Investor Loses R6 Million In A Ponzi Scheme
A person who invested in Craig Warriner’s BHI Trust lost R6 million in a Ponzi scheme. He said he was convinced it was a safe investment by a close friend and a registered financial advisor. The scheme was even backed by the Financial Sector Conduct Authority (FSCA).
Warriner handed himself to the police and has since appeared in court.
The scheme operated like a Ponzi scheme, where new investments were used to pay off older investors. Over 2,000 clients invested more than R3 billion in the scheme. It will be difficult for those who lost money to recover it, and they may have to repay any distributions they received, Daily Investor reported.
Many investors trusted Warriner with their life savings, and even prominent financial advisors invested large amounts. The situation is complicated, and it extends beyond just the people who lost money. One investor shared his experience, stating that he heard about BHI Trust from a friend and his financial advisor recommended it. He believed it was a safe investment since it was registered with the FSCA and held funds with a JSE-registered broker.
The BHI Trust provided consistent returns and allowed easy access to funds. The investor eventually committed R6 million to the Trust. He told BizNews that he was unaware of any wrongdoing, as other investors had invested even larger amounts and relied on the Trust for retirement funds. He said:
I can give you more contacts to people who have lost a lot of money. Some families have lost all of their money.
He said after his financial advisor retired due to health issues, a bigger company called Global and Local took over managing his funds. Surprisingly, Global and Local did not express any worries or doubts about the BHI Trust to the investor. He added:
Surely, if these people are all registered — all of these financial advisers and companies — they should be checking up.
We now know that Warriner just made these numbers up,” said the investor. Warriner was just using fresh investments to pay out those already invested.
Looking back, the investor admitted that it might have been wise to withdraw his money from the BHI Trust when his financial advisor retired and no prominent asset managers showed interest in it. He shared that when he approached larger companies about BHI, they were not even aware of its existence.
According to a statement from Cawood Attorneys, the law firm handling the sequestration of the BHI Trust, an amount of R4,785,164.96 has been discovered in the trust’s Nedbank account, IOL reported. This comes amid allegations that approximately R3 billion was taken from clients.
Ponzi schemes promise high returns, lack clear investment strategies, rely on recruiting new investors, lack proper documentation, and make it difficult to withdraw funds. Investors should be cautious of these signs, conduct research, seek advice, and only invest what they can afford to lose or avoid investing at all.
