Pastor and associate sentenced for R5.8 million Ponzi scheme in Western Cape

Pastor Colin Davids and Mr Derek Bredenkamp have been found guilty of orchestrating a multi-million Rand Ponzi scheme by the Specialised Commercial Crime Court in Bellville, Western Cape.

The duo used Davids' position of spiritual authority to gain the trust of congregants and community members, persuading them to invest in Platinum Forex CC, a forex trading company that was not registered with the Financial Services Board.

According to Christo Snyman, Managing Member at CS Forensics, the scheme began in 2009 when Davids promised investors significant returns. “Initially, while he lost the funds through the forex trading scheme, paying investors with other investors' funds and enriching themselves, Davids and Bredenkamp continued to supply statements falsely indicating that investments had grown between 24% to 94% per annum.

“In one instance, a client invested R300,000 in 2011, and by June 2015, the statement received from Platinum Forex reflected that the money and interest due and payable to him was over R4.5 million," says Snyman.

As suspicions mounted, Davids hired Snyman’s firm to disprove allegations. “He had already been under investigation when he hired us. The forensic audit confirmed the findings of EY’s report,” Snyman added.

Both men were convicted of contravening the Financial Advisory and Intermediaries Services Act (FAIS), the Banks Act, and 56 counts of fraud totalling R5.8 million. They were sentenced to 12 years imprisonment, with three years suspended for five years. The Asset Forfeiture Unit recovered over R90 million, which was refunded to defrauded investors.

“As a figure whom many entrusted with spiritual guidance, his involvement in a financial scam of this size represents a significant ethical violation. It also highlights the impact of abusing a position of trust, and the utmost importance of making sure you’re dealing with registered financial service providers and advisers," says Snyman.

Snyman urged South Africans to be vigilant. “Be cautious of investment offers promising unrealistically high or guaranteed returns. If you're pressured to keep investing or encounter excuses like ‘system updates’ or ‘funds locked,’ consider these red flags. Make sure they are accredited and registered with the Financial Services Board (FSB). Beware of only glowing testimonials, as they can be fabricated.”

PERSONAL FINANCE