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Garnishee fraud uncovered

A major lender, the Hawks and SA courts.

JOHANNESBURG – Letters issued by the Krugersdorp Magistrate’s Court have implicated short-term lender, Atlas Finance, in apparent systemic fraud relating to its debt collection practices.

Atlas, however, has defended itself against the allegations by claiming the letters themselves may be fraudulent and that undisclosed third party entities could be behind wider malpractice in the industry.

The allegations against Atlas stem from seven separate Magistrate’s Court letters in which it is stated that the case numbers and documents related to separate garnishees secured by Syndicated Debt Collectors do not exist.

Syndicated Debt Collectors is owned by Jack Halfon, who is also the major shareholder and founder of Atlas.

Syndicated is the sole collections entity used by Atlas.

Following its own internal investigations the lender claims to have filed documents and an affidavit with the Hawks, which has now apparently entered the scene as part of widening inquiry into the matter.

These documents where filed on Atlas’ own volition as it seeks to clear its name in relation to the matter by uncovering the true source of malpractice says the lender.

Atlas CEO Halfon was unwilling to disclose details of the Hawks investigation but believes the outcome of those proceedings will both exonerate Atlas and uncover “serious” irregularities pertaining to the processes involved in securing garnishee orders.

“We have an idea of what happened and it is in the hands of the Hawks … I believe that there are parties involved here which stand to benefit from Atlas’ downfall,” he said.

“We deny emphatically that any fraud took place on the part of Atlas Finance or Syndicated Debt Collectors,” he added.

The court letters had been provided to Moneyweb by 6cents, a division of Summit Financial Solutions, which is involved in the auditing of garnishees.

According to Clark Gardner, CEO of Summit, 6cents had secured the letters from the courts following concerns regarding the validity of Syndicated garnishes. “We went to the court and looked for the case files and there were no case files … they were fraudulent, there is no nonsense there,” he added

The letters state: “It is hereby confirmed by the court manager … that the document (the respective garnishee) under case number (x) would appear to be a fraudulent document, as this matter does not exist and was not issued by the Krugersdorp Magistrate’s Court.

“Please ignore and do not deduct or pay over any monies in the regard.”

According to a team leader at Summit Garnishee Solutions, every single Syndicated Debt Collectors’ garnishee order his team has reviewed, has been fraudulent.

Since June his team has reviewed in excess of 100 Syndicated garnishees. “It is common practice, that is how they operate,” he said.

Moneyweb presented these letters to Atlas and described the auditor’s testimonial.

Atlas then launched a “thorough investigation” into the matter.

The letters, as well as information gleaned from another concurrent three-month old Atlas investigation, now form part of the evidence being reviewed by the Hawks, according to Atlas.

According to Selvan Pillay, a director at Syndicated, the National Credit Regulator (NCR) is also busy with an investigation into Syndicated’s operations.

Garnishees instruct an employer to deduct amounts from its employee’s salary until their debt, including legal fees, are cleared.

A garnishee needs to be authorised by a judge, which means that a case needs to be opened at a court before the judge can review a range of documents pertaining to the alleged default prior to granting the order.

The process should include an opportunity for the alleged defaulter to present himself in court.

Every case has a case number.

As there is no case number, either Kurgersdorp Magistrate’s has “made a massive mistake which is unlikely because all of the letters, of which there are seven, pertain to the same debt collector” or no case was ever opened, says Noelene Niclas, executive director at Garnishee Audit Services.

Garnishees need an official court stamp and the signature of a court clerk to be valid.

Speaking of the Krugersdorp garnishees the auditor said: “Atlas Finance and Syndicated Debt Collectors did not follow the proper procedures, they did not go to court at all.

“I do not know where they got the court stamp from but those garnishees have the court stamps and signatures … the clerks of the court informed me that the signatures do not look like any signatures of any clerk at the court.”

Halfon has rubbished these allegations.

In extensive discussions with Moneyweb on Friday Halfon described apparently extensive costs incurred by Syndicated in connection with its collections processes.

He says that it would be “cuckoo” to believe that Syndicated incurred these costs while simultaneously adopting measures aimed at flouting the court processes involved in securing garnishees.

Image source: “Business concept isolated on white” from Bigstock

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