Des wrote to City Press after being allegedly defrauded by forex trading company Profit Trading, a business that claimed to invest clients’ money into an automated forex trading system. The company appears to have closed down, with the founder unreachable and investors unable to access their funds. Maya Fisher-French investigates
"I am one of those investors who had taken every little cent I had and invested it with him. I was living off this investment and now that I am not receiving withdrawals, I have since lost my house, my car and a very lucrative logistic deal because of the lack of income," says Des.
An investigation by City Press found that the company founded by Myles Ndlovu in 2014 had its licence revoked by the Financial Services Board (FSB) in September last year after complaints from investors. The FSB told City Press it had handed the case over to the South African Police Service for investigation.
Complaints have started appearing on HelloPeter.com with one investor writing: “When Profit Trading started a few years ago it managed to fake enough about having automated forex trading software to obtain an FSB licence to continue with their operations.
“Multitudes flocked in with the trust that it has been licensed and constant adverts from radio stations pushed most people to be convinced of its validity.
“Now Profit Trading has closed its offices in Sandton, no lines are working and its workers have disappeared. People invested millions due to trusting that it was legitimate. It had branches all over the country and I think people have not realised that they are gone”
According to Des, initially, investors received 5% to 8% profits monthly, paid into their trading accounts which they could access with a 21-day notice.
“I had opened three accounts totaling R350 000 in September 2015. My main account had grown to R650 000 the last time I had access to view the balance and the other two accounts had R80 000 and about R30 000.”
In September 2016 Des noticed that there were delays in receiving withdrawals. “We didn’t think there was an issue at first. Now we have been waiting for our withdrawals since November,” says Des, who has made hundreds of calls to Ndlovu.
“Initially, I was told we would be paid in January, thereafter the promise was March. Ever since then he has ignored calls, emails and texts from everyone including his agents.”
On the surface Profit Trading seems to be a classic Ponzi scheme where just enough information is provided to make people believe it is a real opportunity. Initial investors receive returns sufficient to make them believe in the model and to encourage others to join.
What investors do not realise about ponzi schemes is that there is no real investment and the money they initially receive is from new investors.
Elaine Mabiletsa, who works at the Johannesburg Stock Exchange as a specialist on bonds, currencies and interest rates derivatives, says she is very concerned about the rise of forex platforms in South Africa claiming to make people wealthy overnight.
“What investors don’t realise is that forex trading is very high risk and for every winner there is a loser. Not even a bank with all the access to information and research consistently makes money out of trading currency.
“For someone to pretend they have developed a system that consistently produces profit is impossible. If they had, they wouldn’t be trying to sell courses and software to people, they would be too busy making billions,” says Mabiletsa.
The marketing material on the website claims that investors can invest in a forex “robot” that is accurate 95% of the time, yet as Mabiletsa points out, this is impossible and if such a robot did exist the banks would be using it. It is more likely that the funds were never invested in the first place.
In an SABC interview in 2014 about the launch of his company, Ndlovu claimed to use an “automated system that protects your capital” but at no point in the interview is he able to explain exactly how it does that or give any convincing details about his knowledge of the forex market.
Online research by City Press found that a Profit Trading Bot, an automated forex and binary trading robot, is a scheme that has been marketed elsewhere in the world and appears on many “scam warning” sites.
City Press has tried to contact Profit Trading through the telephone numbers listed but they have been disconnected. We have also tried to reach Ndlovu on his cellphone and via LinkedIn, but he had not responded by the time of going to print.
Apology to Profit Trading
City press apologises to Profit Trading for its report of May 28, titled Reader falls victim to Profit Trading forex scheme, in which we stated as fact that the company defrauded an investor, rather than stating it was the reader’s claim, and for indicating that it was operating a Ponzi scheme which has not been proven in court.
City Press apologises for unnecessary harm this might have caused the business.
The Press Ombudsman dismissed Profit Trading’s other complaints that the company’s director Myles Ndlovu was not asked for comment, that it never announced its offices as closed, that it did not operate a trading robot and that the paper should withdraw its statements regarding an investor who has since apologised for his statements on Hellopeter.
Ombudsman said the journalists effort to contact Ndlovu were extensive and disagreed with Ndlovu that the paper should have waited for his response. The Ombudsman also upheld that the newspaper’s claims that the business was operating a trading robot were valid and that there was no apology from any investors on Hellopeter.
For the full ruling www.presscouncil.org.za