The millions of rands that were paid into Branson Capital, a brokerage firm controlled by two Durban bankers alleged to be behind a R180 million Ponzi scheme by unsuspecting investors, was used to buy properties, forex and gambling tokens.
This emerged during the bail application of Brandon Naicker, aka Muruvan Egambaram and his co-accused, Abraham “Jason” Pillay, in the Pinetown Magistrate’s Court on Tuesday where the pair face scrutiny for fleecing an investor of R2 million.
The charge is just one of more than 80 cases currently being probed by detectives from Directorate of Priority Crime Investigation (Hawks) where investors lost tens of millions of rands, in what Senior State Prosecutor, Joel Kisten told the court was a classic Ponzi scheme.
The pair have been charged with eight counts, including theft and fraud.
Kisten, supported by fellow State Prosecutor Raeesa Shaik, told the court that money that flowed into Branson Capital almost instantaneously flowed out to pay other investors, was used for gambling tokens, properties, forex and to support the lifestyle of accused number one, Naicker.
Some of the money had also been placed in off-shore accounts and into the accounts of family members of Naicker, the court was told.
Kisten said that none of the money was used for further investments, pointing out that in true Ponzi scheme style, investors were led to believe that profits were coming from legitimate business activities “when, in fact, they are coming from payments made by newer investors”.
Detective Constable Simphiwe Maphumulo of the Hillcrest police told the court that in addition to the R2m charge brought against the pair, his case docket had swelled to eight other investors who had since come forward to give statements about their losses.
In addition, he said that his colleague from the Hawks Serious Fraud Unit was investigating 62 other cases related to the Ponzi scheme allegedly run by Naicker and Pillay through the brokerage firms, Branson Capital and Infinitii.
The amounts currently under investigation, he said, amounted to over R140 million.
However, many other investors are yet to give statements and the amount could swell to around R180 million or more.
Maphumulo told the court that the Asset Forfeiture Unit had also got involved in the case, and contrary to the submission to the court by Naicker that he only owned two properties, he also owned properties that were bond-free in Cape Town.
He, however, said that the properties were not registered under his name but under that of family members.
Maphumulo argued against giving the pair bail, citing that they may interfere with the investigation. In addition, he believed Naicker was a flight risk, given his past experience with him and the “influence he had with high ranking police officers”.
He told the court that after he began his investigation in July, he had some months later obtained an arrest warrant for Naicker which he sent to him to try and get him to hand himself over.
He did not, however, but through private security was able to trace Naicker to his home at an upmarket estate in Ballito. He said that after the private security apprehended Naicker, he arranged for him to be placed in custody at the Umhlali police station where he was going to fetch him.
However, when he got to Umhlali police station, he discovered that Naicker had been released on the order of a certain police general.
When he tried to go to the estate to arrest him, Maphumulo said that Naicker used a secondary exit of the estate to flee.
A day later he said he received a call from Naicker’s attorney and an arrangement was made for him to present himself at the Hillcrest police station. Naicker, however, did not honour this arrangement.
Maphumulo said that the next time he heard of the matter was when the Senior Public Prosecutor called him at the beginning of November to inform him that Naicker and his attorney wanted the arrest warrant quashed.
“I told the Senior Public Prosecutor that he must tell them to come to court … that is when I arrested him,” he said.
Under cross-examination by defence attorney, advocate Dhamien Reddy, Maphumulo was asked if a docket had been opened with regard to Naicker being “unlawfully released”, to which he said it had not, but he had reported it to his commanders who were dealing with it.
Reddy put it to Maphumulo that his client had in fact handed himself freely after being told by the Senior Public Prosecutor to come to court on November 1.
Maphumulo said that he was not privy to that conversation.
Reddy also put it to Maphumulo that his client disputes his assertion that he owned properties in Cape Town and asked him to provide an address for the properties.
Maphumulo could not provide an address for the properties as the AFU had them, but said: “The properties are not registered in his name but they are his”.
Legal Aid attorney, Waseem Hoffese who is representing Pillay, asked Maphumulo if his client had tried to evade arrest, to which he answered: “He willingly handed himself over”.
Asked if he feared that Pillay would interfere with the investigation if he was released on bail, Maphumulo conceded: “I don't think he is going to give us any problems”.
Asked why he was opposed to bail, Maphumulo said that he puts Pillay “on the same level as accused number one (Naicker)”.
Maphumulo also conceded that unlike Naicker where money flowed from the Branson Capital account to family members, no money went to Pillay's relatives.
Tuesday’s bail hearing could not conclude as a power outage hit the court precinct.
Magistrate Gwendolyn Robinson was forced to roll the case over for closing arguments and a decision on bail.