A Camps Bay house belonging to the daughter of a man said to behind one of SA’s largest Ponzi schemes has been attached.
|||Cape Town -
A PLUSH R8.8-million Camps Bay house belonging to the daughter of the man said to have persuaded more than 200 wealthy businessmen to invest in one of South Africa’s largest Ponzi schemes, has been attached by order of the Western Cape High Court.
The house, in Medburn Road, Camps Bay, is registered in the name of Laura Haude, 30, daughter of David Leigh – a former legal adviser for the Development Bank of South Africa, who is believed to have recruited investors for what has become known as the Frankel Scheme.
According to an affidavit by serious economic offences investigator Pieter Senekal, “the Frankel Scheme is of such staggering proportions that it has been recognised by the minister of finance in Parliament in South Africa”.
“From the facts at my disposal, it may well be that the Frankel scheme is the largest commercial crime matter which has ever surfaced in South Africa.”
While investors were mostly South African, some were from abroad, with one overseas participant investing more than $800m (about R7.444 billion).
Senekal added that the investigation was ongoing, and would, in all probability, continue for a substantial period “in view of the complexity of the matter”.
By the time the scheme was exposed in 2009, it had about 880 investors who had invested around R12.5 billion.
This week however, the Asset Forfeiture Unit (AFU) focused its attention on the Camps Bay house, applying for a preservation order to allow it to attach the property on the basis that it was bought with money which emanated from the Frankel Scheme.
In an affidavit before the court, deputy director of public prosecutions Priyadarshnee Bisewar sketched the background. She said that Barry Tannenbaum – son of one of the founders of the Adcock Ingram pharmaceutical group – had initiated the Frankel Scheme in 2004.
“Tannenbaum punted his scheme as a legitimate business, buying active pharmaceutical ingredients from foreign countries, which he then sold on to generic drug makers like Aspen, Adcock and Novartis to make antiretroviral drugs. Tannenbaum offered prodigious returns of up to 216 percent per year,” she said.
To make the scheme work, Tannenbaum used agents to recruit investors.
Leigh was one of the agents.
“Leigh amassed great wealth from his participation in this illegal scheme,” she said, adding that the Camps Bay house was bought in November 2007, when Haude was 25, for R8.8m. It was paid for, in cash, over three days.
Months later it was registered in Haude’s name.
Bisewar said the funds used to buy the property were traced back to Rand Merchant Bank and Investec accounts belonging to Tannenbaum.
“These accounts are known to have been extensively used by Tannenbaum in the day-to-day running of the Frankel Scheme,” she said, adding that, during the Frankel Scheme, Tannenbaum regularly made transfers to Leigh who, in turn, transferred funds to other accounts in his own name.
“For the purchase of the property R9 500 000 was transferred from Leigh’s Standard Bank Money Market call account to Leigh’s Standard bank cheque account,” she said.
In addition, at the time the property was bought Haude supplied an affidavit in terms of the Financial Intelligence Centre Act, in which she claimed that a “loan” from her father was used to buy it.
Bisewar said h
owever that Haude did not have the means to repay the loan. She was a student at the time, declaring no income to SARS for 2007.
“The evidence shows that the funds used by Laura Haude to purchase the property are inseparably linked to the proceeds from the Frankel Scheme received by Leigh,” she said, declaring that the property was the proceeds of unlawful activity.
Tannenbaum now lives in Runaway Bay, Australia. A warrant for his arrest was issued in October 2009, and South African authorities have applied for his extradition. The Tannenbaum estate was finally sequestrated in August 2009, with Leigh giving evidence during a subsequent inquiry with the trustees.
It was determined that he made a profit of R114m from his investments.
Judge Nape Dolamo granted the preservation order on Wednesday.
Weekend Argus