Up Money directors’ assets frozen

Those who lost more than R42m in the pyramid scheme seen as willing participants in unlawful activity and also face prosecution.
The NCC’s Joseph Selolo says investors in the scheme might be fined 10% of their annual income and will not be compensated for the money they lost. Image: GCIS

The bank accounts of the directors of pyramid scheme Up Money, which disguised itself as a grocery stokvel, have been frozen. It is believed that 230 000 investors fell prey to the scheme.

The Deputy National Director of Public Prosecutions and head of the Asset Forfeiture Unit (AFU) of the National Prosecuting Authority (NPA), Advocate Ouma Rabaji, announced on Tuesday that the NPA is laying criminal charges of fraud and contraventions of various sections of the Prevention of Organised Crime Act. It directly labels Up Money a pyramid scheme.

Read: Investment scams pop up like mushrooms

“The sections might be racketeering, money laundering, fraud, theft, assisting another to benefit from proceeds of unlawful activities and acquisition, possession or use of proceeds of unlawful activities,” Rabaji said.

The high court granted the AFU preservation orders to freeze bank accounts worth more than R18 million and attach a number of luxury vehicles belonging to the directors, Jade Matsemela and Sipho Martin Mdlhuli (an Audi TT, a Hummer H3 and a Jaguar XKR Coupe.)

This after the National Consumer Commission was alerted to the pyramid scheme by a complainant from East London.

The directors have not been arrested as yet, nor has the scheme been suspended.

How it works

The scheme, which is not registered with the SA Reserve Bank and is neither a registered stokvel nor a financial services provider, mainly used social media to recruit members for R180, which qualified participants for a meat pack.

On joining, participants would have to recruit members who were then required to recruit five new participants.

The original investor would then help the five they recruited to sign up their five new members each so that they could move up to level two, at which point they would receive a meat pack, groceries and R500.

“When those on level one moved to level two by their recruits, the original organiser was pushed to level three. When here the investor received level two benefits plus R3 000,” Rabaji explained.

The scheme received R42 720 501.82 between May 4 and July 2, of which R12.5 million was splurged at various retail stores and on buying the three luxury motor vehicles.

Participants also at fault

In a pyramid scheme, ‘Peter is robbed to pay Paul’. It is one of the oldest investment scams and originated in the 1920s when fraudster Charles Ponzi paid out investors through money received from other investors.

NCC acting company secretary Joseph Selolo said those who participated in Up Money are also going to be charged.

“We will be taking action against all promoters and participants of the scheme that went to social media to promote [it],” Selolo said.

He reiterated that the law clearly states that no one shall participate in, join or promote a pyramid scheme.

“Everyone who joined and promoted Up Money has committed unlawful conduct by joining the scheme. Therefore, in our prosecutions, we will be prosecuting everyone,” Selolo said.

He said the participants might be fined 10% of their annual income and they will not be compensated for money lost in the scheme, because they willingly participated in unlawful activity.

He said the money will be used to fight crime.

Listen to Nompu Siziba’s interview with Nancy Bambo, head of market content at Momentum Securities on Ponzi and pyramid schemes:

AUTHOR PROFILE

COMMENTS   17

Sort by:
  • Oldest first
  • Newest first
  • Top voted

You must be signed in to comment.

SIGN IN SIGN UP

Hey Hey!!!

The NPA on a roll. The charges mentioned can be similarly applied to management of all SOE’s and Municipalities in this country.

So Ouma There you go. What a breakthrough.

Well said- the full might of the law coming down to persecute some very small fish while the ANC sharks feed unabated. Well done NPA.Our tax money at work.Well the leftover tax money not stolen by the ANC. Must say MW is more and more scraping the bottom with its articles. Pure social media nonsense these days. Will be reading BL in future.

I cannot believe that Pyramid schemes still exist or are supported.

Also cannot believe that the Authorities do not close them as soon as they appear.

I accept the spirit of prosecuting those who actively promoted the scheme, but at what level does innocent participation by uneducated investors, those to whom a stokvel is a stokvel, become active promotion?
Will this be another instance in which SARS (and other prosecutors) take unto themselves their new-found license to assume guilt until the victim proves himself / herself innocent?
Slippery slope, Mr Selolo.

@carwriter…..too true !

We’ve all been observing the slow morphing of the state into belligerent looters and untouchable enemies of the citizens across every field as they bend the law to suit their own greedy agenda’s.

This recent CV19 debacle a major case in point for anyone that still doubts this.

Expect more of this as their traditional ‘legal’ sources such as tax etc dry up.

There is a simple but brutal saying, which is becoming more and more relevant these days but only dawns on people later in life, and which can be applied globally too :

‘Your Government is at War with You”

Prosecute ‘everyone’? They can’t even prosecute those that stole state funds.
Big talk from Mr. Selolo.

They will probably end up prosecuting the low hanging fruit i.e. those without the means to fight back or to protect / hide what little they have (most of the proceeds are all spent or eaten anyway). Bullying is easy and that’s basically all that our law enforcement agencies are able to do. Very few of the real criminals are caught and prosecuted i.m.o.

It easy to prosecute any number of participants, they will outsource to a number of Law Firms/Lawyers.

It will take years but they will get through the list.

The ideal fruit will be the middle class, people with some assets and savings.

If you have some asset in your name, you will not get away.

Many schemes around.people are desperate and get caught.

Where will the prosecution bus stop next…Crowd1?

The NPA is yet to go after the ANC cadres with the same vigour.

“He said the money will be used to fight crime”

Wahahahahahahahahahahahahahahahahaha !!!!!!!!!!

Once upon a time, way back, when the average citizen gained the power to make laws, they enabled one man to create one of the largest and most destructive Ponzi schemes the world has ever seen.

The average voter is an eager participant in this evolving scheme that is still growing strongly and attracts new members by the day. The happy but ignorant members are so impressed with this Ponzi scheme that they even voted the inventor into the highest office of the land. They wrote this Ponzi scheme into law and they called it BEE. Like with all Ponzi schemes, the day of reckoning is approaching fast. When the source of funding ends, when the fountain dries up, the scheme implodes upon itself.

When the Debt/GDP crosses the 80% upper limit, it is game over for this Ponzi scheme. Payments will stop and members will be left destitute and without an income because their Ponzi scheme has destroyed all their jobs. The Ponzi schemed promised to turn everyone into capitalists, entrepreneurs and bosses so nobody needs to work for his food.

This Ponzi scheme destroys jobs that are supposed to empower people. The scheme exchanges food on the table for the dream of capitalist wealth and they call it empowerment. This scheme is the method by which the average voter shapes his reality to reflect his mindset.

seemingly there is not a pill or cure against stupidity, greed and corruption….shame! by the way, the garages where these “luxury” vehicles where bought are also obliged to flag these transactions….right?

Meat pack!!! take my money….!

Criminal merger of saving societies and social media or interesting integration of custom and technology?

” the money will be used to fight crime”…. No the money will be used by politicians to buy there own hummers and wabenzi. They too benefit from crime.

End of comments.

LATEST CURRENCIES  

USD / ZAR
GBP / ZAR
EUR / ZAR

Podcasts

NEWSLETTERS WEB APP SHOP PORTFOLIO TOOL TRENDING CPD HUB

Follow us:

Search Articles:Advanced Search
Click a Company: