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

The billions gambled away by self-confessed Ponzi operator Craig Warriner were sourced through high-profile financial companies, whose endorsement provided the credibility the St Stithians old boy's criminal enterprise needed. In this fascinating interview, Pretoria attorney Werner Cawood the only victim present when Warriner appeared in a small Katlehong municipal court last week, explains what happened there – and how his firm was sucked into investing with the fraudster's front company, BHI Trust. Cawood is representing over 100 fellow victims and has applied for the sequestration of the BHI Trust to protect whatever remains of the operation run out of 4 Gremlin Road in Sandton – including data that will implicate the enabling companies. He told Alec Hogg of BizNews that this will help victims go after them. – Alec Hogg.Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here..Watch here.Relevant timestamps from the interview.00:09 – Introductions01:45 – Werner Cawood on how he came to be involved with Warriner03:25 – The amounts he invested with Warriner04:51 – how did you pick up on when you heard about his business model08:45 – How much, by your estimate, could this Ponzi scheme have have embraced09:50 – What happened in Warriners hearing at municipal court13:32 – Why he applied for the sequestration of the trust.15:35 – Axiom capital16:38 – Is the money at risk17:50 – Christian Ashcroft19:35 – His Impression of Warriner20:27 – Why he invested with Warriner21:32 – Are any of your clients involved with this22:40 – Where to from here23:38 – Conclusions.Listen here.Cawood's Founding Affidavit – Ponzi enablers exposed.Download PDFFOUNDING-AFFIDAVITDownload.Edited transcript of the interview between Alec Hogg and Pretoria attorney Werner Cawood.Alec Hogg: Well, in Undictated, we like to get to the story, the context, as we always say, get context no more. And today we're going to be talking to Werner Cawood. He's the senior partner at Cawood Attorneys and one of those who's been sucked into the Craig Warriner Ponzi scheme, so it seems. Mr. Cawood is representing a few of the other victims. So we'll be getting his story and where. All of those who've lost so much, supposedly somewhere around three billion Rand, are going to get their satisfaction, if not their money. Thanks for joining us, Mr. Cawood. It must have been a hectic few days for you, given what has happened, but maybe let's just start off at the obvious place, which is this fellow, Craig Roy Werner. Now we know from other sources that he was pretty predatory within the people at St. Stithian School, which he gave a lot of money to. Are you an old boy of that school?.Werner Cawood: No, Alec, I'm born and bred in Potchefstroom, so I studied there at the University in Potchefstroom, so I've got no affiliation with that school..Alec Hogg: So it wasn't the case of going to the one and all restaurant, which apparently he funded and did quite a lot of his business at. So how did you get to be involved with Warriner?.Werner Cawood: Yeah, so, it's been, I would say, from about 2018. My financial advisor, they were involved with him for, since about 2009, I think. So they were introduced by one of the largest brokers in South Africa to this product. Global and Local is the broker that introduced them. And I started with this fund in 2009, and none of the clients have ever had an issue to receive any payouts. And I mean, the fund didn't make substantial returns. It was market-related. The product made sense to me. At the time, obviously now with hindsight, I might feel different, but yeah, with the trust that was in the product at the time, I got involved in 2018 and had some funds in and got my money out. Yeah, so my firm actually got involved in 2021. So that is, but yeah, it's been years..Read more: UNDICTATED: The '95 Bok; Paul O'Sullivan; Carte Blanche: and R50m codeine scam.Alec Hogg: That's interesting. So 2018 was your first exposure. You say you made an investment, you got your money out, and that has probably gave you confidence that it's worth putting some of your firm's money in as well. Can you quantify the amounts that you've invested with Mr. Warriner? Sorry, not Mr. Warriner. We call him Warriner because he's now in jail. So he's lost the right to be a Mr..Werner Cawood: I agree. Yeah, look, I mean, it's different entities. You know, it's difficult for me to say, I've been so focused on just getting the legal side of things done. You know, I need to go into my records with regards to that, but it was millions. You know, I recall one entity that I had about 4 million in and got my money out when I needed it fairly quickly with a normal withdrawal form that you complete and then your payment is made..Alec Hogg: So it all looked pretty legitimate. I guess with hindsight, as you say, I was having a look through your affidavit for the sequestration of the trust, and we'll talk about that in a moment. It's pretty clear that it was a Ponzi scheme with hindsight for people like me who deal with these criminals often. In the period, he made profits