Some of the clients who invested money with Thomas Stringfellow have told Moneyweb how they would not receive proper documentation relating to their investments or even statements on their portfolios unless they specifically asked for them. However, this didn’t concern them as long as they were receiving the income that Stringfellow had promised.
Stringfellow, a high-profile financial advisor in Johannesburg, handed himself in to the police earlier this month and was charged with fraud in the Specialised Commercial Crime Court. He faces allegations that he may have misappropriated more than R100 million from investors.
Moneyweb has spoken to a number of Stringfellow’s clients, all of whom were promised a return of 14% for placing their money in unregulated products that he was offering. In most cases, these clients had been advised by Stringfellow for many years and their money had previously been held in the regulated unit trusts he managed.
However, when Stringfellow, together with his wife Leigh, started the Lorna Jane South Africa business around 2010, he began encouraging clients to move their money into investments funding this operation. They have told Moneyweb that he assured them that Lorna Jane South Africa had outstanding prospects.
It seems, however, that Lorna Jane South Africa has folded. All seven of its stores appear to be closed, and Moneyweb has been unable to contact anyone affiliated with it.
The parent company, which sells women’s activewear and is headquartered in Brisbane, Australia, has explained that Lorna Jane South Africa operated as “a totally separate business”, and was merely a licensee. It too has been trying to get information on what has happened to the South African operation so that it can relay this to customers who have been making enquiries.
It has however come to light that Lorna Jane South Africa was not the only unregulated investment that Stringfellow was promoting. Moneyweb has spoken to a client who was told that his money was also invested in a venture in Liberia and silicon mines in New Zealand.
In all cases, the return offered was 14% per annum.
This client explained to Moneyweb that he did not have any documentation pertaining to these investments, and did not receive regular statements despite having entrusted Stringfellow with millions. He was also given little detail on the underlying investments.
Other clients who invested in Lorna Jane South Africa also explained that they were never shown financial statements for the business. They relied on Stringfellow’s assurances that the operation was doing well.
Some investors did not even have any indication that anything had gone wrong.
They had continued to receive regular income payments until they were alerted by other investors or the Financial Sector Conduct Authority (FSCA) that there was a problem.
Others, however, had experienced delays in monthly payments, or had struggled to withdraw lump sum amounts for some time. At the time, Stringfellow always had an explanation for the problems. These ranged from his email being hacked by Nigerian fraudsters to problems with systems being automated at the bank.
A question of trust
What all investors had in common, however, is that they trusted Stringfellow’s advice. Given his position as a licensed financial advisor and the award-winning performance of one of the unit trusts he managed, they also did so with good reason.
Some had either been clients of his for decades, or had family members who had been. Over that time, Stringfellow had successfully looked after and grown their money.
For unsophisticated investors, there was therefore good reason to continue to believe that he was looking after their interests. All of them spoke of how confident and convincing Stringfellow had been.
“You always see it this kind of thing in the papers and think why didn’t these people notice what was happening,” one of them told Moneyweb. “As my mom has said a number of times: he was the last person she thought would have done this.”
The FSCA has confirmed that it is working with the police on the matter. Any investors who have not yet done so, should contact the regulator on firstname.lastname@example.org.