Clients who were conned by a broker are facing a lengthy wait for their money
Nawaal Deane
“I invested money with a legitimate company. Now it’s gone. When am I going to get my money back?”
Duma Mpotulo, a lawyer, invested R50 000 on March 15 last year, with a broker who at the time was employed by Cahn Shapiro Incorporated, a brokerage firm in Johannesburg.
“My sister, Khantu, was given con-tact details of this broker, Rudolph Rashama, at a Miracle 2000 [pyramid scheme] meeting, where he told people that they should invest money with a legitimate company,” says Mpotulo.
Rashama handed out business cards indicating that he was a portfolio manager for Cahn Shapiro, with an address in Parktown, an e-mail address and contact details.
Mpotulo and his sister met Rashama at the offices of Cahn Shapiro to open an account.
“He showed us the market shares on his computer and told us we can make a lot of money through investing our money.” Rashama explained how the market shares worked.
“I gave him a cheque for R50 000 made out to Cahn Shapiro,” said Mpotulo.
Each month thereafter Rashama would present portfolio evaluation sheets on company letterheads indicating Mpotulo’s returns on his investment.
In March last year Anglorand Securities bought Cahn Shapiro’s client base. Rashama would give Mpotulo portfolio updates each month that showed his investment had increased significantly and all was going well with his shares. By November last year these portfolios indicated that Mpotulo’s investment had increased by about R10 000. It also showed that he owned shares in Standard Bank, Anglogold and Northam plc.
But things started looking suspicious when Mpotulo requested that the shares be cashed in.
“We wanted to buy a restaurant so we asked Rashama to liquidate the shares and deposit our money into our account,” said Mpotulo.
For the next two months Mpotulo got various excuses from Rashama for why the money was not in the account. He said he was busy or out of town and never returned Mpotulo’s calls.
“In January Rudolph finally confessed that he had been suspended and was under investigation for fraud. He said there was no money in my account but the company had insurance cover. He was in tears and said he was sorry for everything.”
Mpotulo met representatives of Anglorand Securities and was told that an internal investigation into the fraud was taking place. They also said that he was not the only person who had lost money with Rashama.
“They said Mr Rashama had been falsely taking clients’ money for more than three years and the sum amounted to about R3-million.”
Anglorand Securities said it terminated Rashama’s employment after it discovered he had been defrauding a number of its clients. A case was then opened against him on behalf of four clients in the Northern Province who had been defrauded of close to R1-million. These clients were reluctant to comment in case they jeopardised their insurance claim but confirmed that Rashama had dealt with them in a similar manner.
Anglorand has been cleared of responsibilty towards Rashama’s clients.
Mpotulo contacted the Johannesburg Securities Exchange (JSE) and laid a written complaint that neither Anglorand Securities nor Cahn Shapiro had acknowledged liability or indebtedness.
But lawyers for Anglorand responded to Mpotulo saying that when the funds previously held on behalf of clients by Cahn Shapiro were transferred to Anglorand no amount was transferred on behalf of Mpotulo.
“In the circumstances, our client does not accept any indebtedness to Mr Mpotulo,” the lawyers said.
Mpotulo felt left in the dark when his enquiries into how long it would take for his money to be paid out came to nothing.
“I do not know if an insurance claim has been submitted or how far an investigation into this matter has proceeded,” says Mpotulo.
Norman Muller, senior manager of the Financial Services Board, says: “I have had intensive discussions with the JSE on this matter and claims will be submitted to the insurance company on behalf of these clients.”
He says that the process could take some time up to two to three years because of the extensive investigations.
In a letter to Mpotulo he says that the JSE, as a licensed self-regulatory body, is responsible for addressing all client complaints in terms of the Stock Exchange Control Act 1985.
“Cahn Shapiro Inc was taken over by Anglorand Securities (Pty) Ltd … and it is my understanding that your claim will therefore not be against Anglorand, but against Cahn Shapiro.”
Lawyers for Cahn Shapiro could not comment on which insurance company is involved or how many other clients have been defrauded.
“Our client is unable to make press statements at this stage,” said lawyer Gerald Nochumson.
“In addition, fraud charges may be proceeded with against Rashama, to which end the matter is sub judice. We stress that the matter is still under internal investigation.”
Mpotulo says the matter is of public interest because his experience may teach people to be a bit more careful when investing their money.
“I trusted Rashama because he worked for a credible company and did not even think to check whether the letterheads were false or that he was lying.”
“The main problem I have is that the cheque was made out to Cahn Shapiro so how can Rashama steal that money without anyone detecting it?” asks Mpotulo. He says it has been four months since the incident and he wants to know when his money will be paid out by the insurance company.
He still suspects that not enough is being done.
On Tuesday Cahn Shapiro contacted clients in the Northern Province promising to update them on the progress of the investigation.
Attempts by the Mail & Guardian to contact Rashama were unsuccessful.