In­vestors may lose mil­lions in sus­pect SCHEME

The Fi­nan­cial Ser­vices Board has con­firmed that Profit Trad­ing, which con­tin­ues to op­er­ate, never placed any trades, writes Maya Fisher-French

CityPress - - Business & Tenders -

Since pub­lish­ing a reader’s com­plaint about forex trad­ing plat­form Profit Trad­ing two weeks ago, City Press has been re­ceiv­ing com­plaints from other an­gry in­vestors. Profit Trad­ing, founded by Myles Ndlovu, claims in mar­ket­ing ma­te­rial to use a “forex ro­bot” to trade for­eign cur­rency on be­half of in­vestors.

The same story is re­peated by each in­vestor. They in­vested money with the prom­ise of a high re­turn which was payable af­ter three months. Since 2014, in­di­vid­u­als have in­vested large amounts of money and in some cases ini­tially re­ceived re­turns which en­cour­aged them to in­vest fur­ther, or con­vince fam­ily mem­bers to in­vest.

By Septem­ber 2016, the pay­ments started to dry up with ex­cuses about back­logs and tech­ni­cal is­sues.

Some clients, like Mr P, who wrote to us to say that he in­vested R50 000 in Oc­to­ber 2016 and never again saw his money, re­ceived no re­turns at all. “I kept mak­ing calls to these peo­ple and none of them re­sponded to my query.

In May this year, we de­cided to pay a visit to the Sand­ton branch and we found the of­fices closed with­out no­tice. I have lost my money and my co-worker lost R30 000.”

Another in­vestor, Mr M, con­vinced his mother to in­vest her early re­tire­ment pack­age in Profit Trad­ing. “I told her about Profit Trad­ing be­cause I was afraid she would spend all her money. She re­ally didn’t want to do it but I had to con­vince her un­til she agreed,” wrote Mr M, whose mother never re­ceived a cent from Profit Trad­ing af­ter in­vest­ing her en­tire nest egg. “My mother is now not well. She has been ad­mit­ted to hos­pi­tal be­cause of this. There is now no peace be­tween me and my mother. Ev­ery time she calls me, I be­come very sad.”

Mr MK wrote that he had in­vested the funds for his child’s ter­tiary ed­u­ca­tion with Profit Trad­ing. “I don’t know what I can do now as my son is sup­posed to start ter­tiary ed­u­ca­tion next year.”

As part of a joint in­ves­ti­ga­tion by City Press and Money­web, in in­ter­views with for­mer se­nior em­ploy­ees we were told that an amount of around R52 mil­lion was in­vested by 3 000 in­vestors and that the to­tal value in the ac­counts re­flects an amount of R107 mil­lion.

Staff main­tain that Ndlovu was the only per­son who man­aged the books and that he cre­ated a very com­plex struc­ture to hide the ev­i­dence of what they sus­pect to be a Ponzi scheme. They claim he never shared the in­for­ma­tion with the rest of the staff or the founders of the var­i­ous branches that sold Profit Trad­ing soft­ware.

In a re­sponse to ques­tions from City Press, Ndlovu main­tains that this is a cam­paign against him by bit­ter ex-em­ploy­ees “who have opened their own com­pa­nies by try­ing to steal our clients and busi­ness model. There are no specifics here. It’s all hid­den be­cause the sources are our ex-staff mem­bers who go around spec­u­lat­ing ma­li­cious ar­ti­cles on What­sApp even to our clients (sic),” he wrote in an email to City Press.

Ndlovu also con­firmed that he con­tin­ues to sell his train­ing and trad­ing tech­nol­ogy as this does not re­quire a fi­nan­cial ser­vices provider (FSP) li­cence. There are re­ports that he is op­er­at­ing out of of­fices in East Lon­don and Richards Bay.

In re­sponse to why in­vestors had not re­ceived their money, he wrote “there are lots of dy­nam­ics in trad­ing when it comes to with­drawals and open trades with re­gards to risk man­age­ment and there is com­mu­ni­ca­tion with our clients and our of­fices are open for sup­port”. He also main­tained that ac­tual trades took place and that “we are the mar­ket mak­ers for over-the-counter forex trad­ing. Our trad­ing hap­pens off­shore.”

In a com­plaint to the press om­buds­man about our first story he de­nied that his Sand­ton of­fices are closed or that they use a trad­ing ro­bot.

A year­long in­ves­ti­ga­tion into Profit Trad­ing by the Fi­nan­cial Ser­vices Board (FSB) re­sulted in the li­cence be­ing with­drawn and a case opened with the com­mer­cial crimes unit. In an in­ter­view with City Press, Caro­line da Silva, deputy ex­ec­u­tive of­fi­cer for fi­nan­cial ad­vi­sory and in­ter­me­di­ary ser­vices at the FSB, said af­ter a pro­tracted and thor­ough in­ves­ti­ga­tion, it was clear that no trades were ever placed. “He didn’t trade, he cre­ated false re­ports to show they were trad­ing when they were not,” Da Silva told City Press.

The FSB first re­ceived a com­plaint about the busi­ness in Septem­ber 2014. How­ever, upon fol­low­ing it up the in­di­vid­ual re­tracted the com­plaint. In July 2015 the FSB re­ceived another com­plaint, al­low­ing it to launch an in­ves­ti­ga­tion. “We in­ter­viewed Ndlovu, who was un­co­op­er­a­tive. As a re­sult, we is­sued a war­rant for search and seizure,” said Da Silva, who de­scribed a com­pli­cated and thor­ough in­ves­ti­ga­tion process which in­cluded the use of foren­sic tech­nol­ogy ex­perts to an­a­lyse Profit Trad­ing com­put­ers, as well as the in­ves­ti­ga­tion of nu­mer­ous bank ac­counts. By Jan­uary 2016 they had enough ev­i­dence to sug­gest that fraud had been com­mit­ted and the li­cence was sus­pended in Fe­bru­ary 2016 and per­ma­nently with­drawn by Septem­ber 2016. As the FSB has no crim­i­nal au­thor­ity, they had to hand the in­ves­ti­ga­tion over to the com­mer­cial crimes unit.

“It now sits in the hands of the po­lice,” said Da Silva. At the time of go­ing to print, City Press had not re­ceived a re­sponse from the spokesper­son for the com­mer­cial crimes unit.

Ndlovu de­clined to com­ment fur­ther, stat­ing: “My le­gal team has ad­vised me not to fur­ther re­spond to your false al­le­ga­tions.”

He also claims that he is ap­peal­ing the sus­pen­sion of his FSP li­cence, although the FSB con­firmed that no ap­peal had been lodged.

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