BHI Ponzi: The red flags all over the trust’s application forms

By Chris Steyn

Investors – who have lost billions in South Africa’s latest Ponzi scam – knew they were putting their money into an “unregulated” scheme – and had “no guarantee of return in respect of such investment”.

That is if they read the repeated warnings in the application forms of the BHI Trust and the BHI Plus…before they signed it.

The trust has been provisionally liquidated, but only R4 785 164.96 has been found in the Nedbank Savings Account number that appears on both application forms.

In these application forms, three points in particular stood out under “Terms and Conditions”:

“12. The investor acknowledges that he understands that the investment is not registered under any law and that it is unregulated.

“2. The investor acknowledges that he is aware of, and has acquainted himself with the nature of, and risk associated with, the investment. The choice of the investment shall remain that of the investor. 

“14. The Trust shall be entitled to a fee of 10% of the [net] capital growth of the Trust which fee shall be calculated monthly and payable to the Trust at the end of each successive quarter.”

More warning bells rang under “Declaration”: 

“I confirm that I have received sufficient information to make an informed decision regarding this application, and specific information on investment objectives, costs and risk factors,” reads one paragraph. 

“I understand that as with all investment strategies there is a risk of loss as well as the potential for gain. Past performance is not necessarily indicative of future results. The Trust is subjected to market and trading risk,” reads another.

“The investor, or where applicable, its authorised signatory, by affixing its signature to this application form, acknowledges that it understands that it is investing in this investment at its own risk and further acknowledges that there is no guarantee of return in respect of such investment.”

On top of that, the investor “represents and warrants that”: 

“It is acting for its own account, and it has made its own independent decision to enter into the investment, and as to whether the investment is appropriate or proper for it in reliance upon its own judgment and/or upon advice from such advisors as it has deemed necessary. It is not relying on any communication (written or oral) of the Investment Manager, the Trustees or the Trust as investment advice or as a recommendation to enter into such investment (for the avoidance of doubt, any information and explanation related to the terms and conditions of the investment will not be considered investment advice or a recommendation to enter into such investment). It has not received from the Investment Manager, the Trustees or the Trust any assurance or guarantee as to the results which may be expected from the investment. 

“It is capable of evaluating and understanding (on its own behalf or with the assistance of independent professional advice), and understands and accepts, the terms, conditions and risks of the investment. It is also capable of assuming, and assumes, the risks of such investment.”

The application forms were shared with BizNews by Brenthurst Wealth’s Magnus Heystek who says: “you have very smart people handing over large amounts of money into a scheme, which by their own admission on their documents says: This is a trust. It’s an unregulated scheme. It’s not regulated by anybody in South Africa. Your money is high risk. You can lose it all. And the fund manager will take about 10% of your money every year for their fees. Please sign here and send your money. And people did it. That is the scary part that smart, sophisticated people…And it’s in big print. It’s not even a small print. Where it basically says, this is a scam. Invest here and people will still put their money in. And I mean, it could be a fantastic story if you make a joke out of it. And it says, this is a scam, but put your money in. And people did. And that’s what gets me about this story. I mean, they weren’t trying to hide it.

“So, you know, it’s really very sad and a lot of people are going to lose their money. And, you know, you have to turn around and say, look in the mirror, you put this money in, you didn’t read the forms. It’s clear this is a very dangerous investment scheme. You know, it’s very hard to have a lot of sympathy if somebody said: Well, I didn’t read the fine print. This wasn’t even fine print. It’s large print. It’s dangerous, risky, unregulated, but put your money in any way, and people do it. So that’s very, very sad.”

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