Classic Financial Services director and wife’s R66m gambling spree

An investigation into Classic Financial Services has uncovered that director Cobus Geldenhuis and his now former wife, Jackie, gambled nearly R66 million at the Emperors Palace casino over eight years.

This detail was shared in the founding affidavit of Jacques Fisher, one of the three joint liquidators of Classic Financial Services’ insolvent estate. Dated February 13, the affidavit was included in the sequestration application for Jackie’s estate.

A similar application was filed for the sequestration of the couple’s son, Dewald.

The High Court granted provisional sequestration orders for both parties on 25 April and final sequestration orders on 11 June.

This was the latest in a series of court actions that began in May last year when the High Court in Pretoria placed Classic in liquidation.

After an FSCA investigation in 2022, Cobus was hit with a R143m fine and a 20-year debarment in December 2023 for providing unauthorised financial services and other violations.

It was discovered during the investigation that Cobus operated a Ponzi scheme, misusing client funds for personal gain.

Read: FSCA imposes R143m penalty on Classic Financial Services director, creditors unaffected

In the provisional sequestration ruling for Jackie and Dewald, Judge Harshila Kooverjie noted how investors were deceived into believing their money was being invested. Numerous misrepresentations were made. Cobus “stealthily siphoned their investments into various accounts and used the funds for his own benefit”, the judge stated.

The FSCA’s investigation found that Classic received a total of R617 376 972.53 in investments. During the investigation, Cobus admitted he was the mastermind behind the Ponzi scheme.

It was also discovered that Cobus, who was debarred by Metropolitan Life in 2009 for dishonesty, used the licence of Dewald’s business, Pecunia Systems Limited, falsely to present Classic as a registered financial services provider.

Dewald claimed the licence was used without his knowledge.

Judge Kooverjie stated: “At some point, Classic had managed to pay an amount over R454m back to the investors. However, an amount of R129 962 413.37 currently remains unaccounted for. It is these monies that the liquidators intend recovering.”

Ponzi scheme from inception

On 22 May 2023, the FSCA published its report on the investigation into Classic and Cobus.

The key findings included that, from January 2019 to May 2023, Classic received R617 346 972.53 from about 1 120 investors. Of the amount received, R454 814 600.61 was paid to previous investors. Cobus received R129 624 137.09 from Classic.

According to the report, Cobus acknowledged that the purpose of the business was to steal money. He also admitted that he had not invested clients’ funds since the company’s inception in 2011. Instead, he used the money for personal expenses, such as buying vehicles, renovating his farm, building a workshop, paying a divorce settlement, and maintaining a luxurious lifestyle.

The report highlighted that investors’ funds were never invested, and the returns reported to clients were fictitious and fraudulent.

R30m in gambling winnings unaccounted for

Jackie and Cobus were divorced on 22 August 2022.

In her answering and supplementary affidavits, Jackie submitted that she did not know about Classic’s unlawful activities.

A preliminary investigation by the forensic accountants appointed by the joint liquidators found that Jackie made payments from Classic’s bank accounts into her own and other accounts.

Jackie claimed she was responsible for paying salaries for certain employees and making payments on behalf of Cobus, including to the South African Revenue Service. She alleged that all these transactions were made with Cobus’s knowledge and consent.

Judge Kooverjie stated that the evidence, along with Jackie’s own admission, showed she had received a substantial amount of money from Classic’s bank account. The judge noted that, at the section 417 enquiry, Jackie explicitly admitted that large sums from Classic’s account were deposited into hers.

The judge said the following facts were clear and undisputed: Jackie did not earn an income, she did not own any property or other assets, and Classic did not owe her any money.

Judge Kooverjie said Jackie’s claim that she transferred funds from Classic on Cobus’s instructions solely to make payments on his behalf was not credible. Jackie could not account for the large sums deposited into her account – 84% of the funds in her account during a specific period came from Classic.

“Ms Geldenhuis, in fact, benefited from the investors’ money in an amount of at least R27 936 577.44,” the judge said.

Judge Kooverjie highlighted how Jackie spent the money she received:

• She used R14 925 000 for gambling.
• She paid R6 312 209 to Dewald and R4 241 625.24 to Cobus.
• She paid R510 000 back to Classic.
• She used R15m for day-to-day expenses (including purchases at Mr D, Woolworths, Dis-Chem, and Clicks, and airtime).

Additionally, she withdrew R439 000 in cash.

An analysis of Jackie’s gambling activities showed that although she had an inflow of R5 240 000 and an outflow of R14 925 000 in electronic funds transfers, her total winnings from 5 August 2021 to 5 September 2023 were R12 268 594.52. However, she lost about R21 560 753.46, resulting in a net loss of R9 292 158.94 from 7 August 2021 to 22 April 2023.

In Fisher’s affidavit, he noted that during the enquiry, Jackie acknowledged that she used Classic’s funds “to satisfy these gambling habits and/or addiction”.

He also referred to an email, dated 6 November 2023, from the Emperors Palace casino.

The email detailed Jackie’s sign-up information, Winner Circle amount, and pay dates and amounts. According to the Winner Circle account, Jackie lost R34 610 211.97 at the casino between 2015 and 2023.

