A trustee of a failed bridging finance entity who advised two pensioners to invest more than R545 000 in the entity has been ordered to repay the couple.
Noluntu Bam, the Ombud for Financial Services Providers, found Alesio Mogental of Pretoria and his closed corporation, Introvest 2000, liable for the couple’s lost investment in BondCare Trust.
Mogental and Louis Jeremia Cornelius Smit were the trustees of the trust, which offered what Bam refers to as “exotic” interest rates, of between 15 and 22 percent a year. According to Bam’s ruling, BondCare Trust solicited deposits from the public to advance to conveyancers as bridging finance. It claimed it would earn investors the high returns from the interest that conveyancers’ clients would pay to borrow the money.
Clement and Maria Bezuidenhout invested R222 643 and R322 984 in BondCare Trust between 2009 and 2011 on Mogental’s advice. They were offered a two-year investment at 18 percent interest a year, with their money available on 90 days’ notice.
They were not aware that, in 2009, the Registrar of Banks had begun investigating the trust for conducting the business of a bank without a licence, which ultimately led to its sequestration.
In 2012, the Bezuidenhouts heard that BondCare was in financial difficulty and asked Mogental to withdraw their money, but he assured them it was safe and suggested they invest more money.
Bam found that Mogental, whose Invest 2000 was at one stage registered as a financial services provider with the Financial Services Board (FSB), had contravened the Financial Advisory and Intermediary Services Act in a number of ways.
The ruling says Mogental told the Bezuidenhouts that BondCare was a safe investment regulated by the FSB and that it complied with the relevant laws, when “nothing could be further from the truth” and the claim was made “to deliberately mislead the complainants”. She says that, as one of BondCare Trust’s only two trustees, Mogental knew that there was no governance and no controls to manage the risks of theft and fraud. She says he also knew that BondCare had “no real economic activity to generate the lofty returns”.
Bam says Mogental also failed to do an analysis of the Bezuidenhouts’ investment needs and to provide them with suitable advice.
The liquidator of BondCare Trust told Bam that the trust had a shortfall of R23 million before its liabilities to the South African Revenue Service were taken into account, and from this she concluded that the Bezuidenhouts had little chance of recovering their investment.