The Special Investigating Unit traced financial gains of more than R181 million linked to beneficiaries of fraudulent visa applications that were supported by fake documentation
Deceased people and fake identity numbers were part of Dennis Modika’s elaborate R5.5 million Covid-19 temporary employee relief scheme (TERS) scam, which involved more than R2.2 million in cash withdrawals.
Modika bought a Toyota Quantum minibus, a VW Golf 5 and a luxury Mercedes-Benz sedan with the ill-gotten gains from the fraud, which he was found guilty of in the JJohannesburg specialised commercial crimes courtt this week.
Detailing the theft, prosecutor Frans Mhlongo said the fraudster’s crime spree was halted by a call from a person, whose name is known to the Mail & Guardian, who was unable to claim benefits because his particulars appeared on Modika’s online profile as an employee — which was not the case.
Modika swindled more than R5.5 million from the Unemployment Insurance Fund (UIF), which disbursed the Ters.
The UIF implemented Ters to assist employees by paying a portion of their salaries when businesses had to close or cut down operations due to the national lockdowns during the Covid-19 pandemic.
In arguing for a harsh sentence, Mhlongo told the court the fake employee whistleblower had denied working for Modika, which triggered an investigation uncovering that 16 applicants on his profile were deceased, 12 were employed by the government and another 12 had invalid identity numbers.
“Some of the identity numbers submitted in support of the application by Modika did not correspond with the names provided when checked against the Siyaya verification system of the department of home affairs. The identity numbers, cellphone numbers [and] email addresses were also shared between individuals on its profile,” Mhlongo said.
Mhlongo highlighted that Modika had registered his company, which had no employees, with the UIF in December 2020 for the sole purpose of defrauding it.
“This submission is reinforced by the fact that there was minimal financial activity in the banking account of the entity until the funds from the UIF were transferred.
“Also that the entity has since been deregistered for failure to pay annual fees to the CIPC [Companies and Intellectual Property Commission],” Mhlongo said.
An amount totalling more than R5.5 million was paid into the entity’s First National Bank business account — of which Modika was the sole signatory — in eight payment schedules between January 2021 and October last year.
Mhlongo reiterated that selfishness and greed were the motivating factors in Modika committing fraud and mentioned that he had withdrawn more than R2.2 million of the funds in 19 days.
“On 3 October 2022, the department transferred an amount of R2 245 256.71 into the business banking account of the accused and, by 22 October 2022, the remaining balance was R189,” Mhlongo said.
Pleading for a lesser sentence and a non-custodial jail term, Modika, through his legal representative, said he had four minor children — aged 17, 16, 13 and three — who were dependent on him, adding that he suffered from chronic epilepsy.
“It is my submission that a person suffering from chronic illness is not only a danger to himself, but a danger to other inmates as well. Not over-emphasising [my] condition, [I] plead for mercy from this honourable court.”
But Mhlongo rejected Modika’s appeal, asserting that the money he stole could have benefitted the poor through the provision of infrastructure and job creation.
Mhlongo added that this type of crime was constantly encountered and it has cast a “dark shadow over the confidence of the society in the justice system of the country”.
(Graphic: John McCann/M&G)
“It is a myth and reckless narrative that the theft of public funds has no victims and the public needs to be assured that taxpayers’ funds are used properly for the cause they are intended for,” the prosecutor contended.
He said the Ters benefit was one of the many social protection schemes which had been introduced as direct response to the economic effects of the pandemic but has also been a pool for thieves to loot.
The UIF has previously said R1.7 billion worth of Ters fraud had been committed and at least 12 people had been convicted and handed jail or suspended sentences for fraud, theft and money laundering related to Covid-19 relief funds.
Modika was Mhlongo’s second successful prosecution of a Ters fraudster, after he nailed Lindelani Gumede for stealing R11.1 million in September 2021. Gumede is serving a 15-year jail term for his crime.
Gumede, like Modika, had a penchant for luxury vehicles and bought himself a R500 000 Audi Q2 SUV with the stolen money.
He also paid R560 000 towards settling his brother’s bond.
In August, Refilwe Kgaje and Isaac Phiri — a married couple — were convicted and sentenced to 15 years’ imprisonment each for defrauding the UIF of R600 000 through 95 ghost employees.
“We will continue to round up and send fraudsters that stole from the working class to prison. I am pleased with the latest sentences and will insist on even higher sentences so that our message of no tolerance can be crystal clear,” the UIF’s commissioner Teboho Maruping said.
“The day is coming when those who wittingly stole from distressed workers will all answer to the authorities.
“Working together with our partners, we will continue to pursue Covid-19 fraud cases until every single one has been dealt with.”