every month, accepting, well, 8% of them. So here and there he lost tiny amounts, I think his biggest loss of a month was under 1%. But then every other month he would make between 1 and 2%. And hence it gave the investors perhaps confidence that the business model that he was selling them was legitimate. How did you pick up on when you heard about his business model? Maybe you can just give us your understanding of how it worked and why it gave you that confidence..Werner Cawood: Yeah, so basically, Warriner was trading under or he was using the license of Axiom Capital, which is a FSP license that he has a full representative capacity on. So he then indicated he's using or under that license, he's the fund manager. Okay. And then the bank account of BHI was at all times being managed by a company called AfriFocus. They are stockbrokers listed on the JSE. So the bank account is under their profile. That's how I understand it and that's how I still understand it. So in my mind, there's a regulatory authorities involved with not only on the JSE side, but also on the financial side with the FSP, although it was indicated that it's not a regulated product in the documentation, those are the parties involved. Do you think because it's daily trades is doing only on top 20, I think it was top 20 blue chip stocks, daily trading he was doing, it provided comfort we also had a mandate from him that he cannot trade more than 30% of the time of this fund. So 70% of the funds in my mind were in all at all times in the bank account that's being managed by a stockbroker on the JSE. So he could try 30% of the total fund daily. So it's money out the morning, it's money back the afternoon. And then further He provided daily and weekly updates on the progress of his trading to all his, you know, to my broker, you know, so that happened with them since 2009. So I was satisfied at the time, but like I'm saying, everybody has his opinion now, but it's all hindsight. You know, these big business men, competent, knowledgeable business people that have put their money into this fund and it was backed by the biggest brokers in South Africa..Alec Hogg: So we have an organisation called Global and Local, and then you have your broker, your financial advisor, and you've mentioned Axiom Capital. I looked up Axiom Capital, and it's a very impressive website. I've never heard of the guys, by the way. I'd never heard of Craig Warren either. So I'm not sure whether I'm out of touch or whether he operated below the radar, like Bernie Madoff did on Wall Street. But it all seems quite impressive, except when you start looking at the detail. And something that jumped out at me was in the, in the report or in the, uh, the sheet that they gave on the way that they operated, they, he said that he dealt in, I think it was eight, uh, stocks, including Richmond and there is no Richmond is If you legitimate, you'll never make that mistake. A Richmond versus Richmond versus Richmond and so on. But I guess these are all little clues that we, we pick up on later. The more important thing right now is how much is involved here? How much by your estimate could this Ponzi scheme have embraced?.Werner Cawood: Obviously, I don't have the facts at the moment, but I mean, we're all estimating it in the billions. So I would say, you know, definitely around two billion. I'm not sure we don't have the facts. It will all come out in due course, but yeah, it's a lot of investment..Alec Hogg: And this broker, global and local, is interesting. Is that also in Pretoria, in the area where you're based?.Werner Cawood: No, no, they're based in I think they close to more park or hospital they there in a building.Alec Hogg: Okay. Because again, a lot of the, of the clients that, uh, that we've been approached by were St. Stithians. So it was almost like he had that sweet spot at St. Stithians, but then clearly after 2009, uh, branched out, you went along to the municipal court to hear what, uh, I suppose what Warren's story was. Can you just enlighten us what happened there?.Werner Cawood: Yeah, so on the day the prosecutor that started with the case was not, he was on leave. So there was a substitute prosecutor dealing with the matter. You know, so he could give little information before the matter got heard. There wasn't a lot of time to speak to him, but when the case was obviously called and the magistrate indicated that the purpose of this court hearing today is basically to allow him or to let him reconsider if he wants to appoint an attorney. So he indicated he does not want an attorney. He again confirmed that he does not want bail. And then the magistrate wanted to postpone the case, or she indicated she's postponing the case to the 29th of November for further investigation. And at that point in time, he then started, or indicated he's already confirmed he wants to plead guilty to everything. Doesn't matter to him what the charges are. He does not want bail. He does not want an attorney. So he doesn't understand why the process now needs to be postponed for investigations. He can plead guilty today. And sentencing