US authorities said the pair had targeted members of the Orthodox Jewish community in the US and Israel to solicit money to invest in unlisted securities (shares) in property and property holding companies.

The pair had created more than 150 different companies for this purpose, the SEC said, but none of the properties were ever bought.

Instead, the money was diverted to pay off previous investors, pay off their own expenses and finance their lavish lifestyle, which included a corporate jet.

Shereshevsky had invested some of this money in diamond mines in South Africa and Namibia, seemingly in the hope of generating enough profits to cover their mounting losses in the US, the SEC said.

Wextrust's South African director, Michael van der Merwe, who heads up their South African "affiliate" Pure Africa Minerals (PAM), this week denied that he or his company was under investigation.

In spite of a court order obtained by the SEC-appointed receiver to have all Wextrust's assets seized, Van der Merwe insisted that their diamond mining operations in South Africa and Namibia would continue, in spite of "short-term cash-flow constraints."

He was in the process of raising bridging financing from the Israeli RosenRam group, and they intended going ahead with a planned listing on the London Stock Exchange Alternative Investments Market, he said.

But questions remained, not least because of Van der Merwe's own recent spending spree that company sources said included at least 54 properties in Pretoria, game farms and other assets, allegedly all registered in close relatives' names.

Although appointed a Wextrust director last year, Van der Merwe denied that he would in any way be seen as being complicit in Wextrust's collapse and subsequent criminal prosecution for fraud.

Wextrust's legal woes could end plans to develop a diamond mine in Namibia's Skeleton Coast, where PAM's local affiliate Brett Investments had been mining the Toscanini claims on behalf of Malaysian licensees.

The Skeleton Coast's fabled diamond riches have attracted more than their fair share of swindlers: in the 1970s, George Christodoulou (brother of boxing promoter Stan) ran a similar scam that fleeced the likes of Elvis Presley, Alice Cooper and Margaux Hemingway out of millions before disappearing to Cyprus.

The Malaysians have however been all but declared persona non grata in Namibia after their local representative falsely accused Namibian Diamond Commissioner Kennedy Hamutenya of being involved in stealing diamonds off the Toscanini claims.

Brett's local shareholders - which includes several Swapo Party luminaries - this week were scrambling to stop Van der Merwe from selling the mine's most recent diamond production, valued at about N$4 million.

An e-mail from Byers - who like Shereshevsky has been denied bail - to an informant inside Wextrust suggested that income from two diamond mines at Lichtenberg in South Africa and two mines in Namibia was to be used to pay off Wextrust's creditors, according to the SEC charges filed last week in New York.

This, the smaller investors surmised, meant that whatever money raised from the diamond sales would be diverted from local operations to cover Wextrust's losses in the US, estimated to have been in excess of N$7 million a month.

Alarm was also raised over the PAM-appointed general manager at the Toscanini mine, an un-rehabilitated insolvent named Herbert Schubert who was fired from Taeuber & Corssen (Namibia) two years ago for presenting a fake MBA that he claimed was obtained from Oxford University.

A copy of this "MBA" showed that it was in fact issued by "Oxford College", an off-shoot of the Damelin correspondence school.

Schubert's cellphone was switched off and could not be reached for comment.

Other questions remained: Six months after the Malaysians' Toscanini mining licence had expired, the company continues to do what amounts to mining rather than exploration on the Skeleton Coast, raising fears that it was simply targeting only the richest possible deposits.

The only solution, a geologist who had formerly worked in the area suggested, was for the Government to hold all the diamond leases there and put the operator's contract out to tender on 15-year basis.

The risk was otherwise that the resource - a large but low- to medium-quality ore body along Namibia's Skeleton Coast that produced 8 000 carats over the past two years - eventually would become economically unviable to mine, he warned.

The Namibian Ministry of Mines and Energy has so far declined to comment.

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