Here is the link to Carte Blanche Story Exposing Prop dot Com:
Where's the money?
Date: 13 February 2011 07:00
Producer: Michael Duffett
Presenter: Annika Larsen
Researcher: Susan Comrie and Stephen Leppan
Show: Carte Blanche
He always makes a good first impression.
Perhaps it's his piercing blue eyes? Or his charisma, charm, and boundless energy? An in-house marketing brochure describes Louis Baartman as a mover, and a shaker.
But not everybody shares these sentiments.
In fact, he has been labelled a con artist - accused of a horse racing scam 20 years ago, causing loss of livelihood for many; not paying creditors, and, more recently, blamed for the demise of a property syndication company involving tens of millions of rands.
It brought untold misery to hundred of mainly elderly people, like the Blocks, who live a modest lifestyle. In 2004 they jumped at an opportunity when a broker suggested they invest in property syndication - the brainchild of Louis Baartman.
Renate Block (Pensioner): "Well, he said it is a company where you will really get good returns and the money is safe."
They invested R195 000 and welcomed the high return they received every month. Two-and-a-half-years later, that dried up, and they have not been able to get their capital outlay back.
The health of Kurt Block, a once active man who refereed and taught judo, hasn't been the same since.
Renate: "He was very, very upset about it. And then three months later he got that stroke."
Annika Larsen (Carte Blanche guest presenter): "So often they collapse like a pack of cards - so many South Africans, especially the elderly, lured by the promises of high returns are losing their investments to face a really bleak future. We're talking about property syndications"
Louis Baartman thought up a property syndication scheme in Cape Town in the early 2000s.
The company was called prop dot com. Property syndication is when a group of investors purchase commercial properties [that] have tenants. The rent paid by these tenants is then used to pay interest to investors like the Blocks.
Stephen Leppan (Wealth manager): "Most of them have been offered in the region of 12.5% plus their capital back guaranteed."
When the Blocks became deeply worried that their monthly income had ground to a halt, they approached financial consultant, Stephen Leppan.
Stephen: "But no-one can seem to come to the bottom of where is the client's money... where is their money?"
Stephen hosts a radio talk show called On Money Matters and is forever warning listeners of the dangers of property syndication. He has also been trying to trace the money invested in prop dot com. Someone who ought to know that answer is another radio talk show host, whose cheery tones are heard by early morning motorists.
Annika: "Now that is the voice of Louis Baartman, who has his own radio show called OntbytJolyt on Radio Houtstok, which is a community radio station he initiated."
It's the only Afrikaans community radio station in the Cape and, judging by the fan mail the station receives, it's doing okay.
Annika: "Have you got a golden touch, you think, with business?"
Louis "Taaibos" Baartman (Radio Houtstok): "I don't think I've got a golden touch. If you actually look back at all... it all starts well and then somewhere along the line the wheels come off; so sometimes one wonders why."
We wanted to find out from Louis why investors hadn't been receiving their monthly returns.
Louis: "If the shareholders want me to be honest with them, they will know that the last day that I walked away they still received a dividend... that was the very last day. After that, I'm not taking any responsibility [for] what happened after that."
Well, let's put that to the test.
In 2002, he set up a company called Blue Pointer. With its head office at Century City in Cape Town, it would promote, source and manage properties. For this service, they took 18.07 percent of investments received.
Two glossy prospectuses were released. Let's look at the first one: the plan was to sell shares to the value of just over R26-million. That money would be used to buy five bond free buildings that would then be rented out and investors would receive between 10 and 12% interest per annum.
All very well, but it appears that Louis sold shares to the value of R37-million and only three buildings were bought. This appears to be an over-syndication.
Louis: "The total value of all the prospectors' interests that was raised was R37-million."
... Not according to a fact-finding report, compiled by Jackson Neethling auditors in 2009, which shows that that R37-million was taken in for that first prospectus.
Jahale Cloete was a consultant at Blue Pointer for two years.
