BHI Ponzi: AfriForum’s intervention halts Warriner trial, unveils massive fraud probe

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.

By Asime Nyide

In a dramatic turn of events, the court case against Craig Warriner, the embattled investment manager at the center of the BHI Trust scandal, has been postponed as AfriForum seeks to represent more investors in the proceedings. The State’s fraud case, alleging a pyramid scheme that defrauded investors of over R1 billion, was adjourned for two weeks to accommodate AfriForum’s involvement.

Warriner, former chair of the Old Boys’ Association of St Stithians College in Johannesburg, appeared in the Palm Ridge Commercial Crimes Court, where it was decided to postpone the case to May 27th, with Warriner remaining in custody.

The allegations against Warriner involve defrauding 220 individuals of approximately R1.2 billion through a decade-long pyramid scheme that collapsed in August last year. Initially expected to enter a plea deal in April, Warriner’s case took a new turn with AfriForum’s request to participate on behalf of additional investors and victims.

AfriForum’s intervention prompted the State prosecutor to seek a postponement, allowing AfriForum to present its contributions and represent more stakeholders in the legal proceedings. Piet du Plessis, Warriner’s legal representative, confirmed the discussions and agreement with the prosecutor, emphasizing the importance of hearing all involved parties.

Meanwhile, the court-appointed trustees of BHI are conducting an independent investigation into the scandal, shedding light on the magnitude of the fraud. With over 1,000 creditors claiming nearly R2 billion against the trust, the trustees have only recovered about R100 million in assets so far.

Read more: BHI Ponzi: The “biggest heist” ever from a Ponzi collapse?

A recent creditors’ report revealed shocking details from Warriner’s admissions during prison interviews. Warriner confessed to diverting investors’ funds, stating, “Money goes in; I take it. People want money out, so I rob Peter to pay Paul,” describing how the scheme turned into a Ponzi pyramid scheme after the 2008 financial crisis.

The investigation’s complexity involves multiple government agencies, including the South African Revenue Services, the Directorate of Priority Crimes Investigations, the Reserve Bank of South Africa, and the Financial Sector Conduct Authority, reflecting the widespread impact of the scandal on regulatory oversight and investor protection.

The trustees’ diligent efforts include seizing data and devices from Global & Local, the investment advisory firm that marketed the trust. This action follows allegations and criminal complaints filed by Global & Local director Michael Haldane against Warriner, despite earlier assurances of the trust’s reliability and profitability.

As the legal battle unfolds, questions linger about the trust’s auditing practices over its two-decade existence. The trustees highlighted discrepancies, noting that the named auditor denied ever auditing the trust, raising concerns about oversight and accountability in financial operations.