“Further calculation reveals that the total amount gambled by the respondent [Jackie] and [Cobus] Geldenhuis at the casino was R65 967 466.72,” the affidavit stated.

Jackie’s total winnings at the casino were R31 241 581.75 for this period.

Fisher said the joint liquidators have been unable to trace the winnings. He stated the evidence suggests that substantial amounts were cashed out and concealed by Jackie and Cobus.

In a supplementary affidavit filed by Jackie in April 2024, she stated that on various occasions, she gave her casino cash winnings to Cobus, who reimbursed her by depositing money into her account.

“I gave Cobus much cash, and he kept it in bags in a safe. I did not have access to the safe, and Cobus watched me if I went to the safe,” the affidavit reads.

Sins of the father

Pecunia provides financial advice and financial services to the public. At the time of the investigation, it was registered as such with the FSCA.

Dewald is Pecunia’s sole director and shareholder.

According to Fisher’s affidavit, Classic used Pecunia’s FSCA licence number to further “its unlawful fraudulent Ponzi scheme and to solicit large funds from the general public as purported investments”.

Jackie claimed that father and son had not been on speaking terms for years.

Dewald, in a supplementary affidavit filed in April, stated he had sent his father a cease-and-desist order on 18 February 2019 after Pecunia became aware that Cobus used Pecunia’s details without its permission in marketing material.

“Cobus was informed that any reference to Pecunia was unlawful and had to be ceased. Since then, I did not speak to Cobus,” Dewald stated.

In Dewald’s opposing affidavit filed in February, it was noted that he had decided to lapse Pecunia’s FSP licence because “I no longer intend to be involved in the financial sector”.

According to the FSCA’s report, neither Dewald nor Pecunia had any business relationship with Classic, and none of Classic’s investors implicated them.

Dewald denies he was involved in and/or received any money from the scheme.

According to the forensic analysis presented to the court, Dewald received R60 000 directly from Classic and a total of R5 630 200 from his mother.

It was alleged that the R60 000 were rental payments owed to him by his parents.

In her judgment, Judge Kooverjie said it should be reiterated that even if the rental arrangement was in place, no explanation was proffered as to why the rental was paid from Classic’s bank account and not from their personal accounts.

Regarding the R5.63m, Dewald’s main defence was that the funds were from his mother’s gambling winnings. He said that where Jackie made payments into his account, he invested the money on her behalf in his money market account and/or unit trust. He further claimed they were again withdrawn and repaid to Jackie “either personally or on her behalf”.

In Fisher’s founding affidavit filed in Dewald’s sequestration application, the joint trustee alleged that Dewald, through these funds, had acquired various assets.

According to the affidavit, during the insolvency enquiry held on 27 September 2023, Dewald conceded that he has an interest in the franchise known as “Hennies” in Krugersdorp.

Dewald purchased a share of about 40% in a company known as LOW Holdings (Pty) Ltd (LDW) for about R1.2m. LDW in turn has a 65% shareholding in the Hennies franchise.

During the insolvency enquiry, Dewald testified that money for the share purchase was loaned to him by Jackie, who had won money while gambling. He claims to have already repaid in excess of R1.8m to his mother.

Fisher further stated that Dewald was also an avid collector and had valuable collections of items such as luxury watches, whiskey, comic books, artworks, and sculptures. In the affidavit, a number of purchases were listed, including:

• more than R147 865.50 paid to Ludwig Behrens and Comics 4;
• R316 614.18 paid to Peter Machlup (a dealer in Rolex watches);
• R456 950 paid to Topwatch;
• R79 323.35 paid to Everard Read Gallery; and
• R209 874.50 paid to O’Mahony Interiors (for furniture or furnishings).

Regarding Dewald’s claim that the funds he received from his mother were from her gambling winnings, Judge Kooverjie said that, on the contrary, the evidence showed the funds deposited into Jackie’s account originated from Classic.

“Even if I am to accept his version that he was oblivious of his father’s Ponzi scheme, the undeniable fact remains that Mr Geldenhuis [Dewald] was a beneficiary of fraudulent proceeds,” Judge Kooverjie said.

The judge noted that calculating the exact amount was not relevant to the sequestration proceedings. At this stage, the joint liquidators only needed to demonstrate that Dewald benefited from fraudulent proceeds, is indebted to Classic, and is unable to pay the debt.

She said that although he claimed to have paid Jackie around R1.8 million, the remaining amount of over R3.8 million had not been accounted for.

“Dewald remains a recipient of Classic’s funds and had explicitly expressed that he too was unable to pay the debts. On this basis, the second requirement is also met.

“It was at the enquiry, that Dewald advised that he was unable to repay the debt, and claimed that he could repay the monies [R60 000] in instalments if demanded,” the judge said.

“More notably”, the judge stated, Dewald had been selling off some of his assets, including motor vehicles and watches, and had even put his property in Kempton Park up for sale.

This behaviour, according to Section 8(c) of the Insolvency Act, constitutes an act of insolvency if it involves hiding assets from creditors or favouring one creditor over another.

The judge pointed out that Dewald began disposing of his assets after the FSCA investigation started in 2022, stating, “Surely at this point, he must have been aware that Classic was in trouble.”