Up Money pyramid scheme bust
Pretoria - The asset Forfeiture Unit has obtained two preservation orders amounting to R18million in assets against an alleged pyramid scheme operator which apparently swindled more than 230 000 people.
Deputy National Director of Public Prosecutions Advocate Omar Rabaji-Rasethaba said there would be criminal prosecutions in the Up Money pyramid scheme, which has become popular during the lockdown in South Africa and neighbouring Lesotho.
He said the criminal charges may include fraud and contraventions of various sections of the Prevention of Organised Crime Act, which included racketeering, money laundering, fraud, theft, assisting another to benefit from proceeds of unlawful activities and acquisition, to the possession or use of proceeds of unlawful activities.
The Gauteng High Court, Joburg, has granted the asset forfeiture unit preservation orders to freeze the bank accounts worth more than R18million and a number of luxury vehicles.
These accounts and vehicles are being associated with businessmen Jade Ignatius Matsemela and Sipho Martin Mdlhuli, who are respectively the director and former director of companies Up Money Ltd and Uniitco.
The three luxury vehicles which were attached after possibly being bought with the proceeds from the scheme are an Audi TT, a Hummer H3 and a Jaguar XKR Coupe.
These cars were bought directly with funds from the two companies, the National Prosecuting Authority (NPA) said.
The application by the assets forfeiture unit is part of the interventions by the National Consumer Commission and the financial intelligence centre to salvage funds belonging to more than 228900 consumers who were defrauded in the multi-million rand scheme.
The pyramid scheme, which is neither registered with the Reserve Bank, a registered stokvel, nor a financial services provider, mainly used social media to recruit members, said Sipho Ngema, spokesperson for the NPA,
He said new participants were required to pay a once-off joining fee of R180.
This qualified them for a meat pack. They then had to recruit five other new participants on level one of the scheme.
The original investor would then help the five he or she recruited to sign up their five new members each.
“This would then ensure that the original recruiter moves to level two, the benefits of which are meat packs, groceries and R500.”
Ngwema explained that when those on level one were moved to level two by their recruits, the original organiser was pushed to level three, where they received level two benefits as well as R3000 cash.
The new participants make up the base of the pyramid and they provide funding for participants who were recruited earlier.
Those who joined earlier are pushed to the top by the new recruits. Thus, pyramid schemes like Up Money are also loosely called “push-push”, Ngwema said.
“Although the scheme had received more than R42.7m between May 4 and July 2 this year, more than R12.5m was blown through purchases at various retail stores and buying the three luxury motor vehicles.”
The National Credit Commission was alerted to the pyramid scheme by a complainant from East London.
Its investigation revealed that Up Money contravened the Consumer Protection Act by promoting and causing members of the public to participate in a pyramid scheme, Ngwema said.
The financial intelligence centre traced how the funds were laundered through various methods, accounts and transactions.