Sale of pigs could be a Ponzi scheme
FINANCE gurus have sounded the alarm bells, warning consumers not to throw pennies at “pigs”. Instead, they should keep their “eyes wide-open” and take every caution before committing to investments, especially ones promising lucrative returns.
This after the National Prosecuting Authority’s (NPA’S) Asset Forfeiture Unit (AFU) secured a court order to preserve over R4.3 million in the bank account of the Durban-based Piggy Farm Trading (Pty) Ltd earlier this week.
The NPA suspects that Piggy Farm Trading’s purported sale of pigs could be a Ponzi scheme.
Also this week, the Financial Sector Conduct Authority (FSCA) acted on their misgivings over the operations of Indiberries & Co’s offer of “unrealistic” returns on investments in berry farm ventures.
In a media statement, the FSCA said it received information that Indiberries was operating unlawfully, and used social media sites like Youtube, Tiktok and Facebook to goad investors toward “rich pickings” in berry farming.
The FSCA had raised eyebrows over Indiberries’ promised 45.1% monthly return on investments, for outlays as little as R1 000.
Nicole Irene Peters, the country’s deputy director of public prosecutions, deposed a founding affidavit supporting the AFU’S preservation application for Piggy Farm’s bank account.
The matter was heard ex parte, (matters decided by a judge without requiring all parties to the dispute to be present) at the Gauteng High Court in Pretoria.
Peters said the company had a Durban address but its core operations fell within the jurisdiction of the court, and its adverts went national via its website and social media platforms.
She said the application came after investigations were done and to ensure the funds in Piggy Farm’s bank account remained untouched until their forfeiture proceedings had been completed,
“The business model of Piggy Farm was for investors to purchase a pig for R2 750 for a 12 month period.
“Return income of R550 per month over 12 months was guaranteed. After the 12 month period, the pig was returned to Piggy Farming.”
Peters said investors were told they could physically buy pigs after they were weighed or an animal could be purchased virtually from a digital “metaverse piggy farm”, which represented a living pig.
The pigs were vaccinated and investors had the assurance that if animals died they would be replaced.
With that risk eliminated, they encouraged investors to choose the virtual option.
Peters said their investigation revealed the operation was a “multiplication scheme” because the promised rate of return on investment (140%) was 20% beyond the lawful rate stipulated by the National Consumer Commission.
It was also found that Piggy Farm was not a licensed service provider to offer financial services, and was not permitted to receive deposits from investors.
Peters said: “The objective of all the relevant legislation was to protect the public from unscrupulous operators, depriving them of hard-earned money.
“It also appears that Piggy Farm is trading a fraudulent scheme in that no physical farm or pigs exist, at least not to the extent of the investments received.”
She said the company had over R16m in its Nedbank account during February but after Nedbank froze its account, over R4m was moved to FNB, which was the subject of the application.
“It carries the classic hallmark of a Ponzi scheme in that investors are paid with older investors’ money to keep the scheme going,” she said.
Advocate Ouma Rabaji-rasethaba, head of the AFU, said: “We are here to ensure that crime does not pay and criminals should not be allowed to hold onto their ill-gotten gains.
Neil Roets, CEO of Debt Rescue, a leading debt counselling firm, said they issued many previous warnings to consumers on handling investments.
“The reality is, these are desperate times for consumers. We have seen fuel and electricity price increases this month.
“We also understand that people are looking at side-hustles, which have become the norm for some consumers to pocket supplementary income.”
Roets said in most cases, the warning was that if it seemed too good to be true then it probably was.
He advised consumers to first do their homework and research.
“Consumers’ desperation leaves them looking into things that can supplement their income quickly and significantly, which makes them vulnerable.”
Ntokozo Nzimande from the University of Johannesburg’s Econometrix Department said the current economic conditions created fertile ground for Ponzi schemes.
“Unemployment is over 30%, people are vulnerable to schemes operated by sophisticated criminals, and will grab whatever opportunities come their way to put food on their tables.”
Jacolize Meiring, head of the personal finance research division at the Bureau of Market Research, urged investors to use accredited financial advisers and ensure investments were being processed by credible institutions.