Cape Town - Pyramid scheme Up Money used social media to solicit the public to join, the National Consumer Commission (NCC) said as it cautioned people on being swindled out of their money.
The NCC had worked with the National Prosecuting Authority (NPA) and the Financial Intelligence Centre (FIC) to investigate the scheme after receiving complaints.
As part of the investigation, assets of Up Money directors, who the NCC said coined more than R42million between May 4 and July 2, were seized. NCC acting commissioner Thezi Mabuza said the FIC had analysed Up Money's bank statements.
“The FIC established that the scheme, which promoted itself as a stokvel, had received an amount of R42720501.82 between May 4 and July 2. Some of the funds were then moved into the business account of another company, of which one of the directors of Up Money was the sole director.
"More than R14.5m was dissipated through point of sale purchases at various retail stores. In addition, three luxury motor vehicles were also purchased, namely a Hummer, a Jaguar and an Audi TT.” She said over the past two weeks, the three agencies obtained a preservation order for the assets and seized the vehicles and money held in the scheme’s bank accounts.
“The modus operandi of Up Money was to use social media to solicit members of the public to participate in the scheme. In order to receive the promised meat and/or grocery packs, participants were required to pay a one-off joining fee of R180 and to recruit five new participants. As is typical of all pyramid schemes, new participants made up the base of the pyramid and provided funding for participants who were recruited prior to them and who occupy higher positions in the pyramid.”
Advocate Ouma Rabaji-Rasethaba, NPA Deputy National Director of Public Prosecutions in the Asset Forfeiture Unit, said arrests were imminent.
“They contravened various actions of the Consumer Protection Act and the Companies Act. They were not selling a product; this is fraud and theft. The criminal case is continuing and there will be arrests,” Rabaji-Rasethaba said.
Up Money had more than 200000 participants.
Senior legal adviser at the NCC Joseph Selolo said they would be taking action against all participants.
“In terms of the Consumer Protection Act, we will be taking action against all participants and promoters - those who went to social media to promote the scheme.”
Up Money could not be reached for comment on Tuesday.