Investors urged to ask questions | Fin24
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Investors urged to ask questions

Oct 22 2013 06:54


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Too little, too late to stop Ponzi plots

Cape Town - People thinking of investing their hard-earned cash with any institution should never make the mistake of "not questioning".

"Demand evidence and think critically," said investment risk analyst Daryl Ducasse of Merkurius Capital Solutions in reaction to a letter by a Fin24 user in which he accuses the Financial Services Board (FSB) of jealousy and unfairness towards Ledimar.

The court last week ruled in favour of the FSB in its application to prevent companies under the Ledimar banner from continuing to conduct business in the way it has been doing.

The FSB maintained that Ledimar has been operating outside the regulations in that it either solicited investments from the public or offered investment advice without being registered by the FSB.

Ledimar, which trades as Ledimar Financial Services (Pty) Ltd, Ledimar Stock Trading (Pty) Ltd and Ledimar Investment Holdings CC, has offered investors returns of up to 50% per month.

The FSB warned the public in September already against investing with Ledimar companies, stating it conducted an in-depth investigation into the affairs of Ledimar and had enough evidence to believe Ledimar is operating a pyramid scheme.

"The FSB has established that these entities offer investment products to the general public and falsely purport to be an authorised financial services provider in terms of the Financial Advisory and Intermediary Services Act 37 of 2002 (FAIS Act).

"None of these entities are authorised in terms of the FAIS Act to provide financial services, and specifically, to sell any investment products to the public or to receive or hold investment funds from the public," the FSB said in a statement.

Fin24 user Moeng Johannes wrote that he had invested (money) with Ledimar, "but now all my hopes are in vain".

"Please understand that I am not questioning the credibility of Ledimar, because Ledimar is superb."

Confusing the FSB for an individual, Johannes said "there is a man or a woman called FSB, whom I think is so jealous about what the men of God has revealed".

"... I think FSB is really unfair. Let them ask Ledimar to pay all its clients what they deserve."

The FSB is a professional organisation made up of highly experienced and capable professionals with backgrounds in numerous fields, including policy, finance, law and corporate governance, according to Ducasse.

Their objective is NOT to harm investors such as Johannes – one of their mandates is to PROTECT investors, said Ducasse.

Johannes claims that Ledimar is "working so hard to uplift poor black people's lives - they have started building churches and were thinking of buying land to erect an orphanage in Klerksdorp".

In response to this Ducasse said it is indeed an honourable act for a company to seek to uplift the lives of the poor, no matter what their race or background.

"But pyramid schemes are notorious for acts of generosity, particularly towards their promoters and an investing community whose confidence they wish to gain. There are many examples of this."

Financial authorities in South Africa have launched an active campaign against illegal investment and irregular investment schemes.

Last month, the Reserve Bank launched a national campaign to raise awareness of illegal deposit-taking schemes, urging consumers to get advice from accredited and registered financial services provider before investing their money.

"Do not just rely on advice from promoters or friends who may have benefited from their investment," the Sarb urged.

Pyramid or Ponzi schemes are not investments, but elaborate scams that enrich the founder while eroding investors' capital in order to pay out unsustainable returns, said Dawie de Villiers, CEO of Sanlam Employment Benefits.

"As soon as new investment dries up, the Ponzi scheme collapses, leaving most participants severely out of pocket."

- Fin24

Have you ever fallen prey to a pyramid or Ponzi scheme? Help us warn others by sharing your story.

Disclaimer: All articles and letters published on MyFin24 have been independently written by members of the Fin24 community. The views of users published on Fin24 are therefore their own and do not necessarily represent those of Fin24.

Fin24 reserves the right to obtain service providers' comments before publishing any articles or letters, and to edit any material used. Fin24 also reserves the right to edit or delete any and all user comments received.

pyramid scheme  |  myfin24  |  scams


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