Financial regulator seizes documents, computers from Coin It Trading, Commex Minerals
Ponzi scheme activities suspected
The Financial Sector Conduct Authority (FSCA) has executed a search-and- seizure warrant at the business premises of Coin It Trading and Commex Minerals, as well as the private home of one of the former directors of Coin It Trading.
Both companies are doing business in SA from a shared head office in Dundee, KwaZulu-Natal. Coin It has branches in Johannesburg, Vryheid and Newcastle, while Commex Minerals operates in Durban, Johannesburg and Port Elizabeth.
The raid after the FSCA launched a formal investigation on August 30 into the activities of the two entities “suspected of operating an investment scheme in contravention of a financial sector law, and the possibility that clients’ investments may have been misappropriated”.
Documents and computers were seized to determine if there is any evidence that a financial sector law may have been contravened, the FSCA said in a statement.
Despite this, Commex Minerals again advertised its “investment opportunity” in weekend newspapers. Calling it “[minerals] extracted from the ground, into your pocket” in a six-page brochure, Commex promises returns of more than 10% a month for a period of 18 months on reselling people’s purchases in dolomite, manganese, coal and iron ore.
The FSCA has warned the public to act with caution and stressed that neither Coin It nor Commex Minerals are licensed to conduct any financial services nor to receive deposits, even though they falsely claim to be authorised by the FSCA.
Coin It, which according to FSCA director of investigations and enforcement, Brandon Topham, shows “hallmarks of a Ponzi scheme”, promises returns of as much as 200% and ownership in just three years on an investment in trucks, buses and heavy machinery.
Ponzi schemes typically use the money they collect to pay some returns to investors in the initial stages in an attempt to show the scheme is legitimate, but later, as participants in the scheme grow, returns falter and later investors are not able to recover any of their capital.
One investor, who does not want to be named, told Money two weeks ago that she invested R140,000 in Coin It in 2018 after a family friend told her he resigned as a policeman because of the profit he was making. The investor’s monthly payments promised were between R15,000 and R30,000 and ownership of a truck at the end of a 36-month contract.
But now with the investors reporting that they haven’t been paid and the FSCA and Reserve Bank investigating, she doubts whether she will see any of her money again.
The FSCA has named Michael Andrew Anthony de Beer and Patricia Ursula de Beer as directors of Coin It and Commex Minerals respectively.
The regulator has urged the public to be extremely cautious when offered unrealistic returns and reiterated not to do financial services business with any entity that is not licensed by the FSCA.