Cape Town - Auditors have found more than R329 million in public deposits were made to Platinum Forex, allegedly run as a front for a Ponzi scheme by a Cape Town preacher.
In their report before the Western Cape High Court, Ernst & Young say they found the amount was paid in more than 3 500 transactions between November 2009 and July last year.
The report was the subject of argument in the court this week when Pastor Colin Davids, of Parow, objected to it being admitted as evidence in the Asset Forfeiture Unit’s application to have his assets and those of Platinum Forex declared forfeit.
The application follows the granting of an order to attach these assets.
Davids denied he was operating a scheme and said he had a legitimate business trading in foreign exchange. He said his investors were happy and he could prove, with financial statements, that his business was profitable.
In an affidavit, Western Cape Deputy Director of Public Prosecutions Leonardo Goosen said Ernst & Young had compiled its report after its inspectors seized masses of documents, e-mails, receipts and two mobile devices from the offices of Platinum Forex and its financial director, Eugene Herrendoerfer.
The inspectors also found Platinum Forex marketing material, such as flyers, posters, agent brochures and PowerPoint presentations, and that three websites were being used to market the business.
They interviewed Herrendoerfer, another director, and five investors, and had also received information from the police.
According to the report, they concluded Davids and Platinum Forex had executed the business of a bank by accepting vast sums from the public.
They had also breached the Financial Advisory and Intermediary Services Act by acting as a financial services provider, advising clients to invest in the business.
By promising investors high returns, they had been running a multiplication scheme, contravening the Consumer Protection Act.
Goosen said the curator appointed to control the preserved assets had calculated that more than R106m in investors’ capital had been lost.
“It's submitted the scheme was hopelessly insolvent as at the date of the granting of the preservation order and (Davids) was trading recklessly.”
Davids has been charged with contravening the Financial Advisory and Intermediary Services Act and the Banks Act.
Most of his more than 2 000 investors were government employees who had retired or resigned.
He is out on R100 000 bail and is to appear in the Bellville Magistrate's Court again in January.
Weekend Argus