can be extended to a further period then. And the magistrate then confirmed that the state, the case is in its infant phase. The state doesn't have all the information. The state needs to compile proper charges. There's multiple charges. It's a complex matter..He cannot plead guilty at this point until the state has finalised their investigation. So, yeah, basically then he accepted that explanation and he had some story about his leg being hurt and he's getting death threats from other inmates. He's in a joint cell and he wants to be transferred to a single cell. He is being out at some city in Johannesburg. That was also confirmed in the court. So, yeah, and then the matter was postponed. So afterwards I had some informal discussions with the interim prosecutor and that's where, you know, I got the further details that he's handed himself over, that it is to do with the BHI trust that he indicated as before heard in the past week, but I mean, I heard it firsthand that he handed himself over. He made losses in 2008 with the fund. He didn't tell anybody. He continued trading with the hope he's going to trade himself out or the fund out of its situation. And in the process, he just lost further money to a point where the trust cannot recover from it. So, yeah, in my mind, obviously because he handed himself over, there was no investigation prior to him handing himself over. And the state had just as little information as we currently have today..Alec Hogg: You have applied for the sequestration of the trust. What's the thinking there?.Werner Cawood: The sequestration of the trust will lead to the mechanisms of the insolvency act kicking in. The master will appoint a liquidator as a trustee to then take control and charge of all the assets of the trust. So that's the first step, so it's safeguarding the assets. With this interim order that I sought, that will secure the safeguarding of the assets, whatever they ease in the trust. That can also lead to urgent investigations, insolvency inquiries. There can be, I mean, the trustee can approach the court. He can obtain extended powers in order to start with investigation. So that can happen fairly quickly. It can all happen with urgent court orders. And then a proper investigation can kick off. Warriner will obviously be testifying a lot..But all the individuals involved with these other entities we've been talking about, they will need to come and give evidence on the oath. And that evidence can be used to support the criminal investigation, it can be used to go after assets in other entities, it can be used to make recoveries for the trust, can be potentially damages claims that's arising here that can be pursued. So the whole idea of letting the mechanisms of the insolvency kick in as quickly as possible is to get behind the truth of what happened..Read more: Day-trading Ferrari and Jet owner Warriner cost clients R3bn. Maybe more.Alec Hogg: I presume that would also secure the information, because there must be a lot of data there. He must have computers or something that would then enable people like yourself, who are victims of this, to understand better and to look for recourse, which I presume would be those organisations of which he claimed to be an agent, particularly this Axiom Capital..Werner Cawood: No, 100%. I mean, the trustee can, it's called section 69 applications, that search and seizure orders that's obtained. And those orders get executed by, you know, IT teams, the police in conjunction with the police and the trustee involved. So yeah, those, the evidence can certainly be collected..Alec Hogg: Now, David Shapiro made a very interesting comment, which I'd love you as an attorney and as a person involved here to give us some feedback on. He said that as this guy had been trading recklessly, um, since 2008 by his own admission, any money that he paid out subsequent to that could be disgorged in the same way as it happened with Bernie Madoff. Is that the law in South Africa?.In other words, from your own perspective, the fact that in 2018 you put money in, you took money out, or you got your money out, might that be at risk?.Werner Cawood: Yeah, look, the insolvency act goes back six months automatically prior to the sequestration where any, it's called undue preference. So that undue preference that somebody received with a payout can be recovered six months prior to the sequestration without a court order. So if the liquidator or the trustee in this case wants to go further than the six months period that would be on court application, motivating the situation to a judge. And if a judge is satisfied to go further back than the six month period, normally, the first step is to go back two years, then if the court agrees to such an order. So then two years is the next norm, and if there's further evidence, yeah, a court can always grant orders to go back further than that..Alec Hogg: Hectic stuff. There were two trustees of BHITrust. The other one is a chap called Christian Ashcroft. Do you know much about him?.Werner Cawood: Yeah, so look, what I've managed to find out and confirm as the fact is