Picture: iStock
The estate of a woman linked to what is said to be “South Africa’s biggest pyramid scheme” has been placed in provisional sequestration by the High Court in Johannesburg.
This follows the Prudential Authority investigating the business practices of Travel Venture International and/or TVI Express and/or related persons commonly known as the “TVI Schemes”, which marketed the sale of travel vouchers that allegedly gave recipients substantial discounts for international travel and accommodation.
The Prudential Authority, the regulator established to promote the safety and soundness of individual financial institutions, subsequently applied to provisionally sequestrate the estate of businesswoman Adelaide Musa Duma of Seven Oaks, 2nd Avenue, Johannesburg.
In handing down judgment, Judge Phanuel Mudau said the TVI Schemes are said to be “South Africa’s biggest pyramid scheme”.
Mudau said the alliance partners purportedly linked to the schemes “are not in fact partners, and the marketed relationships are, in fact, fraudulent”.
He said the scheme constituted a deposit-taking arrangement falling within the definition of “the business of a bank” as defined in the Banks Act, and after investigations, Duma was identified as a related person to the scheme.
ALSO READ: How to spot a Ponzi or pyramid scheme
Mudau said a warrant was subsequently obtained on about 2 August 2013 in terms of the Inspection of Financial Institutions Act to enter Duma’s premises and require the production of any documents relating to the affairs of the TVI Schemes, including all bank account statements for the full trading period of all the accounts of the TVI Schemes.
He said that from Duma’s bank statements, it was found that she had actively participated in the TVI Schemes by receiving and paying out money from investors.
Judge Mudau said Duma had, for instance, 254 inflows totalling R2 574 072.54 and 959 outflows worth a total of R2 569 456.58 from her First National Bank (FNB) account.
He added that from Duma’s bank account statements, trading as TVI Simply the Best, which were obtained from FNB under a separate bank account number, the inspectors were able to ascertain that Duma had:
“The respondent [Duma] has receipted and paid out money from and to various investors in the TVI Scheme.
“This conduct constitutes ‘bank business practice’, which was done by the respondent [Duma] without being registered as a bank, nor authorised as envisaged in section 18A (1) of the Banks Act and Mutual Banks Act.
“In terms of section 11(1) of the Banks Act, ‘no person shall conduct the business of a bank unless such person is a public company and is registered as a bank in terms of this Act’.
“Business of a bank includes conduct such as the acceptance of deposits from the public as a regular feature of the business in question,” he said.
Judge Mudau said the Prudential Authority on 20 February 2015 issued notices in terms of the Banks Act directing Duma to repay all the monies obtained by her related to the TVI Schemes.
He said the notice was served on Duma on 5 December 2016 and stated that she had acted in contravention of the Banks Act. The Prudential Authority demanded repayment of monies obtained, inclusive of interest.
Mudau said the notice also stated that failure to comply with it could result in Duma being found guilty of an offence, deemed unable to pay her debts, and/or having committed an act of insolvency.
He said Duma has failed to pay the Prudential Authority as required by the notice and is accordingly deemed unable to pay her debts and/or to have committed an act of insolvency.
ALSO READ: Louis Liebenberg claims there’s no evidence to support bankruptcy and Ponzi scheme claims
Mudau said an order was granted on 30 November 2016 to search Duma’s premises and attach her funds and belongings.
He said 15 such assets were attached as a preservation measure, which order was confirmed and made final on 5 February 2018.
The Solvency Report that followed shows that Duma has total assets of about R77 350.00, rendering her factually insolvent as against the indebtedness.
The true amount, according to the Solvency Report, was found to have been R2 144 200.00, which has increased to R2 978 529.83 including the interest incurred and the costs associated with the investigation.
Judge Mudau said Duma, in her answering affidavit, confirms her involvement in the TVI Scheme and admits that she received deposits from the public in respect of the TVI Schemes into her bank accounts.
But Mudau said Duma also alleges that her involvement in the schemes was bona fide and that there was no intention to conduct the business of a bank.
“On her version, monies obtained were ‘paid out immediately to further investors or in respect of vouchers for further investors’,” he said.
ALSO READ: Claims against BHI Trust balloon – and keep going – as Ponzi scheme unravels
Mudau said it is confirmed that Duma has not repaid any monies back in terms of the notice as required.
“The amount claimed is not the ‘true amount obtained’ but less by approximately a million. The respondent [Duma] also suggested that there is no advantage for creditors,” he said.
Judge Mudau added that there is no dispute that Duma willingly participated in the TVI Schemes and that her participation constituted the unlawful conducting of the business of a bank, thus contravening the Banks Act.
It is also apparent that the amounts obtained were not repaid to the persons that deposited those amounts, he said.
Judge Mudau said the Prudential Authority’s claim in this case is not disputed by Duma on reasonable and bona fide grounds.
“Self-evidently, the machinery of the Insolvency Act is accordingly more advantageous to creditors than trial procedure on these facts.
“In light of the uncontested claim and the failure by the respondent [Duma] to pay the monies deposited into her bank accounts, a provisional trustee will be able to clarify this by way of an inquiry, far much [more] speedily than the institution of action proceedings.
“Section 10 of the Insolvency Act requires that the court is prima facie of the opinion that there is reason to believe that the sequestration of the respondent [Duma] will be to the advantage of his creditors.
“Due to the above facts, I am accordingly of this opinion.
“The sequestration of the respondent [Duma] may well result in the proceeds being brought back into the estate for the benefit of the applicant and general body of creditors,” he said.
Mudau ordered that Duma’s estate be placed under provisional sequestration in the hands of the Master of the High Court in Johannesburg.
He also ordered that an interim order be issued calling upon all persons who have a legitimate interest to advance reasons, if any, at 10am on 14 April 2025 to show cause why a final sequestration order should not be granted and that the costs of this application should not be costs in the sequestration of Duma’s estate.
This article was republished from Moneyweb. Read the original here.
Download our app and read this and other great stories on the move. Available for Android and iOS.
