Criminal trial of Durban couple accused in R1bn ponzi scheme gets underway
The criminal trial of alleged ponzi scheme masterminds Yunus Moolla and his wife Fathima Carawan finally got under way on Tuesday.
Both pleaded not guilty to more than 11‚000 charges - including fraud and money-laundering - involving more than R1bn they allegedly fleeced from investors.
The couple was arrested almost two years ago after the Reserve Bank shut down their company‚ Carmol Distributors‚ which between 2011 and 2014 purported to trade in petroleum products.
More than 100 witnesses - some of whom lost their life savings in the scam - are expected to testify during the course of the trial‚ which began before Durban Specialised Commercial Crime Court magistrate Garth Davis.
The accused did not disclose a basis for their defence and have not made any admissions.
The matter has been set down for this week and will then be postponed to later this year‚ with estimates that it could take as many as 70 court days to complete the trial.
The accused are on bail of R100‚000 each.
Essentially they are charged with “conducting the business of bank” by unlawfully taking deposits from members of the public - many of them members of charismatic churches whose pastors encouraged them to take part in the “get rich quick” scheme.
Their charge sheet alleges they opened a number of bank accounts‚ created trusts and transferred money between the accounts and to third parties‚ including relatives.
They are also charged with fraud for misrepresenting that they were authorised to accept deposits and that the money would be invested in diesel trading and petroleum products. They also misrepresented that people would get good returns by claiming that investors would earn back between 2% and 8% of their investment per month.
According to the state‚ “They misrepresented the nature of the business and the purpose for which the money would be used. Dealing in diesel was not their main business and the majority of money was not invested.”
The money-laundering charges carry a penalty of a fine of R100m or imprisonment of up to 30 years.
Moolla and Carawan have previously been accused by the Reserve Bank of blocking liquidators' attempts to pay back investors.
In an urgent Durban High Court application‚ liquidator Michael Stewart alleged that the couple was using others to launch frivolous court applications to delay the process. He claimed that investors were waiting and it would be best to place Carmol into business rescue.
As things stand‚ no investor has received any money yet - and things will be further delayed because Sars has lodged a preferent claim of R279.7m.
While Stewart objected to this‚ the taxman has overruled the objection.
In his latest communique to 2‚330 investors‚ Stewart said he would appeal the ruling. He said one option would be to use alternative dispute resolution‚ but if Sars declined to participate‚ the dispute would have to be decided by the Tax Court - and possibly the Supreme Court of Appeal or the Constitutional Court.
"Only once the Sars claim has been finalised will the liquidators be able to prepare and lodge a liquidation and distribution account‚" said Stewart.
"Creditors are reminded that payments can only be made in terms of a liquidation and distribution account that has been laid open for inspection‚ free from objection‚ and thereafter been confirmed by the master of the high court."