Time is running out for those defrauded in the Classic Financial Services One Ponzi scheme. With the 31 January 2025 cut-off date fast approaching, victims still have a final opportunity to secure what’s owed to them.
In their seventh and most recent communication, issued on 28 October, the court-appointed liquidators – WJ Venter, JA Fisher, and SJ McKenzie – underscored the urgency. The letter noted that the liquidators formally requested a definitive deadline from the Master of the High Court in Pretoria, which confirmed 31 January 2025 as the final date to prove any further claims.
The liquidators’ letter is a final call to creditors who have yet to act, urging them to submit their claims promptly. “Any claims received after the 31st of January 2025,” it states, “will not be submitted at the special meeting of creditors and ultimately not be included in the L&D account of the insolvent estate of Classic Financial Services One (Pty) Ltd.”
According to court documents, Classic took in 1 120 investors between January 2019 and May 2023. For those still unaccounted for, this final appeal offers a last chance for redress in a case that has left many grappling with financial loss.
Read: Investors demand justice as alleged ‘Ponzi mastermind’ remains free
Section 402 report
The second meeting of creditors, initially convened on 3 September, was postponed to 8 October to verify the submitted claims and consider the adoption of resolutions outlined in the section 402 report. This report, required by section 402 of the Companies Act, is a vital component of the liquidation process. Prepared by the liquidators, it serves as a transparent record for creditors and shareholders, detailing the company’s financial status, the causes of its insolvency, and the liquidator’s actions.
According to the section 402 report circulated in August, the company faces a substantial shortfall of R70 401 371.97, not accounting for administration costs. In terms of assets, no encumbered assets – those under legal claim or tied as collateral – were listed, while unencumbered assets total R30 668 659.60 in recovered funds.
Read: Grim outlook for Classic’s creditors – shortfall exceeds R70 million
The report also highlights about R174 million as “possible recovery and subject to change”, bringing the total estimated assets to R204 668 659.60.
On the share capital liabilities front, no secured creditors are listed, leaving the South African Revenue Service (SARS) as the sole preferent creditor, although the amount owed to SARS is listed as “unknown”.
Concurrent creditors, those with unsecured claims, face an outstanding total of R275 070 031.57.
In the liquidation process, creditors must prove their claims at either the first or second creditors’ meeting, with payouts distributed proportionally based on each proven claim.
The first creditors’ meeting on 22 August 2023 saw 118 claims submitted.
Moonstone reached out to the liquidators for an updated count on how many further claims were submitted on 8 October, but no feedback was available by the time of publication.
Section 417 inquiries
In October last year, the joint liquidators alerted “all affected parties” of ongoing section 417 inquiries targeting individuals connected to the insolvent Classic estate.
Section 417 of the Companies Act authorises the Master or High Court to initiate such inquiries after a winding-up order to investigate the company’s operations, transactions, and assets.
The liquidators recently confirmed they have “commenced” these inquiries, actively investigating “various debtors associated with the insolvent estate of Classic Financial Services One (Pty) Ltd (in liquidation)” and recovering funds dissipated through impeachable transactions.
Moonstone requested a list of the debtors and recovered funds. Jacques van Heerden, attorney for the joint liquidators, explained that the debtors could not be disclosed because of certain agreements protected by non-disclosure agreements.
Debtors include investors who received extra capital at the expense of other investors.
“Those who were unwilling to settle must be summoned,” said Van Heerden.
The liquidators noted that they were continuing with the collection of debtors “to collect as much funds as possible for the estate”, adding that a first liquidation and distribution account will follow once claims submitted by 31 January 2025 have been verified.
Per legal firm Bowmans, liquidators are required to submit a first liquidation and distribution account within six months of their final appointment. This account details all funds received, expenses, and proposed distributions. If not final, updates must be submitted every six months. Accounts approved by the Master are advertised for a 14-day inspection period, allowing creditors to raise objections; without objections, the account is usually confirmed shortly after, enabling fund distribution.
If estate assets fall short of covering liquidation costs, creditors may need to contribute.
Ponzi scheme unravels
The scheme, which began in 2011, started to collapse in August 2022 after Nico Retief filed a complaint with the FSCA, alleging that Classic’s director, Cobus Geldenhuis, was unlawfully soliciting public investments.
An FSCA investigation found that despite being debarred in 2009 for dishonesty, Geldenhuis continued operating through Classic, running a Ponzi scheme and misusing clients’ funds for personal gain. According to the FSCA report, released on 22 May 2023, Classic had taken in over R617m from about 1 120 investors between January 2019 and May 2023, with R129.9m still unaccounted for.
During the investigation, Geldenhuis admitted that Classic’s sole purpose was to steal money, and that no client funds had been invested since the company’s inception. On 30 May 2023, the High Court in Pretoria issued a final liquidation order against Classic, appointing Venter, Fisher, and McKenzie as the final liquidators. On 30 May 2023, the High Court issued a final liquidation order against Classic.
Investors in Classic have questioned the delay in the police investigation into the liquidated company and Geldenhuis.
Read: Delay in Classic Financial Services investigation: investors demand answers
In July 2023, the National Prosecuting Authority (NPA) confirmed that a criminal case had been opened at the Kempton Park Police Station to investigate the dealings of Classic and Geldenhuis. Captain SI Mothiba was appointed as the investigating officer.
In September, the NPA told Moonstone that the docket was still with the South African Police Service for investigation.
Earlier this month, security camera footage dated October 10 circulated in creditors’ social media groups showing an accident involving Geldenhuis. The footage captures Geldenhuis, riding a motorcycle, being struck by a car. Reports indicate that his injuries resulted in the amputation of his left leg below the knee.
