/ 10 December 2023

Victims of R2.7bn BHI Trust ponzi scheme in the dark

Graphic Ponziguy Website 1000px
BHI Trust co-trustee and fraud accused, Craig Warriner. Graphic representation by John McCann/M&G

Investors in the estimated R2.7  billion BHI Trust Ponzi scheme are facing a bleak Christmas with no answers to whether they will ever be refunded their money, almost two months after the scheme went belly up.

The financial adviser they claim referred them to invest in the trust, Michael Haldane, and the directors of financial services provider (FSP) Global and Local, which he founded, have gone to ground, and are not responding to pleas regarding the whereabouts of the investments.

This comes after Investec and Allan Gray cut ties with Global and Local — which had been using their investment platforms to manage clients’ funds — when BHI Trust co-trustee Craig Warriner handed himself over to the police in mid-October. 

Warriner told the Randburg magistrate’s court that he wanted to plead guilty to a charge of fraud for managing the fund “irresponsibly”.

Warriner also appeared in the Palm Ridge magistrate’s court on 29  November, where it emerged in court papers filed by the arresting police officer, Captain Ernest Khangale, that the BHI Trust and Warriner had received investments from 220 investors “without being issued with the necessary authorisation to act as a manager of a collective investment scheme or being a representative of an authorised FSP”.

“BHI Trust and the accused were operating a pyramid scheme wherein investors would request (recruit) other investors … when he was losing monies invested by the investors he would then use monies invested by new investors in order to pay out those old investors who wanted to withdraw from the scheme,” the papers said.

Khangale said an anonymous whistleblower alerted the Financial Sector Conduct Authority to the allegedly fraudulent scheme that BHI Trust and Warriner had run from January 2013 to August 2023. His BHI Trust co-trustee and investor, Christian Ashcroft, also opened a case of fraud against Warriner.

“An investigation was then conducted, and it was established that the accused through BHI Trust had defrauded almost 220 investors, an amount estimated to be R1  182  906  735,” Khangale alleged.

Warriner is facing charges of fraud and the Directorate for Priority Crime Investigations (the Hawks) and the police have confirmed that two further cases of fraud have been opened in connection with the collapse of the BHI Trust. 

Asked to comment on the status of the investigations this week, Hawks spokesperson Brigadier Thandi Mbambo said: “The main case relating to the BHI Ponzi scheme was in court on 29 November 2023 and postponed to 20 March 2024. The one [fraud case] opened in Sandton … will be an additional charge to the main charge.”

Forensic investigator Bart Henderson, who says he is sitting with 200 cases of investor victims referred to him, believes the sum of money people have lost is much higher than the R1.2  billion mentioned in court and that there is a bigger picture involving companies abroad. He believes police investigations are moving at a slow pace.

“There’s a one-dimensional view of the BHI matter centred around Warriner’s confession. This is an extremely limited and narrow view and short-sighted,” Henderson said.

In a bid to expedite the investigation to preserve victims’ investments, which can be done through a preservation order in terms of the Proceeds of Organised Crime Act, Henderson said he had written an “urgent tip-off and a complaint” email to Sandton police station commander Brigadier Egen Moodley alerting him that he has files of evidence.

The letter highlighted connections between financial adviser Haldane, Rubicon Administration and Rubicon Trust and international firms including BHI International, Wasabi Investments and Drake Fund Advisors.

He said the names of officers representing these entities shared one name in particular, Kratrinos (Kaddy) Cost, who is directly associated with Haldane through Rubicon Administration, which administered the BHI Trust and Rubicon Trust, which Haldane founded.

“This structure is replicated by an offshore structure in the form of a BHI International, located in the British Virgin Islands. In this structure are companies sharing the exact same address but with different company names,” Henderson said.

In a United States Securities and Exchange declaration in March, Global and Local declared funds under management of about R2.4  billion. But in September the company declared R5  billion under management in an investor pack advertised in South Africa.

“Either Global and Local have misled the US SEC, or weren’t required to list the R2.6  billion investment under advisement omitted, to the SEC. It’s important to establish the actual size of investor funds under management to establish how much was lost through BHI, how much is left, and precisely where these funds are,” Henderson said.

He reported the matter to the US authorities last week and received an acknowledgement “submission number”.

Global and Local attorney Heetesh Patel had not responded to questions directed at the company, Cost and Haldane at the time of going to print.

Global and Local earlier distanced itself from BHI Trust. Managing director Mauro Forlin and Haldane recently said in a statement they were transferring the company’s client portfolio to GCI Wealth, a “strategic move” aimed at upholding superior financial advisory services “amid recent industry upheavals”.

“This transition underlines our dedication to our clients’ financial security and our confidence in GCI Wealth’s professionalism. We trust GCI Wealth to uphold the dedication and integrity our clients expect,” Haldane said.  

 But Global and Local clients who spoke to the Mail & Guardian this week said they would not accept advice from anyone recommended by the company.

Catherine Taxer, who entrusted Haldane with at least R2  million in investments since 2009, said she had received a call from a GCI Wealth agent who advised her that Global and Local would receive revenue when it took over her investments.

“I don’t want to have anything to do with anybody that has ties with Allan Gray or with Global and Local. Where do they come from?” Taxer said.

Another investor who declined to be named said he had trusted Haldane because he had been referred by family and friends who had used his services for years, and invested R7  million with BHI Trust through Global and Local in 2023. But now, he has no idea how to withdraw his money as Haldane is not responding to calls and emails.

He said a director of Global and Local had advised him that he could not speak about the investment because “it is going to jeopardise our case” but investors were advised in an email to withdraw their funds from the BHI Trust after Warriner’s arrest.

But Cost, who sent out emails on behalf of BHI Trust, advised that the fund had been “frozen”.

“You can email Kaddy [Cost] but you won’t get anything from him, you can’t get hold of anyone. As investors we have no one to talk to because there is a barrier of attorneys,” the investor said.

“Why would we go to GCI when Global referred them and they have basically screwed us and it is business as usual? It is terrible. People are saying we have lost everything we had so what is GCI going to do for us?”

Investor and attorney Werner Cawood filed an urgent application for the liquidation of BHI Trust in the Johannesburg high court, which granted an order for its provisional liquidation in October.