Tussle expected over spoils from Ponzi scheme

A FIGHT is looming between government law enforcement agencies and investors in the pyramid-type scheme operated by Barry Tannenbaum, over who gets the majority of the spoils from the assets and money recovered by the trustees.

Ian Levitt of Ian Levitt Attorneys, who is representing several investors in the scheme, said the task team established by the government was fighting and assisting the trustees to get as much money in the estate to the ultimate benefit and distribution to creditors.But Levitt stressed that if the government then got the lion’s share of the money in the estate, then there was no point in investors putting themselves at risk with the South African Revenue Service (Sars) and the Reserve Bank.Adrian Lackay, a spokesperson for Sars, said the major focus of the task team was not exclusively to recover funds that were believed to be due to the government, such as undeclared taxes and from contraventions of the exchange control regulations. However, Lackay stressed that if there was criminality, ‘some punitive action must be taken’.He said the extent to which investors were assisted to recover some of their losses was dependent on what assets and money could be preserved and how much was in the pool.The approach that would be taken in distributing the assets and monies recovered would be much like winding up an estate, with creditors lined up and some creditors having preference over others.Lackay added that, if investors co-operated and made statements and affidavits that improved the ability of the task team to preserve assets and monies, then the task team could give assistance to people who had invested their money in the scheme.He said some people who had invested in the scheme were ‘willing to help and talk to us but they do it on the basis of confidentiality’.The task team was set up last month and comprises investigators from the Financial Intelligence Centre, Sars, the SA Reserve Bank, the SA Police Service’s serious economic offences unit and the National Prosecuting Authority (NPA).It was established to co-ordinate the efforts of law enforcement agencies, clarify their terms of reference and to decide on a plan of action for a high-level investigation into serious allegations against Tannenbaum and associated entities. These include possible fraud, money laundering, tax evasion and foreign exchange control violations.Prosecutors from the specialised commercial crime unit are working closely with police detectives to evaluate evidence and determine whether to prosecute any of the people or entities involved in the scheme.The NPA’s asset forfeiture unit is also considering whether any assets can be frozen or forfeited as the proceeds of unlawful activity.Lackay said none of the agencies in the task team had brought any court applications yet to secure any of the assets allegedly linked to the scheme.- Business Report