BHI Ponzi: Victim who lost R6m helps explains how he was duped – as were thousands more

Critical facts are emerging on the R3bn Ponzi scheme operated since 1999 by St Stithians old boy Craig Warriner. When the fraudster needed fresh funds to keep the scam rolling, he expanded out of the original well-heeled Sandton private school base into a broader middle-class group of retirees who depended on a monthly income stream and thousands of mainly Coloured and Indian ‘investors’. The increasingly desperate scam was funded through enablers that included broking firm Global & Local, which earned up-front commissions of a reputed 5% on the money injected into the Ponzi. In this interview, an investor who asked not to be named, explains how he got sucked into the fraud – and how Global & Local geared up its involvement with Warriner’s BHI Trust by purchasing books of clients from smaller brokers. The victim, who lost R6m, spoke to BizNews editor Alec Hogg.

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Edited transcript of BizNews founder Alec Hogg’s interview with anonymous BHI Ponzi Victim

Alec Hogg: Well, Craig Warriner, a fellow who’s larger than life, is sitting in Sun City jail near Johannesburg, in Naturena, just south of Johannesburg. The victims of this Ponzi scheme number in the thousands, from people who attended St Stithians School to various financial advisers. What we’ve got now is a conversation with a victim, someone who invested with BHI Trust. Thanks for joining us. You’ve chosen to stay anonymous, and I respect that. How did you learn about this? I trust you were aware of Mr. Warriner’s existence.

BHI Victim: Thank you. I had money invested in Investec and other banks during a period when it was challenging to access funds due to low interest rates. A family friend who had invested in BHI Trust for years introduced me to it in 2010. I initially didn’t consider it a significant investment but eventually put in R500,000. Over time, I invested R12 million and later added another R6 million from other funds. Many people were drawing monthly debit orders from the returns, allowing their capital to remain constant with only an 18% capital gains tax. Looking at the historical data, the investment seemed stable, with average returns of around 17% before 2008, dropping to about 12% after that. It appeared like a solid choice.

Alec Hogg: So, you’ve invested 6 million rand in this?

BHI Victim: That’s correct.

Read more: BHI Ponzi: Attorney Caitlin Gottschalk on Warriner’s betrayal of Ashcroft, the other trustee

Alec Hogg: Before we delve deeper, what are your expectations for recovering your investment?

BHI Victim: We have reached out to a legal vessel and broker and they’re looking into it. The investment appeared solid, and I did my research, even checking with the Financial Services Conduct Authority. I found my financial advisor’s registration, looked into other implicated companies like Axiam Capital Management, and they all seemed legitimate. The investment offered protection, and my financial advisor was highly accredited. The company managing my portfolio was a part of an elite Financial Advisors association. They took over my financial advisor’s portfolio, which included around 500 clients, without raising any concerns. They assured us they would take care of our investments.

Alec Hogg: Which company took over?

BHI Victim: That would be Global & Local.

Alec Hogg: All roads lead back to Global & Local. Are you aware of that? The person in charge of Global & Local affairs, Haldane, operated from two houses on Barry Hertzog Road until a couple of years ago. Later, he leased the Metal Box House in Mill Park, suggesting he ran his business from there. It seems they are quite significant in this situation. You’re the second person I’ve spoken to who had investments through Global & Local. They have a branch in Lenasia, indicating a deep presence in the Indian and coloured communities.

BHI Victim: They did attempt to open my wife’s file since my initial financial advisor, a long-term acquaintance, fell ill due to a brain tumor. He had his money invested, and many people, including families, seem to have suffered significant losses.

Alec Hogg: When you examine the returns they provided, it covers the period from 2008 onward. We now know that Warriner of BHI Fund lost a lot of money in 2008 and began running a Ponzi scheme from then on, taking money from new investments to pay out those who needed it. It’s a classic Ponzi scheme. However, the annual returns he reported, like 13.9%, 13.9%, 12.2%, 12.7%, 12.7%, 13.7%, 12.9%, seem convincing. Unfortunately, it’s all fabricated.

BHI Victim: This raises a question about financial advisors selling this product, who are registered and licensed. Even the Financial Services Conduct Authority (FSCA) should have been monitoring them. It’s puzzling that when I did a check, BHI was a listed company, and the FSCA should have been keeping an eye on them. The ACA website mentions that the Patient Placement Fund is recognised and authorised to trade by the FCA but is classified as an unregulated fund, neither a unit trust fund nor a hedge fund. It doesn’t match the classification given on the documents, and I need to find out from the lawyers if it’s true or false.

Read more: UNDICTATED: Cawood says intermediaries that enabled Warriner’s Ponzi will be attacked 

Alec Hogg: It’s indeed interesting. I contacted Afrifocus and requested information about B.H. Trust and Mr. Warner. The response from Alisha Pillay, the COO, was as follows: “BHI trust has been a client of Afrifocus Securities that invested in the Nedbank Corporate Saver on a non-discretionary mandate. In line with a mandate, Afrifocus Securities acted only upon instruction from the client. In terms of client confidentiality, we cannot disclose any client information.” In other words, they refused to provide any information and shifted the responsibility to the client’s instructions.

Essentially, we’re dealing with a super crook who’s been at this for 30 years. He was cooking the books from the beginning because crooks don’t change overnight. From 2008, it became a classic Ponzi scheme. What’s intriguing is that he targeted St Stithians old boys and their teachers, some of whom invested millions. Warriner even funded a club and sports high-performance area at St Stithians. On the other hand, Global & Local, a different market segment, operates in Lenasia, the Coloured and Indian area. So you have a rich part, a middle-class part, and various brokers. It seems this individual’s influence reached far and wide. Now, with the money running out, he turns himself in to avoid retribution.

BHI Victim: Yes, it’s a very challenging situation. Thankfully, I still run a business and have other means. However, there are substantial losses. I know someone who put his retirement savings into this and now has no income. He’s lost nearly everything. My money was allocated for other purposes, like immigration, and I needed it to be accessible for tax clearances. I didn’t want to lock it in an investment for a year while waiting for exchange rates to stabilise. It was convenient because this trust allowed you to withdraw funds within a month. It all made sense at the time. Even when Local & Global took over, I felt comfortable. Perhaps that was another warning sign.

Alec Hogg: Have you reached out to Global & Local, have they responded?

BHI Victim: They contacted us first last Friday, stating issues with BHI Trust and implicating Mr. Craig Warriner in fraud. They sent further emails, and we learned he would be in court on Monday. I tried to call them, left messages, but no response. They said they would get back to us. Now, we’re receiving documents from Cawood to be represented in the case. Local & Global have gone quiet, and we’re not getting much communication from them at the moment.

Alec Hogg: Thank you for sharing your personal and saddening story. Hopefully, shedding more light on this Ponzi scheme, the likes of which South Africa hasn’t seen in decades.

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