ALTHOUGH it is still a mountain to climb, investors who were subjected to bankruptcy after losing almost all their hard-earned cash to the Coinit Trading pyramid scheme can now start to hope for the better as law enforcement authorities are now hard at work tracing their money.
Durban-based liquidators, Berrangé Incorporated, had on Thursday released a statement, which brought a glimpse of hope on billions of rands collected by the northern KwaZulu-Natal-based controversial company for illegal investment before it went into financial trouble and became a subject of police and Financial Sector Conduct Authority (FSCA) investigations.
Various media houses had previously reported that Coinit had collected more than R4 billion from investors, but the liquidators brought the amount down to R2 billion. The liquidator is yet to clarify this discrepancy, and how many people in total had lost their investments. The story will be updated as soon as more information comes in.
Those under investigation are Coinit associates Michael de Beer, Malcolm Henry de Beer and Patricia Ursula de Beer who are family members or relatives.
“The FSCA has found that Coinit contravened various provisions of the Financial Advisory and Intermediary Services (FAIS) Act in that it was unlawfully taking deposits from members of the public,” read the statement.
The police’s Serious Crime Investigation Unit launched an investigation following cases that were opened by investors at the Dundee Police Station. It is unclear when this scheme started, but it crashed between late 2019 and early last year.
Most unsuspecting investors did not only invest their pensions and life savings but also went overboard by taking bank loans – worth hundreds of thousands of rands – to try their luck with Coinit.
Prior to joining Coinit, most of the investors were middle- and working-class people who survived through their monthly salaries but resigned in order to invest their savings. Some unemployed people borrowed hard cash from their friends and relatives for the investment.
Others are not only left languishing in abject poverty but they are also drawn into debt as they are still struggling to service loans they took in order to invest with Coinit, which had promised them financial miracles. The end result were broken hearts, tears and suicide.
There are many rivers to cross before recovering some of their investments as the whole invested money had not yet been traced, however, the National Prosecuting Authority, police and liquidators have kick-started the process of finding justice for the investors.
Others who believed in promises from Coinit operator Malcolm de Beer blamed the Directorate for Priority Crime Investigation (Hawks) and FSCA for meddling with the Ponzi scheme.
The investors were promised that their investments would buy earthmoving equipment, trucks and heavy-duty vehicles to be leased to third parties and their operations would then earn them monthly dividends for a long period.
However, instead of earning dividends on leased equipment, it was discovered that Coinit was operating as a pyramid scheme. FSCA’s head of investigation Gerhard van Deventer had found that new investors’ funds were used to pay existing investors.
The authorities had pledged that investors who benefited at the expense of others would have to pay back the money. The De Beers did not use the investment as they had promised. Instead, they went on a lucrative buying spree, pampering themselves with:
- Properties in Dundee, Hattingspruit and Colenso (Northern KwaZulu-Natal)
- A Porsche 911 Turbo
- A Jeep Grand Cherokee
- A Trackhawk Grand Cherokee
- Two Beechcraft Baron 58 light aircraft
- Two Hawker 700A jet aircraft
- A Bell 2006, Long Ranger III helicopter
It is currently not known how much each item is worth. But through Google search, the Porsche is worth at least R3.8 million, Jeep Grand Cherokee up to R1.3 million and Trackhawk Grand Cherokee over R2.1 million. The price of the Beechcraft Baron 58 is $295 000 (R4 792 570 according to current exchange rates). The Hawker 700A is $1.7 million and Bell 2006, Long Ranger III is at around R14 631 435.
“The National Director of Public Prosecutions has to date obtained three Preservation Orders in terms of the Prevention of Organised Crime Act to freeze assets purchased directly and indirectly with monies received by Coinit from investors,” the statement read.
Of the money that was invested in Coinit R548m, R7.15m and R21.8m were found to have been moved from Coinit to DH Machine Manufacturing (Pty) Ltd, Bluebay Freight Solutions (Pty) Ltd and Bright Future Trading Enterprises CC respectively.
Coinit director Michael Andrew Anthony de Beer, who is allegedly refusing to co-operate with the liquidators, is also the sole member of DH Machine and Bluebay and the sole member of Bright Future.
In May the Pietermaritzburg High Court granted investigators an order to forfeit five aircraft that included a helicopter and other property belonging to Coinit and other liquidated business entities worth R106m.
“It appears to be reasonably certain that a substantial portion of Coinit funds are missing and will probably never be recovered, unless Michael de Beer makes a full disclosure of the manner in which the Coinit funds have been dealt with, the whereabouts of such funds and the whereabouts of any assets purchased with such funds,” read the statement.
The De Beers could not be located to respond to the allegations against them. But their response would be published as soon as it is obtained.