In just five years more than R70 million flowed in and out of a business account as Durban attorney Colin Cowan sweet-talked people into giving him money to run a pyramid scheme, a forensic probe has uncovered.
And this was just one of several accounts that the once highly respected lawyer used to run his illegal business which, it is said, has cost hundreds of “investors” about R190 million collectively.
Cowan, an executive consultant at leading city law firm Garlicke & Bousfield, committed suicide late in 2010, admitting to his fraud in a note to the firm’s directors.
Details of his crimes are now being exposed in court applications as investors begin approaching courts to recover their losses.
Garlicke & Bousfield director Yvonne Boden, in an affidavit in a recent court application brought by the firm to stop a threatened winding-up application, said Camilla Singh of KPMG had been tasked with probing the “Cowan transactions”.
In broad terms, he would inform potential lenders that he had an investment opportunity for them, where people looking to borrow money for a short-term were prepared to pay favourable interest rates, from one percent above prime up to 42 percent a year.
She said Cowan would tell them where to deposit their money. This included the bank account of Rodlane Trading and Investments, a close corporation owned by Cowan’s brother Martin, various bank accounts under the control of PKF accountants, Cowan’s own bank account and the Garlicke & Bousfield trust account.
Boden said in recent times their money was never used for investments, but rather to repay others.
In what appears to be the first indication that Cowan may not have worked alone, Boden said some money appeared to have gone into paying commissions to “certain parties” who funnelled substantial monies to him while acting as intermediaries or “feeders” in introducing people to his scheme.
Freelance writer Marjorie Copeland, of Westville - who on Thursday launched an application in the Pietermaritzburg High Court to have Rodlane Trading wound up in an attempt to recover just less than R1 million, which she had invested through Cowan - said her late husband had known the attorney through business and, after his death, Cowan had contacted her to offer assistance.
Cowan told her he could use her money to make short-term loans for others and promised her good returns.
Most of the money was paid outside of South Africa, but Copeland made two deposits, totalling R990 000, into the account of Rodlane - which Cowan told her was Garlicke and Bousfield’s investment company.
Copeland said she was shocked when, after Cowan’s death, she discovered the money had simply been used to repay others.
KPMG’s Singh said her investigations thus far showed that Rodlane had never traded as a legitimate business, but was used by Cowan “as a vehicle to perpetrate fraud”. He controlled the chequebook and his brother, Martin, had no signing power over its bank accounts.
The application was adjourned without a fixed date. - The Mercury