Ombud rules in favour of widow
Another failed property investment scheme has raised eyebrows at the FAIS ombud. Propspec directors plan a Business Rescue initiative.
NELSPRUIT – Four investment brokers of the property syndication company, Propspec, were ordered by the Free State High Court to repay jointly and severely, an amount of R300 000 to local widow and pensioner, Ms Lettie Minnie. This comes after the scheme they convinced her to invest in, imploded. A local broker, Johann van Zyl was among the four. Van Zyl made headlines in 2011 with a similiar scheme, Sharemax, in which many pensioners lost their life savings.
According to Minnie, she invested more than R300 000 into the scheme in 2009, and was promised a return on her investment within two years. She was also assured by Van Zyl of a monthly payout in interest from her investment varying between one and two years depending on the term.
“He assured me that he was so certain of the investment that he had invested R1 million into the scheme himself,” said Minnie, “apparently he had taken an extra bond on his farm to fund his investment.”
Of her investment, R200 000 was earmarked for the Kimberly development known as Grey Haven Riches 15 ltd. Her broker allegedly assured her that she would receive a return on her capital within a year. Minnie’s remaining R100 000 was invested into Grey Haven Riches 19 ltd – a development in Olympus Ridge – and was to be a two year investment. A short term investment of R20 000 was made into the Ruimsig Gardens project.
During the course of the next year, Minnie received monthly payments of R3 000 off the back of her investments until it suddenly stopped in February 2010.
Her inquiries to the offices of both Propspec and Van Zyl delivered no concrete answers and so she turned to the Financial Advice Ombud, Noluntu Bam. A determination was made by the ombud that the four respondents, had to pay back, with interest the money that Minnie invested in the high risk scheme. The determination was then filed in the High Court and a warrant of execution issued in July.
Regarding the warrant of execution the FAIS Ombud commented: writer confirm that when a determination of this Office was filed in the court and a respondent has failed to discharge the judgement debt, a complainant may obtain a writ of execution in order to attached the respondent’s assets.
Where there is no order from the High Court or the appeal board at the FSB staying the execution of the writ pending the outcome of an appeal (or review), then there would be no legal impediment preventing a complainant in possession of a writ to proceed to attach a respondent’s (defendant’s) assets to satisfy the judgement debt.
A sheriff of the court delivered the warrant to Van Zyl’s home, but could not seize his assets as he was apparently not there at the time.
Van Zyl then sought legal advice from Free State based law firm Spangenberg Zietsman & Bloem, who in turn determined that the warrant of execution had been issued irregularly as the Free State High Court had no jurisdiction in the lowveld.
“The products that we as brokers market to our clients are approved by the Financial Services Board who inspect these funds with a fine tooth comb before they approve them. When brokers markets the product to an investor and that scheme later experiences problems and fails them, you surely cant blame the broker for it?” Van Zyl said in his defence. “Minnie was happy with the product and even told me that she does not blame me, but that she will be taking the directors of Propspec to task at the FAIS Ombud. Now suddenly she is taking the matter to the press and making us brokers look like the villians. I am also a victim here as I have invested R1 million of my own money in the scheme and am also waiting with baited breath for a positive outcome.”
According to Van Zyl, the directors of Propspec are currently working on a Business Rescue Plan which they intend to list on the JSE in October.
“The plan is called the Freedom Fund and I would wager that everyone will be getting their money back with interest in the next year or so. Minnie should realize there is nothing I can do to pay her money back, I dont have that power, like the rest of us, she would just have to be patient.”
