Businessman bust for cheating investors
A mobile coffee shop owner has been convicted of fraud after duping an investor into buying a 50% interest in a business that no longer existed.
Michael Anthony Craus appeared in the Bellville Specialised Commercial Crime Court, where he admitted previous convictions for fraud, theft and assault.
His previous conviction for fraud, in 2006, involved six counts.
Craus traded as 2U Cafe CC, and sold franchises of the coffee shop to two entrepreneurs, Mtunzi Malunga of the Western Cape for R270,000, and Karel Janse van Rensburg of Johannesburg for R300,000.
He also sold a 50% interest in 2U Cafe CC to Malunga for R150,000 at a stage when Craus knew the business had been de-registered and no longer existed.
The transactions gave rise to three fraud charges — two involving the franchises and the third involving Malunga’s 50 percent interest in 2UCafe CC.
On a fourth count, Craus was charged with reckless or fraudulent trading, for duping Malunga and Janse van Rensburg into investing in a business that had been de-registered.
Magistrate Amrith Chabillal expressed dismay that Malunga and Janse van Rensburg, both seasoned businessmen in search of new ventures, had each purchased a franchise in the coffee shop without a written contract setting out their rights and obligations.
Chabillal described Malunga as a “director of various companies, and a businessman of some experience”.
Both had been “taken in” by an attractive brochure advertising the mobile shop as lucrative.
Both had understood that Craus would organise them lucrative opportunities to sell superior coffee at major events, such as the recent soccer World Cup, and provide them with new mobile coffee machinery.
However, Craus only provided them with overhauled machinery, and not new.
Craus told the court that he had in fact organised six major trading opportunities, but had made it clear that they needed to find daily trading opportunities themselves for the franchises to be successful, and not rely entirely on opportunities that he provided from time to time.
Chabillal said the brochure merely advertised the mobile coffee shop as a lucrative business, but did not did not set out the rights and obligations of all concerned, as would be found in a written contract.
He said the absence of such a contract created confusion and doubt, and he acquitted Craus on the two counts involving the franchises.
Chabillal ruled that the reckless trading charge amounted to a duplication of the franchise charges, and found Craus not guilty on this count as well.
However, Chabillal ruled that Craus, at the time that he accepted Malunga’s R150,000 for the 50% interest in the business, was aware that the business had been de-registered and no longer existed.