The bank accounts of Up Money, an alleged pyramid scheme that has been marketing itself as a “grocery stokvel,” was frozen after a court order that also demands the forfeiture of various luxury vehicles from those behind it.
Deputy National Director of Public Prosecutions and head of the Asset Forfeiture Unit (AFU) of the National Prosecuting Authority (NPA) Advocate Ouma Rabaji-Rasethaba today (4 August) confirmed that there will be criminal prosecutions relating to the Up Money pyramid scheme.
The AFU’s application forms part of the interventions by the National Consumer Commission (NCC) and the Financial Intelligence Centre (FIC) to recover the funds of more than 228 900 investors, of the 230 000 who were reportedly deceived by the multimillion-rand scheme.
A complainant from East London alerted the NCC about the pyramid scheme.
According to a press release from the NCC, investigations revealed that Up Money unlawfully exploited the Covid-19 pandemic and food security concerns to lure consumers into joining and participating in the Up Money pyramid scheme.
The alleged pyramid scheme, which was not a registered stokvel nor registered with the South Africa Reserve Bank or any other financial services provider, made use of social media to recruit its members.
“New participants were required to pay a once-off joining fee of R180. This qualified them for a meat pack. The new members were then required to recruit five other new participants – this process was termed level one,” said Sipho Ngwena on behalf of the NPA and AFU.
The original investor would then help the five members that they recruited to sign up their respective five new members. The original investor would then be moved to level 2, the benefits included a meat pack, groceries and R500.
When the members on level one were moved to level two by their recruiter, the original investor would be moved to level three. Level three investors would receive all of the benefits as mentioned in level two with an addition R3 000.
“The new participants made up the base of the pyramid and provided funding for participants who were recruited earlier. Those who joined earlier were pushed to the top by the new recruits. Thus, pyramid schemes like Money Up are also loosely called push-push,” added Ngwena.
According to authorities between 4 May to 2 July this year the pyramid scheme received R42 720 501.82, R12.2 million of which was spent on a number of retail purchases which included three luxury vehicles.
According to the NPA, criminal charges to be faced by the pyramid scheme may include fraud and contraventions of various sections of the Prevention of Organised Crime Act (POCA), racketeering, money laundering, fraud, theft, assisting another to benefit from proceeds of unlawful activities and acquisition.
The High Court of South Africa, Gauteng’s Local Division, has granted the AFU preservation orders to freeze bank accounts relating to the pyramid scheme worth over R18 million and seize the three luxury vehicles.
According to Ngwema, the luxury vehicles were purchased directly with funds from the bank accounts in questions.
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