Alleged ponzi scheme shocks community

TALI FEINBERG

This time, Johannesburg accountant Michael David Ash allegedly scammed community members out of at least R60 million, and then fled to Israel. A case of fraud was opened this week at the Sandringham Police Station on behalf of one of the victims.

The alleged victim is Andi Colley, and it appears there were more. On 7 February 2019, a court order in the High Court of South Africa Gauteng Division demanded that Ash pay back R2.5 million to an ex-South African man and his family now living in Australia.

Speaking to the SA Jewish Report on condition of anonymity, the Australian man emphasised that he had not invested with Ash. Rather, Ash had been his family accountant for 30 years when he asked him to transfer inheritance funds for the family. The man’s brother was dying, and wanted his affairs to be in order.

The man claims the transfer never happened. About 350 emails and more than two years later, the brother has died, and his family has been left with nothing. The Australian man has suffered two heart attacks from stress.

In spite of the court order, he doesn’t think his family will ever see the money again. “Trust no one when it comes to money,” he said.

Colley told the SA Jewish Report that five years ago, after returning to live in South Africa, she was introduced to Ash by a family member. She trusted him and invested a total of R2 million over five years. She said she believed him to be a “pious man”, not least of all because “his own family had invested with him”.

“I was paid interest monthly, but it stopped last August. I couldn’t get a clear answer as to why, but was then told I was being paid my own money, and only half was left.

“I was asked to accept an offer to be given this half back, and to sign a non-disclosure agreement that would implicate me in the crime. I chose not to do this, and contacted Chad Thomas of IRS Forensic Investigations last September. We have been working on [the case] since then. I was told to wait to receive a payout, but eventually realised it would never be made. That’s when I laid criminal charges.”

Lawyer David Swartz was mandated by Ash to try to recover money for creditors, and managed to raise R2.5 million. “We made it clear that I do not and would not act in any proceedings, civil or criminal, and my mandate was limited as above,” he said.

“I had arranged a meeting for creditors for 5 July, but this was postponed solely as a result of the criminal charges laid, followed by the publication of Mr Ash’s picture on social media with content that matched the content of an article published in The Star. Now that the matter is under investigation, it is our view that an informal process for purpose of recoveries is doomed to fail, and we are considering this and our position.”

Thomas told the SA Jewish Report the case had “all the trademarks of an affinity ponzi scheme. We estimate that the total losses in this particular scam currently run in the tens of millions of rands.

“An affinity fraud targets a specific community, generally a religious community, and can take the form of a ponzi scheme. IRS has noted a marked increase in ponzi schemes targeting specific communities throughout South Africa in recent months,” said Thomas, who also has a programme on ChaiFM.

“These schemes take multiple guises, from investment schemes, to forex schemes, to crypto currency schemes. People need to ensure that the people with whom they invest are registered with the Financial Sector Conduct Authority (FSCA), previously known as the Financial Services Board or FSB,” he said.

A prominent Johannesburg lawyer advised that the term “ponzi scheme” in the story was being used colloquially to describe all manner of embezzlement schemes.

Thomas said IRS had met Ash on two occasions to give him the fundamental right of audi alterma partem (listen to the other side). “Ash’s explanation as to how our client’s funds were invested changed several times, leading us to believe that it was a ponzi scheme. Once more members of the community came forward, we realised that this could in actual fact be an affinity scam. Follow up meetings were held with Ash’s representatives.

“Our client, Ms Colley, has not just lost money, she has also lost her faith in people in general. What makes this matter worse for her is that Ash forms part of her extended family, and she has been ostracised by several family members for exposing this alleged scam. It is indeed a sad indictment when victims are further victimised or shamed by those closest to them for exposing what is clearly an issue requiring further investigation.”

He is not 100% certain that Ash has fled to Israel. “We have been advised that he travels between South Africa and Israel on a fairly regular basis.” However Colley was told that Ash would return mid-June, and he has still not returned. “South Africa has an extradition treaty with Israel which was tested successfully in July 2016 when Rabbi Eliezer Berland was formally extradited from South Africa to Israel,” said Thomas.

The SA Jewish Report used all reasonable means to contact Ash to allow him to present his side of the story, without success. We asked Swartz, among others, to connect the newspaper with Ash, who said he would ask Ash’s permission to give us his contact details. He didn’t get back to us before the newspaper was published. The SA Jewish Report was unable to ascertain Ash’s present whereabouts.

Thomas said anyone who believed that they might be a victim of an alleged scam perpetrated by Ash should contact the police and lay charges.

“Before taking financial advice from anyone, or investing in any venture, check that the person offering or giving financial advice, and the company that he or she represents, is registered in terms of FAIS [the Financial Advisory and Intermediary Services Act] with the FSCA.”

The South African Reserve Bank website advises, “When choosing a money making opportunity, do your homework thoroughly. Get advice from registered financial advisers. This is available free of charge with no obligation. Take your time, you didn’t save it overnight. Be particularly cautious about ‘opportunities’ that promise to make you wealthy in a very short period. Beware of a ‘secret formula’ that will be shared only with select investors.”

It advises to use accredited financial institutions that are regulated and supervised by the South African Reserve Bank, National Consumer Commission, or the FSCA. These organisations are governed by strict rules and controls that are not necessarily in place with unregulated and unsupervised persons and groups where your money could be at risk.

• For more information, visit www.resbank.co.za. To find out if a business is accredited, contact the FSCA Fraud and Ethics hotline: 0800 313 626.