From professors to pensioners, thousands of people lured by promises of a 30 percent monthly return on their investments ploughed R73-million into a Hillcrest-based investment company which, it now seems, was a Ponzi scheme.
The Reserve Bank has in effect shut down Ingede Mineral Holdings (IMH), freezing its bank accounts and employing attorney Johan Kruger of Bowman Gilfillan as fund manager.
Kruger has hired forensic auditor Eckhard Volker of Thabani Zulu & Co to ascertain how much money was invested, by whom and what happened to it. The matter is also under police investigation.
The company, which had offices in Crooked Lane, Hillcrest, was run by 25-year-old Goodman Goqo until its forced closure at the end of February for contravening the Bank Acts.
The Mercury has been told that Goqo used agents who would "sell the scheme" to workers in companies such as Toyota and in government institutions, including hospitals, schools and prisons.
The company advertised its "guaranteed 30 percent monthly returns for life" on the intranet site of the Albert Luthuli Hospital - and, in one week, nurses from one ward alone invested R400 000.
In an affidavit submitted to the police by Volker, and which is in The Mercury's possession, Volker says about 3 100 people gave R73-million to IMH as "investment to trade" over nine months.
He said many had borrowed the money, sold their houses, used their pensions and were now "financially devastated".
Describing the profile of deposits into IMH's bank account as having "typical characteristics of a pyramid scheme", he said his preliminary investigations showed investor funds were pooled and used to finance interest payments, with "significant funds" withdrawn for personal use by Goqo.
"Irregular" payments included almost R1m into Goqo's personal bank account, cash withdrawals of R2,7m, and R7,4m in payments of "special interest".
Goqo had also spent R5,1m on cars, including R1,4m for a second-hand Mercedes S65, which he bought on February 24.
The document notes that at the time the account was frozen there was R40m in it, meaning investors will get some money back.
Neither Kruger nor Volker would comment. However, an investor - who did not wish to be named - said all investors were being called to Volker's Westville office to submit proof of their investments.
He said not all were happy with the Reserve Bank's action against the company, and the rumour was that the scheme had been closed to protect the interests of the major banks.
Last month, Goqo unsuccessfully applied to the Durban High Court to have the appointment of Kruger as fund manager set aside.
His attorney, Suran Gounden, told The Mercury his client said he was running a legitimate business "and did not rob anyone".
IMH had not traded on the stock exchange because it did not have a trading account, but he had his own personal trading account and had done the trading himself.
"He denies running a pyramid scheme and says he paid out investors on a monthly basis."
Gounden said Goqo claimed to have bought the cars with his own money. His client also denied the Reserve Bank's charge that he was "acting as a bank".