Fais ombud finds against CBI again

A PORT Elizabeth-based firm that claimed to be a foreign exchange services provider and four of its representatives have been ordered to repay a retired Mpumalanga farmer and his wife the R300 000 they lost in the scheme.

Deo Volente Empowerment and Trading, which traded as Capital Builder Investments (CBI), and representatives Paul Louis Louw, Johannes Theodorus Otto, Denton Dean Henning and Paul R Johnson were on Friday ordered by the ombud for financial advisory and intermediary services (Fais) Noluntu Bam to repay Graeme Chancellor-Maddison the amount he lost through the investment.

It was the second determination issued last week by Bam against CBI and four of the company’s representatives.

Earlier last week Bam ordered the company to repay retired teacher Margaretha Delport the R100 000 she invested with the firm that was subsequently lost.

Chancellor-Maddison invested R390 000 through CBI into a foreign exchange trading scheme.

CBI promised to manage the risk of Chancellor-Maddison’s investment on the basis of only using 5 percent of his capital to make a trade; there was only a 20 percent draw down; if more than 20 percent of the investment was lost in trading, this would be reported to him and no further trading would occur without a written instruction from him; and he was promised a return of 30 percent a year on his investment.

Chancellor-Maddison checked his investment from time to time with ODL, the clearing house in London and noticed the accounts summary from ODL were not reconcilable with the monthly statements from CBI.

The ODL statement reflected three accounts, which showed that he was losing money, but the CBI reflected a fourth account that showed an increase in his investment.

Bam said that as Chancellor-Maddison’s funds decreased, an increase was reflected in the fourth account.

ODL told Chancellor-Maddison the fourth account did not belong to him and sought an explanation from CBI.

Guaranteed

CBI informed him that if he made a trading loss, they could allocate funds from his fourth account, which they called a “profit account” and was guaranteed. Chancellor-Maddison found it strange that CBI was willing to guarantee against loss and was not convinced that everything was working as CBI claimed and suspected something was wrong.

He decided in October 2010 to redeem his funds but CBI delayed sending him the redemption forms before completing them in January 2011. It was agreed with CBI that the funds would be repaid within 60 days.

“This did not happen and (the) complainant was left wondering if this was not a Ponzi scheme. On March 22, 2011, (the) complainant reported CBI to the FSB (Financial Services Board) and opened a case with the Hawks,” Bam said.