Investors duped into losing savings
A JOHANNESBURG-BASED company suspected of running a pyramid investment scheme has swindled unsuspecting investors of their hard-earned money.
Sowetan can reveal that among those who invested in Hlala Ethembeni Finances - which promised a 100% return on "invested" cash in a few weeks time - are police officers, nurses and soldiers.
Hlala Ethembeni Finances has been taking money from unsuspecting investors since 2009.
It started out as Living Hope Financial Services and was based in Katlehong on Nova Road. The company has grown and boasts offices in Germiston, Benoni, Johannesburg CBD, Thokoza, Kempton Park, Vereeniging, Polokwane and Burgersfort.
Initially investors were asked to invest a minimum of R500 in cash and pay a 10% administration fee, with the promise of receiving a 100% return after a month.
By last year the basic investment requirement was R1,200 plus a 10% administration fee with the promise of a 100% return after a month.
To test the scheme, Sowetan invested R1,400 in March - of which R200 was taken as an administration fee.
Hlala Ethembeni Finances promised Sowetan would receive R2,400 as a return on its investment after a month.
Up to now Sowetan has not received any money.
Instead, in June, Hlala Ethembeni Finances advised the newspaper to apply for a refund.
- Sibusiso Nkwali (not his real name) of Johannesburg has also fallen victim to Hlala Ethembeni Finances' shady scheme.
As in other pyramid schemes Nkwali was lured by the returns he initially received when he made his first investment.
He invested R2,000 in Hlala Ethembeni Finances' Germiston branch and got a R5,000 return. But he has not been as fortunate since then.
"Between September and December last year I invested R40,000. Unfortunately I got back only R6,000," Nkwali said.
On joining, an investor receives a deposit slip with his or her name, amount and expected return and date of collection.
"I invested because I had hoped to buy a new car," he said.
Nkwali is still waiting for his money and the last promise he received was that he would get it in August.
- Doris Nkosi - not her real name - of Katlehong invested R8,400 in February and when Sowetan met her in April she was still waiting for her R16,800 return.
She accused Hlala Ethembeni Finances of cheating ordinary people while paying out to public servants, including the police and nurses.
During one of Sowetan's visits to the company's offices in Katlehong we noticed how public servants, including police officers, nurses and soldiers, were allowed to jump the long queues of investors.
According to the Companies and Intellectual Property Commission, Hlala Ethembeni Finances was registered on February 17 2012 as a private company. There is no indication of what services the company provides.
Its founder is known only as Thami. His family home is in Katlehong, where the main office is based.
At the beginning of this year the company struggled to pay investors and some of its Joburg staff members pulled out to form Londolozani Financial Services, which operates in the same way.
Sowetan found that none of the three companies mentioned above are registered as financial services firms with the Financial Services Board or the Reserve Bank.
Several attempts to get comment from Hlala Ethembeni Finances have failed.
The bank has launched a campaign, Beware of oMashanyana, to warn people about pyramid schemes.
This article was first published in the Sowetan newspaper on Monday 2 July 2012