Delay in Classic Financial Services investigation: investors demand answers

Investors in Classic Financial Services One are questioning the delay in the police investigation into the liquidated company and its director, Cobus Geldenhuis.

Geldenhuis was debarred in 2009 for dishonesty but continued operating through Classic.

In August 2022, a complaint was filed with the FSCA, accusing him of soliciting investments.

The FSCA’s investigation, which was completed in May 2023, found Classic was a Ponzi scheme, with Geldenhuis admitting to misusing client funds and fabricating returns.

Classic received more than R617 million from 1 120 investors during the period under investigation, but R129m remains missing.

Following the FSCA’s report, Classic was liquidated, and WJ Venter, JA Fisher, and SJ McKenzie were appointed as the joint final liquidators.

Subsequently, the estates of Geldenhuis, his ex-wife Jackie, and his son Dewald were sequestrated.

Read: Classic Financial Services director and wife’s R66m gambling spree

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.

When Moonstone asked about the progress of the investigation a year later, Colonel Katlego Mogale, media spokesperson for the Directorate for Priority Crime Investigation (Hawks), said the matter had been handed to the NPA for decision but further instruction had been given. Moonstone again contacted Mogale this month, asking whether he could indicate the reason for the delay in the investigation.

Mogale said the case had been sent back to the Director of Public Prosecutions with feedback.

“Unfortunately, [the] docket details and [the] instruction to investigating officer cannot be discussed in the media,” he said.

According to the NPA, the docket was still with the SAPS.

In the meantime, all calls and WhatsApp messages to Captain Mothiba have gone unanswered.

Juli Bredenkamp, a Classic investor who says she regularly communicates with Captain Mothiba, claims she was informed that Mothiba was instructed to “follow up” the bank accounts of Geldenhuis, his wife, and son. Bredenkamp claims that according to her knowledge, the docket is still with Captain Mothiba. She questions why, despite both the FSCA and the joint liquidators of Classic obtaining these bank statements, it has taken the police more than a year to do the same.

In 2022, the NPA secured a preservation order from the High Court to protect several assets in Absa, Nedbank, and First National Bank accounts held in the name of Classic, as well as an FNB account held by Jackie. Moonstone contacted the three banks to enquire about the procedure and turnaround time for providing bank documents or statements in response to requests from authorities such as the FSCA and the Hawks.

FNB Risk spokesperson Nadiah Maharaj says FNB has a responsibility to ensure that its bank accounts are managed in accordance with all relevant laws, regulations, and internal risk processes.

“We have a zero-tolerance approach to any incidents of fraud and fully co-operate with legal and regulatory authorities if there is an inquiry into the conduct of any client,” says Maharaj.

Maharaj explains that when a subpoena is received, FNB ensures it responds within the stipulated timeframes or requests an extension if it cannot meet the deadline.

“The due date for information and the court date is generally stipulated in the subpoena, which guides the submission timeline.”

Maharaj added that the turnaround times for information depend on the complexity of each matter.

Nedbank states it has a dedicated team that handles all subpoenas.

“Turnaround times are dependent on the request, as each subpoena details its own due date. Nedbank strives to provide the information before the due date, except when older data is requested that has been archived,” states Nedbank.

Absa said it offers its full co-operation to all law enforcement agencies.

“As such, it will duly comply with any properly issued subpoena within the time frames specified by the legislative framework under which it may have been issued.”

Final liquidation of Afropulse

Meanwhile, the joint liquidators have used the information from subpoenaed bank accounts in support of liquidation and sequestration orders as part of their ongoing efforts to recover funds for creditors.

Read: Forensic audit traces Classic Financial Services’ missing millions

One such is the urgent application for the compulsory liquidation of Afropulse 128 (Pty) Ltd. The founding affidavit, filed by Fisher on 21 June this year, details that Afropulse, a property holding company established in 2006, owns the Anniesdeel farm in the Free State. The property was purchased in 2007 for R500 000. Geldenhuis was initially the director but was replaced by Dewald in 2012.

Jacques van Heerden, an attorney for the joint liquidators, says although it appears that the farm was purchased without Classic’s funds, improvements and extensions to the property, as well as salaries paid to staff linked to the farm, were financed using fees from Classic investors. This amount, as set out in the affidavit, totalled R10 647 434.94.

The joint liquidators took urgent steps to apply for the liquidation of Afropulse as soon as they learned in June that the company had received a cash offer of R2.2 million for the farm.

‘The turning point’

Along with the affidavit, the liquidators submitted a copy of the transcript (annexure FA13) from a meeting with Geldenhuis on 18 August 2023. This meeting was recorded and transcribed with Geldenhuis’s consent.

During the meeting, Geldenhuis emphasised that the scheme had been insolvent since inception. He stated that between 2011 and around 2016, it operated by using new investors’ money to pay existing ones.

He said the “turning point” for him came in 2016 when he had to use his pension of about R300 000 to R400 000 to cover shortfalls and realised it was insufficient. Describing it as a “wake-up call”, Geldenhuis admitted he should have closed Classic at that point but felt too deeply involved (“ingesuig”).

He attributed his actions to his reaction to the death of his son Rico in 2006. According to Geldenhuis, at the time he was given a handful of pills to cope, and he tried to ween himself off them in 2010. He says from about 2014 he no longer took the pills, but he says he was a “malletjie” (a madman) and depressed “op die volgende vlak” (“on the next level”). He says at one point he went back to a psychiatrist, who put him on stronger medication, which left him feeling numb.

“En dit het my, kan ek maar reguit se, k*k besluite laat neem en wat nie moes gebeur het nie en dis die bottomline.” (“And it made me, if I may be blunt, make sh*t decisions and things that shouldn’t have happened, and that’s the bottom line.”)

Robbing Peter to pay Paul

In the interview, Geldenhuis also admitted to soliciting funds from new investors even after Classic was liquidated. According to Geldenhuis, he used the funds from the new investors to pay others. Asked how he determined which investors would get paid, he said it depended on who was struggling the most.

Van Heerden reports that, in collaboration with Adams & Adams Forensics, significant progress has been made in mapping the total investor portfolio. However, he explains that in some cases, only surnames were used in payment references and no accompanying identity numbers. He says that some clusters, where investors share the same surnames, remain difficult to allocate accurately. He says a small portion of these are still classified as unallocated.

“We have also obtained new information drawn from the other bank statements of investors who received extra capital at the expense of other investors, and we will continue in the month ahead with a few insolvency interrogations to see if we can still recover further funds for the benefit of creditors and people who have lost in this Ponzi scheme,” Van Heerden says.