The director of Classic Financial Services who was hit with an administrative penalty of R143 million by the FSCA late last year for, among other reasons, rendering unauthorised financial services, is at it again.
The FSCA imposed the hefty administrative penalty, as well as a 20-year debarment order, on Jacobus Geldenhuis on 12 December last year.
The penalty and debarment order followed the FSCA’s investigation into Classic and Geldenhuis.
The FSCA began investigating Geldenhuis after a complaint about his offering share investments despite being debarred in 2009. In October 2022, a search was conducted at Classic’s premises in Kempton Park, followed by a public warning a month later. Last July, the FSCA’s Enforcement Division concluded its investigation and began taking enforcement action.
The FSCA found that Geldenhuis and Classic violated section 7(1) of the FAIS Act and breached section 11 of the Banks Act by acting as a bank. It was discovered during the investigation that Geldenhuis operated a Ponzi scheme, misusing client funds for personal gain.
Read: FSCA imposes R143m penalty on Classic Financial Services Director, creditors unaffected
In a media statement released this week, the Authority said that it has come to its attention that despite Geldehuis’s debarment, he is rendering financial services to the public.
“Mr Geldenhuis now appears to be conducting business under the name Pecunia Systems (Pty) Ltd (Pecunia) with FSP number 11332,” the FSCA said.
According to the FSCA, Pecunia confirmed it was not associated with Geldenhuis and it did not give him permission to use its licence number and branding. Pecunia applied to the FSCA for its FSP licence to be lapsed on 30 November last year.
“The FSCA is in the process of considering Pecunia’s application,” the Authority said.
This is not the first time that Pecunia’s name has cropped up in the Classic Financial Services debacle.
In May last year, the NPA’s Asset Forfeiture Unit successfully applied for preservation orders regarding funds in two accounts unearthed during the original FSCA investigation.
Read: Criminal investigation into Classic Financial Services and its director gets underway
According to the founding affidavit – signed and submitted to the court in the preservation orders application by the deputy director of public prosecutions S’Khumbuzo Maphumulo – reference was made to Pecunia Systems. However, the link between Pecunia and how it relates to Classic was not made clear.
When Moonstone asked the FSCA in July last year about Pecunia’s role in the matter, the Authority said that although it was aware of allegations that Geldenhuis was using Pecunia as a front to conduct business (while being debarred), “the FSCA had no evidence to indicate that Pecunia was a willing partner to this”.
Recovery of assets
Classic was wound up by order of the High Court in Pretoria in May last year. The liquidators, PBP Administrators, have since shared that numerous assets that were “dissipated by virtue of impeachable transactions out of the insolvent estate” have been recovered.
In October last year, the liquidators stated that they had begun the section 417 inquiries and were investigating various role-players associated with the insolvent estate.
Section 417 of the Companies Act provides that in any winding-up of a company unable to pay its debts, the Master or the Court may, at any time after a winding-up order has been made, convene an inquiry to obtain information concerning the trade, dealings, affairs, or property of the company.
At the time, the liquidators stated that, through the provisions of the section 417 inquiries, the liquidators had collected “numerous assets” that had been “dissipated by virtue of impeachable transactions out of the insolvent estate and were successfully recovered to the benefit of the general body of creditors”.
Read: Inquiries into insolvent Classic Financial Services unearth assets
In the latest update sent to creditors earlier this month, PBP curator Jaco Venter said that more information on Classic’s trade dealings and affairs has been uncovered through these recent inquiries. This, he said, has led to the recovery of additional assets by the liquidators.
Provisional sequestration order for Geldenhuis’s estate granted
Following investigations from the section 417 inquiry, the joint liquidators applied for the estates of Geldenhuis, his son Dewald Geldenhuis, and his wife Jacoba Geldenhuis to be sequestered. A provisional sequestration order for Geldenhuis’s estate was granted on 1 March, while the applications for Dewald and Jacoba Geldenhuis are to be heard on 19 March.
Venter also mentioned that legal action has been taken against all three individuals to preserve their assets. A court order obtained on 31 January froze these assets, preventing them from being traded.
The National Prosecuting Authority recently obtained a provisional POCA (Prevention of Organised Crime Act) order against Classic. Subsequently, the liquidators were granted permission to intervene and defend the POCA application.
A provisional POCA order freezes assets suspected of being obtained through criminal activity, aiming to preserve them for potential confiscation if charges are proved.
Venter noted that the order resulting from the liquidators’ intervention meant that all property attached under the POCA order was now included in the insolvent estate of Classic, benefiting its creditors.
The liquidators confirmed they were in the process of finalising their section 402 report in preparation for convening the creditors’ second meeting.
Section 402 of the Companies Act outlines the requirements for the liquidator to prepare a report for the creditors and contributories (shareholders) of the company in liquidation. This report, known as the section 402 report, typically includes details of the company’s financial position, the causes of its insolvency, and the actions taken by the liquidator. The report aims to provide transparency and accountability to stakeholders involved in the liquidation process.
“Upon advertisement of the second meeting in the Government Gazette, we shall circulate our report with the date of the second meeting of creditors,” said Venter.
