An apparent copycat to the embattled 2% a day scheme, Defencex, has emerged.
Through its proclaimed Forex investment activity, the NaxaInvest scheme promises that “each client will earn 2% profit daily on his investment,” and that “a total of 10% profit will pay out every Friday.”
Investors are invited to make as many investments of a minimum R250 as they wish and may withdraw their generous return 90 days following deposit.
By comparison, the near 200 000 member Defencex scheme, which has had its bank accounts frozen amidst suspicions that it operated in contravention of the Bank’s Act, sold “points” for R100 apiece.
Those points then “earned” 2%, or R2, a day for 75 days, at which point they could be withdrawn.
Both schemes effectively guarantee a return in excess of 600% per annum.
Following the publication of this article,the Financial Services Board (FSB) has warned the public not to conduct financial services business with NaxaInvest.
“NaxaInvest is not authorised as a financial services provider and is not a representative of an authorised financial services provider. Persons rendering financial services without a licence or without being appointed as representatives are acting in contravention of the Financial Advisory and Intermediary Services Act, 37 of 2002. Such contravention is an offence which carries a heavy fine or period of imprisonment,” it stated.
NaxaInvest is being run by businessman Cornelius van der Merwe, a former Defencex member.
He claims to have started taking deposits for Naxa after the “collapse” of Defencex in order to help Defencex members by earning magnificent returns for them through trade on the JSE.
“I had been trading for a long time, about 13 months, with my own money on the stock exchange through the platform, Investors Choice,” says van der Merwe.
It was then that “we crossed the road with Defencex and invested R50 000,” he says.
“We started meeting some of the people on Defencex who were crying (because it went down), they knew I was trading and they said they wanted to give me money to trade because they don’t make money now,” he explains.
After explaining to members that “we are not allowed to do it (take deposits), because we must register with the FSB to do it,” van der Merwe went ahead and began taking deposits from Defencex members.
The 2%-a-day profits would be generated for investors through trades in Forex, he explains.
“We were going to make it (the profits) by trading on the platform … there are a lot of people making this kind of money … there are guys making 70% per week through trading Forex,” he claims.
Van der Merwe has defended his decision to begin taking deposits without a licence by claiming that he “wanted to help,” the distraught Defencex members and that “they are aware that we are not registered with the FSB.”
He adds that Naxa has since applied for a licence from the FSB and expects to have it within two to three weeks.
According to Thabang Malimabe, Head of the FAIS compliance department at the FSB, “it is not clear from Mr van der Merwe whether they have already submitted an application but normally as soon as an application is received a FSP (financial service provider) number is allocated.
“Do they have the number?” he asks.
Van der Merwe did not reply to a Moneyweb question asking what Naxa’s FSP number is.
In its statement released on Wednesday, the FSB said: “”According to the records of the FSB, NaxaInvest has not applied for a licence to be authorised as a financial services provider. The entity was also never inspected by the FSB.”
The Johannesburg Stock Exchange has also warned that Naxa is not a registered member of the exchange.
“Investors should take caution with selecting a trading platform and ensure that service providers that claim to invest on the JSE on their behalf are authorised JSE members and are registered with the FSB,” said the JSE.
Tanya Woker, former vice-chairperson of the Department of Trade and Industry’s Consumer Affairs Committee was asked to provide prima-facie comment on Naxa.
“In terms of section 43 (3) of the Consumer Protection Act (CPA) it is prohibited conduct to offer promise or guarantee a person an effective annual interest rate which is more than 20% above the repo rate,” she said.
“So the moment a person is offering, promising or guaranteeing an interest rate of 2% per day they are engaged in a prohibited scheme”.
Van der Merwe has told Moneyweb that he is not aware of the CPA rule.
The Deputy Registrar of Banks, Michael Blackbeard has told Moneyweb, that he was unaware of Naxa but will follow up on the scheme.
Van Der Merwe is no stranger to criticism.
He is listed as the director of seven registered companies including Naxaphase CC.
Another of those companies is BVG Property Developers which has been accused of fraud and of failing to deliver on contracts, failing apparently by embittered customers.
BVG customers have stated in a public comment forum that a class action suit is to be heard regarding its operations.
Asked to respond to these complaints, van der Merwe said (sic): “Bvg Construction and Naxainvest have no interest or connection with each other.
“You know Malcolm after I spoke to you – decide this is it, to help people is not good anoth we sending tonight an email to the investors to refund them and we will go go as previously. This is just to put us in a negative way, an no good will come out of this.
“I will after each and everyone reveive their money in the next day or 2 supply you with the proof of payments and then I want you to meet with you to show you the profit that we been made for the last few months. “
Conrelius provided no further comment after being presented with a draft of this article as well as a copy of the director search linking him to BVG properties.
As it stands
Following Moneyweb’s investigation, Naxa appears to be attempting to halt its operations.
“At the point we were queried by Moneyweb we decided not to take any more registrations but then we decided that because so many people were asking about the scheme that we would put up a notice,” he says.
In an announcement dated April 21, Naxa informed potential investors that “no more registrations will be accepted.”
However, it later added that “existing investors may add more money anytime. It will be a new investment in your investments.”
According to van der Merwe Naxa has only managed to attract around ten investors, four of which are former Defencex members.
BVG Holdings has raised concern regarding the similarities between its trading names, including BVG Commodities (PTY) ltd and a range of subsidiaries and the Van der Merwe linked entities mentioned in this article. It would like to make it clear that there is no connection between BVG Holdings and either BVG Construction CC or BVG Property Developers CC. Moneyweb can confirm that this is the case.