Financial services ombud Noluntu Bam has ordered two Bloemfontein financial advisers, one an accountant, to repay R283 000 plus interest to a Bloemfontein pensioner couple who had entrusted them with their savings to supplement their monthly pension of R3 300 a month.
The complaint arose from one adviser, Marius Jacobs, advising Mr and Mrs JFM to invest R283 000 in a mortgage participation bond scheme marketed by JAR Financial Services, which was controlled by Bloemfontein accountant Raymond Daniel de Villiers, who also has a financial advice company, Raymond Daniel de Villiers CC, in Bloemfontein.
The mortgage participation bond scheme was not registered as required in terms of the Collective Investment Schemes Control Act (Cisca).
Previously, Mr and Mrs JFM had invested in an entity called Taakmeesters Trust (TMT), controlled by De Villiers, but they had been told in October 2004 that the investments were to be changed to participation bonds as TMT had to be discontinued because of changes in the law. TMT has since been placed under curatorship, with millions of rands lost by about 54 investors.
The curator has described TMT as a pyramid scheme and criminal charges are being investigated.
The purpose of the JAR investment was to supplement the income of pensioners Mr and Mrs JFM.
JAR was set up as an anticipated property syndication company by De Villiers, his brother Leon and a Bloemfontein lawyer, James Callis.
Callis has told Bam he was shocked to find that money was ever taken from the couple, as it was not the intention to take this type of investment.
He says the money was deposited “dishonestly” in the JAR bank account. He also resigned as a director of JAR in August 2007 because the company, as far as he knew, had no assets.
De Villiers told the couple the money was to be invested in an entity, Emirates Property Syndication, but secured via mortgage participation bonds.
Bam says that initially the complaint was only against Jacobs, but De Villiers and his companies were added because of the improper conduct of De Villiers and his relationship with the advice company and JAR.
Despite JAR not being registered as a financial service provider or its participation bond scheme being registered in terms of Cisca, Jacobs claimed he had conducted all the necessary checks and was satisfied JAR was a “safe workable investment”.
Bam dismissed Jacobs’s investigations as based on “nothing more than verbal assurances” without any independent verification.
The ombud determined that Jacobs acted “wilfully or negligently” in the financial services he provided to the pensioner couple and as a result they suffered damages.
Bam says even though De Villiers and his companies misled Jacobs, he allowed this to happen and contravened the General Code of Conduct of the Financial Advisory and Intermediary Services Act.