Investors left destitute as R21m squandered
As two young stockbrokers allegedly squandered R21m on trips to Bali and the US, luxury items and gambling at casinos, many of their investors were left destitute, with some so down and out they even contemplated suicide.
One excuse after another was used when the desperate men and women inquired about their money.
On one occasion, one of the accused, Michael Rathbone, allegedly told a worried investor that his wife had died during childbirth and that he therefore could not immediately attend to financial matters.
Rathbone, 31, stands accused of fraud and theft alongside his husband, Leon Lewitton, 29. They said they would plead not guilty to the charges.
The pair are the directors of Helping Hand Invest (Pty) Ltd, which traded from 6th Avenue, Newton Park.
As they took the stand in the Port Elizabeth Magistrate’s Court on Wednesday in a bid to convince magistrate Xolile Dlulisa to release them on bail, details emerged of how a prominent estate agent had to hire lawyers to get them to remove her name from their business banner.
The court also heard that Rathbone’s father had since written him off — though his son disputed this.
It was further alleged that the couple tried to convince the investigating officer not to oppose their applications for bail, saying he could accompany them on an all-expenses paid business trip to Bali.
While the men were happy to answer questions put to them by defence advocate Terry Price SC, they opted to remain silent when it came to answering many of the questions from the state.
“I do not wish to testify on that at this stage,” was a line both men repeated on several occasions.
Rathbone and Lewitton are alleged to have convinced clients to invest their savings with Helping Hand, with promises of a speedy and lucrative return with interest of up to 45% a year.
Money from one investor was then allegedly used to satisfy the next, until they could no longer keep afloat.
In total, R21m was allegedly lost in just 2½ years.
One woman claimed to have lost her R1.3m pension — an investment she had made with Helping Hand on retirement to care for her sickly husband.
Investigating officer Warrant Officer Nico Koen said the elderly woman’s money had instead allegedly been transferred into the personal bank accounts of Rathbone and Lewitton and then spent on rental for a house in Kini Bay, as well as at the Boardwalk Casino.
The men also allegedly paid themselves director’s fees of up to R800,000 at a time.
The state alleges that two vehicles totalling R675,000 were purchased in Rathbone’s name and that the money for the purchase was traced back
to one of their investors.
“The two suspects have left investors with scars for life,” Koen said in an affidavit read out by state advocate Tjaart van Zyl.
“I had investors in my office after the arrest saying they could not bear to face their families due to the fact that they had lost their life savings and that they felt helpless.
“Two other investors told me that they have nothing to live for as they [Rathbone and Lewitton] had taken everything from them.”
But Rathbone testified that all their actions had been within the law.
He said they had every intention of paying back their investors and that R2m had already been paid out.
Though the prosecution said Rathbone’s father no longer wanted anything to do with his son after he was cornered and allegedly threatened by some of the complainants, the young man said he had received a letter from his father this week.
“I received a letter from my dad telling me that he will always love me but that he cannot assist me financially,” Rathbone said.
Testifying later, Lewitton said he shared a strong relationship with Rathbone and that he firmly believed that they would be acquitted.
He said he no longer had any money of his own.
Asked by Van Zyl how he had afforded to pay for his legal team, Lewitton said he would rather not say.
Koen said the men had failed to show an ounce of remorse.
“On the day of arrest, Rathbone told me that they have to go to Bali in December for business ... and they think they must pay for me to accompany them for the two weeks.
“They were prepared to pay for all my expenses.”
It also emerged that local estate agent Talana Foot had met the men when they showed interest in buying a building in Newton Park for R7.5m.
They later agreed to rent the property instead because they were waiting for a R15m investment but allegedly defaulted on the payments.
Foot said in an affidavit that in April 2018, she received a call from a friend informing her that her business name was on the banner of Helping Hand Invest.
She had to enlist attorneys to force the men to remove her name.
The men are further accused of unlawfully trading with a licence number belonging to BOT and Investment CC.
Van Zyl said there was nothing tying the men to Port Elizabeth, or even to SA, and that given the chance, they would likely flee.
The hearing was postponed to Friday for the state and defence to submit heads of argument before judgment is handed down.