he's the one that laid the charge against Warriner. So he apparently had approximately 1.5 million of his own funds in the BHI Trust. And yes, I made contact with his attorney or she made contact with me this week Tuesday in the evening. I don't know how she got my application because my application was brought ex parte. It was explicitly brought on a ex parte basis because, you know, notice can potentially impede with the investigation. So I don't know how she got my application, but in any event, I made contact with her and she essentially confirmed that her client being Ashcraft you know, is not against the provisional sequestration of the trust. So that is what I currently, the facts that we have, we don't know anything further than that, but yeah, so it seems he's the word or the complainant from the beginning..Alec Hogg: When you saw Warren at the magistrate's court, had you seen him? Tell us what he looks like, because I've got conflicting views. The one group of people say he was a swimmer at school and a real bully. Another group says his name is Fatty, and he drinks prodigious amounts of alcohol when he's not driving his Ferrari or flying in his private jet. What was your impression of this fellow when you saw him?.Werner Cawood: Yeah, he's a big man, he's very overweight, he's bald, you know, he was in court in a t-shirt and like a sweatshirt, you know, he doesn't look like anybody, I don't know, because he's obviously not convicted, he's not in the orange suit, so he's in his normal civil clothes, but I mean my impression was a friendly giant. He doesn't have a very aggressive demeanour about him, but that was my impression..Read more: Markus Jooste? No Justice. Cyril Ramaphosa? No Accountability. "Super Pact"? No Thanks. – Themba Godi.Alec Hogg: Have you met him before?.Werner Cawood: No..Alec Hogg: And maybe you can explain why you invested with him in the first place..Werner Cawood: Yeah, basically, as I explained through the years that my financial advisors has been working or having their clients invested in the fund and the introduction from their side coming from the biggest broker in South Africa. Selling this as a very good product. You know, it started to become like a savings account for a lot of people because your money is accessible fairly quickly and you get some returns, not massive returns, so yeah. It's basically on reputation that I made the decision, not on anything else..Alec Hogg: And Mr. Cawood, as you have explained to us in the conversation with David Shapiro and I, we thought that, or rather it was intimated that you would have told your clients also to put money in there. That's not the case at all. It was, it was your firm's money that was invested there as a, as a reserve, I guess, as a savings account, as you've now explained, nothing to do. You did not put any of your clients' money in..Werner Cawood: That's correct. No, there's no clients of mine that are involved with this. I've subsequently, there's been mandates coming from investors across South Africa, because basically because I got the information first. There was nobody else in court on the 18th. It was only me. I specifically, it's not a big court. There's only I think four or five rows. It's a small commercial crimes court and you could see that nobody in that court had any knowledge of who this person is that was appearing. So yeah, that's led to a lot of people coming to me and I've updated everyone on where I'm standing with my process..Alec Hogg: A lot of people? Can you quantify how many when you say a lot of people?.Werner Cawood: In the odds of about, it's over a hundred..Alec Hogg: It's really a story, this one. So thank you, Mr. Cawood for sharing that with us. Just to close off with what's the next step from your perspective, because you now got a hundred people that you're representing. Where do you go to from here?.Werner Cawood: Yeah, look, my purpose now is to firstly allow the master will make the appointment. And we believe it will be made imminently within the next either today or earlier next week. And then from my side, I'm just securing and registering everybody as a creditor with the just compiling everybody's claim documents, the paperwork, getting that sorted, and then working very closely with the trustee in order to investigate. I mean, any creditor is allowed to partake in a insolvency inquiry and ask their own questions. So my intention is firstly to get the investigation done as quickly as possible so that we have more facts and that's if parties other parties are involved that we go after it, basically follow the money..Alec Hogg: Werner Cawood is the senior partner of Cawood Attorneys. I'm Alec Hogg from BizNews.com..Letter from Cawood Attorneys – RE: BHI Trust and Craig Roy Warriner.Download PDF231027-LETTER-TO-BIZNEWS-Download.Read also:.Mailbox: Why I support Cape Independence (and you should to)Shocking census 2022 results: Has Cape Town overtaken Joburg as SA's biggest city?SAPS: The ANC's "Iron Fist" with Ian Cameron

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

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