Christopher Walker is in hot water with the SARB which is probing his alleged get-rich-quick scheme.
|||Cape Town - Cape Town businessman Christopher Walker is in hot water with the South African Reserve Bank, which is investigating his alleged get-rich-quick scheme in which about 200 000 people invest more than R800 million.
The Western Cape High Court has described the business of Walker’s Net Income Solutions (NIS) as an “illegal deposit-taking scheme”, and ordered that all his assets, and those of NIS, be frozen.
There appears to be R324m in the business account even though evidence before the court was that more than R800m was moved through it.
In addition, investigators have found that Walker transferred R20m from his business account into his personal account, according to the court.
Judge James Yekiso declared that evidence established that Walker was “effectively” NIS, all decisions were taken by him, and that as the sole member of NIS, any profits were “to his benefit”.
It was also apparent, he added, that Walker was inclined to treat NIS’s money as his own.
Meanwhile, a news section on the company’s website warns investors that “we are receiving many requests from people saying that we must pay them” but no payments could be made since the account was frozen.
The alleged scheme, known as Defencex, drew investments u
nder the guise of offering an opportunity for people to access stress relief workshops.
On the instructions of the Reserve Bank, the registrar of banks appointed inspectors at auditing firm Price Waterhouse Coopers to look into NIS’s affairs.
According to papers before the court, they found that deposits into NIS’s account from investors amounted to more than R800m.
The court papers said the inspectors found that NIS operated a website called “EFT for Me”, which provided readers with information about a form of stress relief.
The acronym EFT stands for Emotional Freedom Techniques.
In order to join EFT, investors had to create a user profile on NIS’s website after inserting the name of the person who had referred them to the scheme (known as the sponsor).
New users could then deposit money into NIS’s bank account, using a unique identifier as a reference.
After three days, the funds went into a virtual bank account, called an e-wallet.
The funds in the e-wallet could then be used to buy points, each of which cost R100, and these could be used to pay for stress relief workshops and seminars.
Users earned commission on points bought by those they had referred to EFT, and five percent on those the referral had referred.
The EFT home page explains: “EFT are remarkable techniques that alleviate emotional distress using simple yet elegant techniques based on the body’s energy meridians. By teaching an easily adopted system of tapping on the body’s meridian points, this will enable you to ‘tune’ and ‘tone’ your body’s energy system for immediate relaxation and relief from stress and anxiety.”
According to evidence before the court, 195 233 user names were registered.
In addition, the inspectors found that 218 391 individual deposits, to the value of more than R815m, had been made.
Earlier this year, after receiving the preliminary findings of the inspectors, the registrar of banks approached the High Court to stop NIS and Walker from disposing of assets.
The registrar asked the court to interdict NIS and Walker from contravening the Banks Act by conducting the business of a bank without any authority to do so, and from soliciting and accepting deposits.
However, NIS and Walker denied operating a bank, saying that NIS was a referral marketing company, and the points people bought were for access to workshops, not an investment with the promise of high returns.
On the EFT website is a disclaimer which states: “If you make a purchase from Net Income Solutions you are purchasing our products or services. You are not making any form of investment.”
Walker also took issue with the registrar asking the court to freeze his personal bank account.
But in his judgment, Judge Yekiso found that figures for the number of deposits made into NIS’s business account indicated that the first component of the definition of “the business of a bank” had been satisfied.
He said the acceptance of money was not only a regular feature of NIS’s business but a core feature, adding that the inspectors found that member deposits constituted about 92 percent of the money NIS received in its business account.
Judge Yekiso said that in September and November last year, between 0.3 percent and and 0.7 percent of participants attended workshops. No further workshops were held.
“It is quite clear, therefore, that the workshops did not form a significant feature of the business of NIS.”
Attempts to contact Walker proved fruitless.
Weekend Argus