The Pretoria High Court on Tuesday (August 20) ordered the forfeiture of around R101 million hidden in two Israeli bank accounts by personal injury lawyers Ronald and Darren Bobroff as it found the money to be the proceeds of crime.
This comes after the Asset Forfeiture Unit (AFU) froze the money in 2017, after the Bobroffs fled to Sydney in Australia to evade the Hawks. They may face a range of criminal charges related to the overcharging of their clients through illegal fee agreements, tax evasion, theft, money laundering and fraud.
Ronald Bobroff & Partners (RBP) had what an AFU investigator referred to in court papers as a modus operandi to fleece its clients.
No SA Reserve Bank approval
The SA Reserve Bank (Sarb) has Exchange Control Regulations in place that state how one obtains permission to transfer money from South Africa. In the application, the Bobroffs claimed they had taken advantage of a Sarb Exchange Control Special Voluntary Disclosure Programme (SVDP), which came into operation in February 2016. The Bobroffs received approval in December 2018.
It is unclear whether the SVDP application was made before the July 2017 freezing order. No mention is made of the Bobroffs’ substantial assets in Australia and elsewhere or at what stage the South African authorities are at with these investigations.
Judge Malindi found that “the point that the Bobroffs miss is that the SVDP applies to lawfully earned money” that had been taken out of the country and so the SVDP did not avail the Bobroffs.
Ronald and Darren each paid a 10% SVDP administrative penalty to the Sarb during 2018.
At today’s exchange rate these penalties amount to more than R9.6 million:
- Ronald paid US$277 131.28 (more than R4.2 million)
- Darren paid US$357 786.72 (more than R5.4 million).
Stealing from clients
Judge Malinidi further found that the Bobroffs’ contentions “do not provide an answer to the gravamen of the allegations against them or RBP”. More damningly, observed the judge, “the supplementary affidavit on its own version discloses a pattern of expropriation of funds that Pretoria Judge Natu Ranchod found to be the proceeds of unlawful activities”.
Bobroffs’ conduct prohibited by the Proceeds of Crime Act (Poca)
Judge Ranchod did not mince his words and described the Bobroffs’ conduct as “extensive and serious”. The conduct was of “serious charges of practice-wide conduct of overreaching clients, contravening the Contingency Fees Act by relying on unlawful common law contingency fee agreements, making clients sign several different mandates with a view to using the one that was later the most advantageous to the firm, and other unprofessional, dishonourable and even fraudulent conduct.”
Judge Malindi found that evidence before the court showed that it was not merely a failure to adhere to the rules, and pointed out that there were a host of other judgments and “established facts” that demonstrated that the Bobroffs were serial offenders when it came to the pillaging of their personal injury clients’ monies.
“The misconduct referred to in the various cases before court was not a mere failure to adhere to the Rules of the Law Society. It was conduct prohibited by Poca.”
The Bobroffs’ conduct resulted in them being struck off the Roll of Attorneys.
The Bobroffs’ counsel, Arnold Subel SC, tried to persuade Judge Malindi that claims against them had prescribed (lapsed).
The intention to commit a crime in a schematic way
The Bobroffs have for years relied on unlawful fee agreements, which time and again have been declared unlawful by the courts. No court has ever upheld a single one of their multiplicity of fee agreements, yet they persisted in operating in this manner and proffering it as a defence.
Judge Malindi also rejected Subel SC’s contention that the Bobroffs’ fee agreements were “permitted and lawful”.
Judge Malindi: “The contention is without merit. I am satisfied that the schematic way in which the clients of the practice were overreached and the manner of concealing the origin of the funds (by effecting inter-account transfers which were disguised as section 78(2A) investments) reveals the respondent’s intention. The respondents had the necessary intention to overreach and to conceal or evade paying tax on any portions of the proceeds of their unlawful activities.”
The court’s order
The National Director of Public Prosecutions (NDPP) succeeded in terms of section 50 of Poca in that the monies frozen in July 2017 (including interest) were declared to be the proceeds of unlawful activities and were declared forfeit to the South African state.
These are the funds held in the name of Darren Bobroff at Bank Mizrahi, and those held in the name of Ronald Bobroff held at Bank Discount, both in Israel.
The Israeli banks were ordered, in terms of a mutual assistance agreement, to pay the money into the Poca Criminal Assets Recovery Account at the Sarb in Pretoria.
The Bobroffs were ordered to pay the NDPP’s legal costs.
Request for assistance by the state of Israel
In April 2017, the state of Israel requested the assistance of the South African government. By that stage, they had suspected that funds transferred from South Africa to the Bobroff bank accounts “may be the proceeds of the crimes of fraud committed in South Africa.”
The question was posited how Darren Bobroff after only 12 years as an attorney could have accumulated such vast wealth offshore.
The amounts in the Israeli request are reflected in Israeli New Shekels. The present rand amount follows in brackets:
- Darren Bobroff Shekels: 24,686,342-76 (R106,579,581-91)
- Ronald Bobroff Shekels: 3,028,662-01 (R13,075,793-93)
The request is a comprehensive 10-page document. Read it here.
Neither Ronald nor Darren Bobroff provided any relevant comment to Moneyweb, other than that we should contact their attorney, John Cameron, for comment. Cameron did not acknowledge our request or respond to it by the time of publishing.
Read the full judgment here.