Choice Lifestyle investors in for another shock

A severe blow struck investors, many of whom from the city, when the business entity operating as Choice Lifestyle Change was liquidated on
12 June leaving them not only with the prospect of getting back but a mere fraction of the money they had invested, but also the reality of having to return any profits paid out on their investments.
Business rescue report released
The liquidation order follows a business rescue report that was issued by business rescue practitioner (BRP) Herman Bester on 4 May in which it is stated that “all so-called income/dividends paid to investors were paid using their own money and that the company at all material times operated an illegal pyramid scheme”. The report claims that investors were misled by the officials of the company and the BRP could find no evidence of any legal underlying business activity other than the permit (sic) scheme that was perpetrated, referring to Free Agape Enterprises (Pty) Ltd. Bester therefore recommended that the business be liquidated.
According to the report, the main objectives of the investigation were to establish whether a commercial business came into operation and, if so, to identify the underlying business principles which were applied in the operation of the business, to identify the funds that came into the company and establish how these funds were allocated and to the extent that the funds were not paid out to investors, to establish who were the beneficiaries and recipients of those payments, to identify those assets which were acquired with funds of the company and finally to establish whether it is possible to rescue the company.
Bester says in the report that the company, in an effort to promote investments, claimed to be involved in the provision of bridging finance and property development. The company’s records did, however, not reflect any evidence of any concluded transactions. Investors were promised 50% return per month as a profit on their investments.
Huge amounts invested
The report indicates that more than R380 million was deposited into the accounts of the business from January 2017 until December 2017 which include deposits amounting to R63 857 720, R49 512 779, R65 744 070 and R36 752 011 for the months of September to December 2017, respectively. For the four months, close to R260 million were paid out to investors. A number of other payments that include amounts of R11 700 000, R1 317 950 and R1 327 602 to three individuals that were not necessarily investors, were made.
‘Working capital’ dried up
Botha says that the inflow of funds initially exceeded the ‘dividends’ that the company was obliged to pay. Excess funds were transferred to various bank accounts held by the business. By November 2017 the monthly ‘dividends’ which were payable were larger than the inflow of investments. “By 13 November it was clear that the funds had dried up. All payments to investors after 23 November 2017 were made from investments which were received after 13 November 2017,” Botha reported.
Inter account transfers to be investigated
The report also states that transfers of between R7 million and R11 million were made between accounts belonging to persons involved in the business. “All of these transactions have been handed over to the Financial Intelligence Centre (FIC) under the supervision of the Hawks,” the report indicates.
Money to be recovered by liquidator
“From our investigation it is clear that a large number of investors benefited from this scheme by receiving more repayments than the initial amounts invested. At least 30 accounts have been identified which are currently being investigated on the basis that fictitious investors’ accounts may exist,” Botha says and added that payments to family and friends, estimated at R15 million and repayments from investors, also estimated at R15 million, are some of the monies which may be recovered by the liquidator.
Botha confirmed to Polokwane Observer on Tuesday that the appointment of a liquidator is eminent.
At time of going to print, Limpopo Hawks Spokesperson, Matimba Maluleke was not aware of any criminal cases being investigated as yet.

Story: BARRY VILJOEN
>>barryv.observer@gmail.com