UP Money, the alleged pyramid scheme: What you should know
Authorities believe it exploits struggling South Africans during lockdown.
South Africans who partake in pyramid schemes may end up losing their funds even if the organisers are brought to book. Those who participate in such schemes willingly are committing a crime and may incur a fine of R1 million.
This is according to acting National Consumer Commission secretary, Joseph Silolo. Silolo was one of the various representatives who addressed the media on government’s Up Money investigation today (August 4, 2020).
After recent court proceedings Up Money, an alleged pyramid scheme, lost possession of R18 million, an Audi TT, a Hummer H3 and a Jaguar XKR Coupé.
- The court order
A Gauteng court issued an order to this effect based on the National Director of Public Prosecution’s belief that Up Money is a pyramid scheme. Authorities believe it exploits struggling South Africans during the unprecedented difficult times we face due to Covid-19 and the resultant lockdown.
- What is a pyramid scheme?
During today’s briefing, acting Consumer Commissioner Thezi Mabuza explained that South Africans had been going through a tough time during lockdown.
With reference to investigations into Up Money, she explained what constitutes a pyramid scheme.
The court allowed the Asset Forfeiture Unit to freeze bank accounts relating to Up Money worth over R18 million and three luxury vehicles.
Watch the video below for a summary of events and intricate legalities.
- Has anyone been arrested?
No criminal prosecutions have been instituted, but authorities say that this will happen, following investigations by the National Consumer Commission, the Financial Intelligence Centre (FIC), the South African Police Service (SAPS), the South African Reserve Bank, and the Asset Forfeiture Unit.
- How did the alleged pyramid scheme come to light?
A complainant from East London alerted the NCC about the pyramid scheme.
Investigations led the state entities mentioned above to obtain preservation orders in court for the following:
– An amount of R18 361 521.88 held in a First National Bank Gold business account in the name of Up Money (Pty) Ltd.
– An amount of R205 586.73 held in a First National Bank Gold business account in the name of Uniitco (Pty) Ltd. This further account was identified by the FIC as having received the proceeds from the First National Bank Gold business account of Up Money in an amount of R4 million.
– The three vehicles had been purchased directly from the Uniitco (Pty) Ltd (Uniitco) bank account.
- What happens now?
Criminal investigations are underway. According to today’s briefing, it may still take at least three months. The matter will then be referred to the National Prosecuting Authority for consideration of a criminal prosecution.
- Specific allegations by the NDPP
The National Director of Public Prosecutions believes that a host of offences were committed. Racketeering, money laundering, fraud and theft are some of the alleged crimes under investigation.
They have also alleged the following contraventions:
➢ Section 5 of the Prevention of Organised Crime Act 121 of 1998 (POCA) – assisting another to benefit from proceeds of unlawful activities.
➢ Section 6 of the POCA – acquisition, possession or use of proceeds of unlawful activities.
➢ Section 43(2) of the Consumer Protection Act 68 of 2008 – promoting a pyramid scheme or causing other persons to do so.
➢ Section 22 of the Companies Act 71 of 2008 – reckless or fraudulent conduct of business.
This is a developing story.
- Similar schemes
During today’s briefing, NCC acting secretary Joseph Silolo stated that multiple alleged pyramid schemes are under investigation, but that these will not yet be identified. Citing the Consumer Protection Act, he indicated that nobody may participate in, promote, join, or enter a pyramid scheme. According to Silolo, South Africans who have made themselves guilty of any such behaviour may be prosecuted.
Penalties for participating in such schemes include fines of up to R1 million.
- Will participants get their money back?
Although innocent victims in such schemes may get their money back, those who participated in unlawful activities intentionally will have their lost funds forfeited to the state. Representatives indicated that it will be applied to further investigations.
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