Jahale Cloete (Director: Uniprop): "But, with more money coming into the company and lesser buildings acquired, that means that the rental money wasn't sufficient to pay all the investors. That was a clear indication."
The obvious question is: how did Louis manage to pay the investors their full monthly returns for two-and-a-half-years? Louis wasn't shy to tell us.
Louis: "Some of the dividend was paid from investments that came in; other came from the proceeds of Blue Pointer that we paid the dividends. We tried to keep it up until that point in time."
Annika: "Is it good business practice to be moving money around like that?"
Louis: "It is not good business practice, but it is the way that everyone does it. It just happened. I can't explain why, and I can't say why I did it and why we shouldn't have done it - it just happened."
Annika: "Did you ever think you were doing something wrong?"
Louis: "I know at the time that we did it was not the right thing to do; I'd never thought it was wrong because we thought that we'd pull it out with the development with Khoisan Bay... that we'd make it right. Because that's the way it works - you are always positive that you'll sort it out."
We asked advocate Stephen Powell to comment on Louis' surprising admission.
Stephen heads up the forensic unit for a top law firm.
Steven Powell (Director of Forensics, Edward Nathan Sonnenbergs): "My first reaction is - what Louis has done has been akin to running a Ponzi scheme."
For 20 years Steven has been investigating and prosecuting white collar crime. He explains what a Ponzi scheme is.
Steven: "You're taking funds from members of the public in order to pay prior investors. And in the interim you are drawing funds out of the scheme. There's no question that it is a misappropriation of investor funds and it is fraudulent."
Steven knows all the signs.
Steven: "Typically, when we investigate what has happened to the money, most of the money has been expended on high lifestyles, overseas trips, fancy cars. And a lot of individuals are appointed to positions where the business actually cannot sustain these commodities."
And Louis knew how to spend. He splashed out on a Caribbean cruise for his family and about 15 staff members, apparently half-a-million for a launch at the V&A Waterfront and really competitive salaries. Werner Coetzee was a financial director at Blue
Pointer who resigned in protest at the way Louis managed the company.
Werner Coetzee (Businessman): "And he appointed a marketer on which our budget was R15 to R20 000... in the end the net cost to [the] company was closer to R75 000 a month."
Werner can testify to Louis' lifestyle.
Werner: "Both him and his wife had state-of-the-art Mercedes, they lived the 'good' life."
But trouble started brewing when in 2004 the law changed and Blue pointer had to be licensed as a financial services provider. Louis' application was turned down. The Financial Services Board said he did not have the required characteristics of honesty and integrity. Perhaps they took into account his several previous convictions, which include theft and reckless trading.
In 2006, following an FSB inspection, Blue Pointer had to shut its doors. There were several contraventions of the law. For example:
- Operating as an unlicensed financial services provider.
- There had been no audits, or shareholder meetings.
- KPMG were listed as being the auditors in Prospectus 2, but they weren't!
... and so on. But undeterred, Louis offered investors a share swop to UniProp, a property investment company. Most took up his offer. But, to UniProp's horror, when they sold this Vredekloof shopping centre - expecting about R11-million in proceeds from the sale - they discovered that the centre had a massive bond, and that Louis had taken out bridging finance against it.
Jahale: "There was nothing left... only R45 000. And we were banking on getting that money out and paying the investors, because that is crucial to the investors."
And so, monthly returns dried up.
Renate: "The R1 500 you got each month was really something you needed
and we relied on that income."
Lorraine Marincowitz (Investor): "I am 82 years old, so it is a loss for me... a big loss."
Lorraine Marincowitz invested R500 000. Dreams of retirement were shelved and she had to resume work in her son's business.
Lorraine: "In six years' time the amount I invested should have been more and now I've got much less money."
Annika: "There is a glimmer of hope: a potential property development on a pristine stretch of land on the Cape coast."
This beautiful sea-front property near Gansbaai was to be Louis' rescue plan.
A few million rand of investor's money was used to pay a non-refundable deposit to secure development rights. Now this project is in the good hands of directors, all prominent businesspeople.
