Prosecutors decline to take action in failed Treoc Capital scheme.
(Moneyweb)
An investor in the failed Treoc Capital investment scheme is outraged that no prosecution has been pursued of the alleged perpetrators. What’s more, the directors are currently involved in other ‘wealth building’ businesses. Treoc Capital formed part of the Treoc group of companies, which remains in business today.
The investor, a pensioner who wishes to remain anonymous, is particularly upset because a senior advocate, JJ Botha, said the Treoc Capital scheme “clearly amounts to the conducting the ‘business of a bank’ as defined in Section 1 of the Banks Act…” Treoc Capital had no banking licence.
Botha said of the scheme: “Not only was the business conducted by Treoc Capital illegal, but it also amounted to a so-called pyramid scheme.”
Botha made these comments in his capacity as commissioner in an insolvency inquiry into Treoc Capital. They are contained in a seven page report to the Master of the Western Cape High Court. The report, dated April 5, 2011, can be downloaded here.
Encouraged by Botha’s findings, Treoc Capital investor Gareth Fisher laid charges against Treoc Capital’s two directors, Ian Deyzel and William Fullagar.
But on June 7, 2012, Fisher’s hopes of prosecution were dashed. He received an email from Captain Jan Judeel of The Hawks, who informed him that the prosecutor had decided that there was “no prospect to prove criminal intent with misrepresentation, there is a dispute regarding contracts, this is a civil matter.”
Botha wrote that Deyzel, Fullagar, and Treoc founder Coert Coetzee can all be considered the perpetrators of the scheme. “They knew the investments to be illegal,” wrote Botha.
However, in previous correspondence with Moneyweb, Coetzee has, through his lawyers, Kellerman Hendrikse, distanced himself from the scheme, noting that he “was never involved with the management of Treoc Capital (Pty) Ltd either as an executive director or employee.”
Similarly Fullagar has supplied Moneyweb with an affidavit distancing himself from the operation of the scheme. He stresses his function was that of marketing consultant, and says he only accepted a directorship because failure to do so would mean losing his job and monthly income. A copy of Fullagar’s affidavit can be downloaded here.
In his report, Botha noted that since 2005, Treoc Capital had regularly solicited deposits from the general public. The deposits were supposed to be used to grant bridging finance to members of the Treoc Investor Club. Instead they were used to finance a failed property development.
“As part of its advertising and soliciting campaign, Treoc Capital misrepresented to potential investors that their investments would be secured and that the investment of their capital would be free of risk,” wrote Botha.
Investors were lured with the promise of good returns: 2% a month, or 24% a year.
Wrote Botha: “Deyzel conceded that the business couldn’t pay all the investors/creditors as and when repayments of capital were due, and that existing investors would be (partly) paid from the proceeds of new investment capital.”
Cracks in the scheme started to appear in 2008 when investor payments were late.
An urgent liquidation application was instituted by creditors after Coetzee allegedly attempted to convince them to exchange their debt for Treoc Capital shares.
On October 25, 2010, the Western Cape High Court ordered Treoc Capital’s provisional liquidation. Ryno Engelbrecht and Mervin Dowries were appointed liquidators.
Treoc Capital’s directors, Ian Deyzel and William Fullagar are still involved in the investment business.
Deyzel is a financial adviser at FSB-licenced Sapphire Wealth Procurement, which promises to take care of trust-, financial- and property-planning matters.
Fullagar has chosen a less regulated future career path, and one that is more in keeping with Treoc’s roots. His website, www.beyondthedream.co.za, offers clients seminars and access to investment opportunities, among other things.
The biographies of both players are silent on their past involvement with Treoc Capital.
Moneyweb recently reported that the Reserve Bank has launched a campaign warning investors of the perils of pyramid schemes. The campaign message is: “Beware of oMashayana (crooks). If it sounds too good to be true, it probably is. Speak to your bank or an authorised financial services provider.”
At the campaign launch, Reserve Bank spokesman Hlengani Mathebula conceded that the low number of successful prosecutions of alleged pyramid scheme bosses is a big problem.
Prior to publication, a draft copy of this article was sent to BJ Kellerman, lawyer for Deyzel and Coetzee. Kellerman’s response (click here to download) notes: “Our clients have always maintained their innocence and if a decision has been taken not to prosecute our clients, it serves to affirm this and our client’s belief that Messrs Fischer, Vowles and Hoogendoorn (who are very likely the instigators of your article) are on a witch-hunt and will stop at nothing to exert undue pressure on our clients to extract from them payments that they are not entitled to.”
Wrote Kellerman: “Neither of our clients have conducted a pyramid scheme, nor have they misled any investors in Treoc Capital. Had there been any evidence to this effect, it would surely have been presented to the SAPS by the creditors and the SAPS and NPA would not have declined to prosecute.
