Ponzi scheme worth R3 billion bankrupts 2 000 people

By: Natasha Archary

Earlier this month an investment manager handed himself in at the Sandton police station, admitting to having run a large Ponzi scheme.

Craig Warriner, who is currently in a Johannesburg prison was the trustee of the BHI Trust, which invested funds on behalf of individuals, amounting to more than R3 billion.

Maya Fisher-French, financial journalist and author at Maya on Money joins Gugulethu Mfuphi on Kaya Biz to share more information on these schemes in a bid to create awareness with South Africans.

The BHI Trust involved more than 2,000 people who invested, many of them placed their life’s savings in the scheme, including pensioners who rely on the fund for income.

“This is the interesting thing, I think it started off legit, he started off with some investments and there was a time when it was actually easy to make money.

The markets were up, things were growing in the early 2000s between 2003 and 2008, that was really a bull-run in the stock markets, and people who were investing with him were getting good returns.

And then, in 2009 when the credit crisis happened and he lost money this is when it took a turn. But, because he had a track record prior where investors were getting good returns, that worked in his favour.

So, by taking in new money from new investors, he was able to keep this illusion going. That’s when he became quite aggressive by working through financial advisors, and there’s a big question that needs to be asked about financial advisors who put their clients through this.

He targeted financial advisors who were linked to high networth individuals, started to move in private schools, those kinds of environments. People were putting in their money and even though initially they might not believe in the scheme, when they start to see their family and colleagues reaping the benefits, they too start drinking the same kool-aid.”

While the full extent of the fraudulent scheme is still being investigated, it involved Warriner managing the funds whilst claiming he had a trading strategy that delivered consistently high returns, irrespective of the market conditions.

Maya shares that some pensioners who sold their homes to invest in the fund have now lost everything.

BHI Trust has since been placed under sequestration, and Warriner confessed to running the fund in an irresponsible manner, using the “borrow from Peter to pay Paul” analogy.