Cape Town - A shocking auditors’ report into an alleged Ponzi scheme run by Pastor Colin Davids shows that his company received a total of R329 million from thousands of investors.
Prosecutors claim the Parow pastor was insolvent after losing more than R106m in investors’ funds.
The report by Ernst and Young was brought to the Western Cape High Court last week as the Asset and Forfeiture Unit was applying for a full forfeiture order against him.
Davids, the director of Platinum Forex Group, is accused of running a multimillion rand Ponzi scheme where investors are promised impossibly high returns, and are repaid with investments from newcomers.
The father of three has denied the allegations against him, insisting his business is legitimate.
The 49-year-old is out on R100 000 bail at the Bellville Magistrates’ Court where he faces charges of fraud, contravention of the Financial Advisory and Intermediary Services Act [FAIS], which he was not registered or licensed to perform.
Last week, Judge Vincent Saldanha denied attempts by Davids’ lawyers to block the submission of the report.
“According to the facts gathered during our inspection, the institution is conducting the business of a bank,” reads the 84-page report.
“The promise of enormous returns described is typical of a so called Ponzi scheme, a scheme where early investors are paid returns from the investments of subsequent investors.”
According to the report, a total sum of R329m went into Davids’ accounts from over 2 000 investors.
From November 2009 to July 2015, about 3 541 transactions were recorded from investors at an average of 52 deposits a month.
It’s believed his clients were mostly former government employees and pensioners.
The report also states that a total sum of R17m was classified as expenses of a personal nature for Davids.
The New Direction Church pastor owns two multimillion rand homes, a luxurious mansion in Plattekloof and another house in Hermanus, and several luxury cars.
In an affidavit handed to the court, Deputy Director of Public Prosecutions, Leonardo Goosen, said a report from curators appointed to seize Davids’ assets indicated that more than R106m of investor’s money had been lost.
Goosen said the scheme run by Davids was “hopelessly insolvent” and that the accused had been trading recklessly.
The audit found that Davids lost the majority of the R87 million he had paid into the accounts of forex traders.
According to the report, of a sum of R79m paid into one of the companies he used to trade, only R812 589 was left by August last year.
Daily Voice