo’s argument that there is money left in any of his accounts to pay back creditors, or that Magliolo’s lawyer has even tried to get hold of him.

"The fact that he says there is money there is incorrect. If he wants to have his sequestration order discharged, he has to bring an application to the High Court and its only in that forum that any relief he is seeking can be heard and dealt with. To try and have his issue resolved over the phone is ridiculous. I don’t think he’s tried very hard, I don’t think he has an attorney."

Van Zyl says as it stands there is no recourse for those who have lost their investments and he’s warning that others could still fall into the same trap.

"It’s my understanding that he now trades through his wife’s name. I was contacted by someone in November who had never met him, yet she invested over R100 000. He can keep trading under various entities or other people’s names and the fact that he’s free enough to do that means he can keep defrauding people."

cape town  |  fraud allegations  |  ponzi scheme


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