By Fatima Schroeder
High Court Writer
The Western Cape High Court has ordered the police and two banks to unfreeze the bank accounts of two businesses linked to a Khayelitsha man accused of operating a fraudulent investment scheme in his neighbourhood.
The man, Mzwandile Pato, and his wife, Nosisa, have been charged with fraud worth R5-million and appeared in the Khayelitsha Magistrate's Court in July, where each was granted bail of R15 000.
The two businesses are close corporations Mthuthulezi Funeral Services and Fola Investments.
In an affidavit before the court, Pato said Mthuthulezi has been in existence since 2005, and that its members paid a R185 monthly premium for funeral services for themselves or their relatives.
He said the business had an account at FNB in Tokai, but that it was frozen during the fraud investigation against himself and his wife. However, he said he believed that there was no reason to freeze the Mthuthulezi account.
He said that he was charged with fraud in his personal capacity, and that the freezing of his business account was therefore not warranted because it did not directly affect him, but affected members of the funeral service business.
Pato said the main objective of Fola Investments was to alleviate poverty within poor and destitute communities, such as Khayelitsha and Mfuleni.
Investors were divided into four categories:
- Those who invested R350 received R910 after four months.
- Those who invested R700 received R1 820 after four months.
- Those who invested R3 000 received R8 086 after four months.
All four categories were grouped into four sections of 30 people each, which meant that there were 120 investors at any given time.
"Using this method, Fola has been able to provide food and other household necessities for approximately 240 poverty-stricken families in the areas aforementioned each month," Pato said.
He said the reason he had been investigated for fraud was because a special offer was introduced to investors during the World Cup, which effectively changed the four-month payment period to four days.
Pato submitted in his affidavit that freezing the business account made it difficult for people to provide for their families. He added that he did not have anything to gain from having the account unfrozen because the money in it belonged to Fola investors.
Pato also said that the court had the discretion to authorise someone else to operate the account, pending the finalisation of the criminal case against him.
Judge James Yekiso on Monday ordered that the accounts be unfrozen and ordered that police return Pato's computers and books to him.
He said the businesses were permitted to continue rendering a service to members "in the public interest".
Hundreds of investors gathered outside the court building on Monday where they sang and held aloft banners and placards in support of Pato's application. They also waved bank notes in the air.