Bail not safe for Ponzi accused

2017-10-30 13:45
Over 400 people want cash back from pyramid scheme.

Over 400 people want cash back from pyramid scheme. (File)

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A Pietermaritzburg businessman and retired teacher suspected to be at the helm of an alleged pyramid or Ponzi scheme that was operating in the city was denied bail on Friday.

Wellington Mhlongo (53) from Scottsville is facing 13 charges of fraud after he was arrested for being one of the alleged organisers behind Sunesis Holdings.

The company, which was operating from the Allied Building on Timber Street, locked its doors more than two weeks ago and apparently disappeared with hundreds of thousands of rands.

Mhlongo was arrested at the Pietermaritzburg police station after he was spotted by some of the complainants who were there to lay charges of fraud against the company.

A pensioner from Imbali who spoke to The Witness outside court said Mhlongo’s company ostensibly acted as a foreign exchange broker trading on their behalf.

“We were promised 100% profit for whatever amount we invested. He must just give us our monies back,” said the pensioner.

He said while walking along Timber Street he had been approached by one of Mhlongo’s associates, who lured him to invest money in the company.

Handing down judgment in the bail application, magistrate Chetna Singh ruled that according to the evidence presented by Sergeant Muzi Ntombela from the Pietermaritzburg­ police station, the number of complainants in the case could increase to up to 400.

“The case has generated public interest. This is evident in the full gallery today. We cannot guarantee the safety of the applicant and that of the complainants,” said Singh.

She said the court was of the view that although Mhlongo did not have a passport, there was a likelihood that he would flee if he was released on bail.

Singh said while the investigating officer in the case has not gathered all the evidence, the complainants had receipts to prove that they had given the company money.

“These receipts form the basis of the evidence. Mhlongo could interfere with the witnesses by virtue of the knowledge he has on the company. You could concede or tamper with the evidence.”

Singh said while Mhlongo has denied all the allegations levelled against him, the possibility that 12 people who do not know each other had all lied about him was “absurd”.

The case was adjourned to October 31.

Mhlongo’s legal representative Phumlani Fakude said they planned to appeal against the decision.

Pietermaritzburg police station spokesperson Captain Khosi Khonje­lwayo has issued a warning on various scams ahead of the festive season.

“We urge the public not to carry a large amount of cash with them and rather to make electronic transfers if possible.”

She said criminals were also using a different modus operandi to target customers near clothing shops and supermarkets.

“They claim to have a contact at the store or to personally know the store manager. The scammers will promise the victim half-price clothing or groceries.

“The victim is asked to go inside the store and choose their desired goods, leaving their belongings with the criminals. Within seconds the scammers flee with the victim’s belongings.”

She urged stokvel or saving club members to arrange for their payouts to be electronically transferred into each member’s personal account. “It is becoming increasingly important for stokvels to open a bank account in which to keep members’ hard-earned money safe and secure to benefit from compound interest on savings. It makes it much safer than collecting the money at meetings and then keeping a large amount at someone’s house,” added Khonjelwayo.

Last week The Witness reported on an alleged scam operating from the Allied Building.

It is feared that scores of local people may have lost hundreds of thousands of rands in what appears to have been a pyramid or Ponzi scheme.

The people behind the company offering major interest on investments closed its doors over two weeks ago and had apparently disappeared.

Investors said the company appeared to act as a foreign exchange broker trading on their behalf.

Read more on:    pietermaritzburg  |  court case

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