BELLVILLE – After a decade-long legal battle, Pastor Colin Davids (56), his company Platinum Forex CC, and marketing manager Derek Bredekamp (58) have been convicted of fraud, money laundering, and contravention of financial regulatory laws in what prosecutors have described as one of South Africa’s largest Ponzi schemes.
The Bellville Commercial Crimes Court found the trio guilty on Tuesday 10 June, of operating an elaborate investment scam that solicited R329.8 million from unsuspecting investors between 2009 and 2015. The conviction marks the culmination of a case that began in 2015 when the Western Cape High Court granted a preservation order to seize the assets of Platinum Forex.
The scheme
According to evidence presented in court, Davids was the sole member and Chief Executive Officer of Platinum Forex CC, a Parow-based corporation, while Bredekamp served as the marketing manager. The State proved that they directly or indirectly solicited deposits, investments, and loans totaling R329.8 million from individuals, promising to hold the funds in trust and conduct forex trading on behalf of investors.
Senior State Advocate Jannie Knipe successfully demonstrated that the accused lured investors with promises of extraordinary monthly returns of 2-8% and guaranteed capital preservation. However, of the total amount collected, only R87.5 million was actually transferred to forex brokers for trading, with the majority of those funds subsequently lost.
The court heard that the operation functioned as a classic Ponzi scheme, with monthly interest payments to existing investors generated from funds received from new investors rather than from legitimate trading profits.
Unauthorized Operations
A critical aspect of the State’s case centered on the fact that neither Davids, Bredekamp, nor Platinum Forex CC were authorized to accept deposits or conduct financial services. The prosecution established that the accused were not registered as financial service providers under the Financial Advisory and Intermediary Services Act (FAIS Act) and were not entitled to conduct the business of a bank under the Banks Act.
Misappropriation of Funds
Investigations revealed that contrary to promises made to clients, a significant portion of investor funds were diverted for personal use. Court papers indicated that Davids used investors’ money to purchase two properties in Plattekloof and Hermanus, buy motor vehicles for his wife, and cover household expenses at retailers including Woolworths, Checkers, and PicknPay.
The accused made their first court appearance on 29 November 2017, with the case experiencing numerous postponements due to various applications. They pleaded not guilty to the charges against them. The State called 34 witnesses to prove its case beyond reasonable doubt regarding the statutory offenses related to the R329 million scheme and fraud amounting to R5.8 million.
The court ultimately convicted the accused on the following charges: – Contravention of section 7(1) of the Financial Advisory and Intermediary Services Act 37 of 2002 – Contravention of section 11(1) of the Banks Act 94 of 1990 – Money laundering under Section 4 of the Prevention of Organised Crime Act 121 of 1998 – 56 counts of fraud
Sentencing proceedings are scheduled to start tomorrow, 18 June.
The National Prosecuting Authority welcomed the conviction, acknowledging the difficulty in obtaining convictions in high-profile and complex corruption cases with the onerous standard of proof beyond reasonable doubt. The NPA stated that it “will prioritize the prosecution of these crime types and criminals that disproportionately undermine the rule of law.”
