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In the R1.8-billion BHI Ponzi scheme case, Sona Pillay is alleged to have visited the Sun City casino 131 times where he reportedly placed bets totalling R800 million over four years, withdrawing large amounts in cash to launder the money.

Charged with fraud and money laundering in this massive BHI Trust Ponzi scheme, Pillay appeared alongside co-accused Michael Phillip Adam Haldane to apply for bail following their arrest a week ago.

The two central figures in the scandal were granted bail at the Palm Ridge Magistrates Court, per BizNews, noting how this has been one of the most devastating financial frauds that SA has had to grapple with, having left thousands of investors financially crippled and seeking justice since 2008.

The arrests of Michael Haldane, founder of Global and Local, and Sona Pillay, Managing Director of Rubicon Trust Company Ltd., mark a crucial turning point in the investigation of the BHI Trust Ponzi scheme. Sona Pillay, 54, was apprehended on May 31 this year, at OR Tambo International Airport when he returned after trying to leave the country. Michael Haldane, 55, turned himself in on June 3, 2024.

Both individuals have been charged with fraud and money laundering and are in custody pending their bail hearing.

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This is following the arrest of the fraud king, Craig Warriner, who was convicted on 207 counts of fraud and running an investment advisory service without a financial services provider licence, per News24.

Following the collapse of the scheme, the former chairperson of the Old Boys’ Association of St Stithians College in Johannesburg surrendered to the police in October last year, citing fears for his life.

Warriner was sentenced to 25 years imprisonment late in May, and as part of his plea agreement, pledged to cooperate with the state in the prosecution of other entities linked to the fraud, as well as to help the state recover as much of the funds as possible.

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According to the affidavit provided by the prosecution, the BHI Trust scheme, founded by Warriner, lured investors with promises of high returns, often exceeding 10%, by allegedly investing in high-yield, low-risk financial instruments. As a classic Ponzi operation, the scheme used funds from new investors to pay returns to earlier investors, thus creating an illusion of profitability and sustainability.

“In typical Ponzi scheme fashion, BHI Trust scheme started to falter and failed to keep up with the promised returns on investment,” Hawks spokesperson Col Katlego Mogale said via BusinessLIVE.

The court heard how Pillay would collect funds from unsuspecting investors while pretending to run a legitimate investment scheme with Warriner.

Khangale said the funds stolen from BHI were washed through Pillay’s personal account at Nedbank, and disguised as gambling at the various casinos. “Clearly, he disguised his unlawful conduct as a gambling habit,” said Khangale in the affidavit that was read into the record.

During the 131 times he visited Sun City from November 2019 until January this year, Pillay placed bets of R797 million and withdrew R782 million in cash and redeemable vouchers, according to Khangale. This amounts to half the total R1.8 billion lost by investors in the BHI Trust Ponzi scheme.

“This conduct was repeated at various other casinos, moving a staggering R93 million in the same manner.”

Pillay allegedly moved another R14 million through Sun City’s betting machines after Warriner’s October 2023 arrest, effectively “cleaning” proceeds equivalent to almost 50% of the stolen investor funds.

Haldane’s company Global and Local promoted and sold the BHI Trust as an investment vehicle running an unregulated fund “and as having the appearance of being a fund manager that is regulated, while it was not,” said Khangale. He said Haldane sold prospective investors into BHI, telling them that only a portion of their funds would be invested in local equities. These investors said they invested in BHI on the advice and assurances of Haldane.

Meanwhile, Haldane was a director of other entities that were used as conduits to channel investor funds out of the country, which had not been disclosed to the investors.

Haldane’s deep involvement in the company raises questions about his knowledge and orchestration of the fraudulent activities. Born in PE, Haldane’s family trust, the Open Range Family Trust, holds assets including a family home valued at approximately R4 million, household contents worth R1.5 million, and three motor vehicles collectively valued at R1.4 million. Haldane also has international assets, including an apartment in tax-haven Malta valued at €300,000, shares worth €205,000, and residency status in Malta, which he obtained in 2019 for ease of travel.

As the Managing Director of Rubicon Trust Company Ltd., Pillay’s role in the Ponzi scheme was also crucial. At the time of his arrest, he said he didn’t leave the country to evade the authorities but rather because he’d won an all-expenses-paid trip to Las Vegas. Interesting that someone with a proposed betting problem was going to a gambler’s paradise for a holiday just as the Ponzi scheme started to crumble.

The trial has been adjourned until October.

[source:news24&businessday&biznews]