Fraud, theft charges in R3m investment scam

A UK BUSINESSMAN who wanted to help his son set up a business has found himself at the centre of a fraud investigation after a Pakistani couple, living in Cape Town, allegedly defrauded him of nearly R3 million meant to start his son’s venture.

The businessman, Alan Edward Joseph Jones, was at his wits’ end as he tried to make sense of what had happened after he paid the funds to a company called Mystic Blue Trading 635, run by Mohammed Shahid Mughal and his wife, Tanzeem.

However, according to papers before the Western Cape High Court, Jones discovered that Mughal was an insolvent who was not allowed to transact without the knowledge and assistance of the trustees of his insolvent estate.

The couple now face charges of fraud and an alternative charge of theft.

In addition, Mughal has been charged with the Contravention of the Insolvency Act. Their criminal case is pending in the Bellville Commercial Crimes Court.

In an affidavit before the High Court in support of an application for a restraint order, Asset Forfeiture Unit regional head Gcobani Bam said Mughal and his wife were co-directors of Mystic Blue, but he resigned in November 2011, leaving his wife as the sole director.

Bam said the fraud charges relate to an incident which took place in October 2013, when Jones paid Mystic Blue $300 000 to enable it and an entity, known as Realta Minerals (Pty) Ltd, to secure a $50m bank guarantee.

The purpose of the guarantee was to fund a venture between Mystic Blue and Realta, which involved setting up an international trading company which was to have looked for lucrative investment opportunities.

The venture was then to fund the overheads and expenses of the business opportunity for Jones’s son in the UK. It was to have a 25 percent membership interest in the business.

The bank guarantee was to be secured from Momentum Gold and Diamond Trading in Dubai, in favour of Mystic Blue, the papers revealed.

When the details were finalised, Jones paid the bank guarantee initiation fee to Mystic Blue’s FNB account, where it was to be held until the bank guarantee “monetised”.

When nothing further transpired, he contacted Mughal, who told him there was a technical delay and the guarantee would be sorted out, the papers revealed.

Mughal even provided Jones with a letter from Momentum Gold to explain that money- laundering clearance issues were responsible for the delay, Bam said.

However, Jones discovered that the couple allegedly misled FNB to release the funds to them, using documents they had prepared themselves.

It emerged that the couple never paid the money so the guarantee could be issued, Bam said.

Mystic Blue’s bank statements show that, months later, two transfers totalling R1.3m were made to FCI Group South Africa, which is run by Mughal.

Jones said the couple agreed to repay him, but he never received the funds.

The restraint order was granted.