The National Prosecuting Authority is gunning for two owners of a pyramid scheme who allegedly blew R12.5 million from almost 230 000 investors.
THE NATIONAL Prosecuting Authority (NPA) is gunning for two owners of a pyramid scheme who allegedly blew R12.5 million from almost 230 000 investors.
The NPA’s asset forfeiture unit (AFU) secured a preservation order at the South Gauteng High Court to freeze bank accounts containing more than R18 million and a number of luxury vehicles belonging to Jade Matsemela and Sipho Martin Mdlhuli, the director and former director of Up Money and Uniitco, respectively.
The AFU’s application was part of the National Consumer Commission (NCC) and the Financial Intelligence Centre’s (FIC’s) interventions to save more than 228 900 investors who were allegedly defrauded in the multimillion-rand scheme.
The intervention netted three luxury vehicles – an Audi TT, a Hummer H3 and a Jaguar XKR Coupé. The cars were bought with funds from Uniitco’s bank account, according to the NCC.
The commission said on Tuesday that while the scheme received more than R42.7m in two months between May and July this year, more than R12.5m was spent at retail stores and on the purchase of the three luxury motor vehicles, which have been attached.
AFU head and Deputy National Director of Public Prosecutions advocate Ouma Rabaji-Rasethaba promised there would be criminal prosecutions in relation to the Up Money pyramid scheme, which has been described as a “push-push scam”.
The identified suspects could face charges of fraud and contraventions of sections of the Prevention of Organised Crime Act relating to racketeering, money laundering, theft, assisting another to benefit from proceeds of unlawful activities and acquisition, and possession or use of proceeds of unlawful activities.
It was found that the pyramid scheme was not registered with the SA Reserve Bank and was neither a registered stokvel nor a financial services provider. It used mainly social media to recruit members.
Unsuspecting participants were required to pay a one-off R180 joining fee, which qualified them for a meat pack, and were then required to recruit five other new members to move up the scheme.
The NCC received a complaint from East London and its investigation revealed that Up Money contravened the Consumer Protection Act by promoting and causing members of the public to join and participate in a pyramid scheme.
The FIC traced how the funds were allegedly laundered through various methods, accounts and transactions after requests from the NCC.