Rodney Love (Khoisan Bay Property Development): "What is important to note is that I come after the Louis Baartman debacle."
Rodney says that once the environment report is finalised, the development could start within two years.
Rodney: "I can confirm that this development is now in bona fide directors' hands. We have a vested interest in this development and we have a very keen interest to now see it come to fruition."
Annika: "So, there is some light at the end of the tunnel for those investors who placed their trust in Louis. But then, let's go back 20, 15 years to see what Louis has been up to."
Louis: "Ever since I know myself I was an entrepreneur; I liked to do my own thing, start my own thing. I was involved in racehorses - the marketing of racehorses..."
In 1990, Louis launched a scheme called Pondoroza in Gauteng. It was a way for ordinary people to invest, and then be paid monthly dividends from owning racehorses. It collapsed two years later and a similar pattern emerged.
Annika: "Can you answer anything about Pondoroza?"
Louis: "I don't think this is relevant to this whole case."
Louis didn't want to elaborate, but he did say this...
Louis: "The problem was that an Afrikaner guy moving into a Jewish sort of domain with horses... it didn't gel well and so it went a little bit wrong there."
That's an understatement. R1.4-million of investors' money disappeared. It was also reported that Louis was evicted from offices for being in arrears for R33 000; horses were never paid for; he owed money to advertising agencies, and so on."
Annika: "This may be hard for you to hear, but the allegations that we have is that you are... and you can respond to this... that you are an absolute conman, you are a con artist."
Louis: "Ah, I'd love... okay, I'm not even going to respond to that because I don't believe it is true. I'd love to hear on what basis they say that. Who did I con what?"
Here's a person who says that he was conned by Louis.
The last time Gary van den Berg saw the blue-eyed boy was almost 20 years ago.
We gave him a recent picture of the man.
Gary van den Berg: "Ja, that's Taaibos Baartman - the one and only. The finger on his mouth... butter wouldn't melt in his mouth (laughs)."
Gary had owned a business transporting race horse, called Bloodline Carriers.
Louis wanted to buy it.
Annika: "And you can't talk to me about Bloodline Carriers?"
Louis: "No."
Gary so believed in Louis that he signed over his business and waited for a payment of R628 000, which never came. By the time he woke up, it was too late. His business had been stripped.
Gary: "There were trucks on wheels... without wheels, trailers missing and trucks missing, and some of the stuff was never ever found."
The banks closed in, leaving Gary and his family literally homeless.
Gary: "And it was about 5:30 in the afternoon that they left with everything. So you are standing on the side of the road at 5:30 in the afternoon in Randjesfontein with nothing."
Gary says Louis was nowhere to be found."
Annika: "Why did you come to Cape Town?"
Louis: "I came to Cape Town, you see, just after the accident. I just needed to get away from everything in Johannesburg. I just wanted to make a clean break."
The accident to which Louis refers - and he has told several people about this - is when he jumped off a five-storey building to evade the police.
Perhaps they'll catch up with him soon.
Graham Flack (Attorney): "Fraud, theft, and contraventions of the Companies Act."
Graham Flack, the attorney for Uniprop, is preparing criminal charges against Louis. .
Graham: "We are in the process - I am sitting here with an affidavit that is about 10 pages long at this point in time, in draft - with the view to lay criminal charges."
Meanwhile, Louis remains a charmer, but he's never far from controversy. Black Rose Entertainment is threatening to sue Louis, for a music concert, organized by Radio Houtstok. They say their performers were never paid.
But Radio Houtstok is organising another festival.
[Radio Houtstok] Man 1: "The Houtstok festival..."
Louis voice may disappear from the airways if charges against him stick this time around. Then he'll have plenty of time to reflect on his colourful and, some may say, chequered career.
Steven: "If Baartman has a prior criminal history, as I understand he has, he could be looking at a mandatory minimum sentence of 15 years' jail time based on the values involved in the investments."
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