The pyramid scheme, which is neither registered with the Reserve Bank, registered stokvel, nor a financial services provider, mainly used social media to recruit members

The details of the scheme, and the interventions that lead to the high court judgement were released in a media briefing by the National Consumer Commission on Tuesday.

The Deputy National Director of Public Prosecutions and head of the Asset Forfeiture Unit (AFU) of the National Prosecuting Authority (NPA), Adv Omar Rabaji-Rasethaba, says there will be criminal prosecutions in the Up Money pyramid scheme which swindled more than 230 000 consumers.

Long list of criminal charges

The criminal charges may include fraud and contraventions of various sections of the Prevention of Organised Crime Act (POCA) like racketeering, money laundering, fraud, theft, assisting another to benefit from proceeds of unlawful activities and acquisition, possession or use of proceeds of unlawful activities, as well as assisting another to benefit from proceeds of unlawful activities.

 

The High Court of South Africa granted the AFU a preservation orders to freeze bank accounts worth more than R18 million and a number of luxury vehicles associated with Jade Ignatius Matsemela, Sipho Martin Mdlhuli, director and former director, respectively, of Up Money, (PTY) Ltd and Uniitco (Pty).

Three luxury vehicles were also attached, an Audi TT, a Hummer H3 and a Jaguar XKR Coupe. These cars were bought directly with funds from the Uniitco (Pty) Ltd (Uniitco) bank account.

Over 220 000 customers were defrauded by the pyramid scheme

The application by the AFU is part of the interventions by the National Consumer Commission (NCC) and the Financial Intelligence Centre (FIC) to salvage more than 228 900 consumers who were defrauded in the multi million Rand scheme.

The pyramid scheme, which is neither registered with the Reserve Bank, registered stokvel, nor a financial services provider, mainly used social media to recruit members.

How did the scheme work?

  • New participants are required to pay a once off joining fee of R180. This qualifies them for a meat pack. They would then have to recruit five other new participants. This is level 1.
  • The original investor then helps the five he or she recruited to sign up their five new members each. This then ensures that the original recruiter moves to level 2. They would benefit from a meat pack, groceries and R500. When those on level 1 are moved to level 2 by their recruits, the original organiser is pushed to level three.
  • At level 3, they get level 2 benefits plus R3000.

The new participants make up the base of the pyramid, then they provide funding for participants who were recruited earlier. Those who joined earlier, are pushed to the top by the new recruits. Thus, pyramid schemes like Up Money are also loosely called push-push.

Over R12.5 million blown at retail stores & on luxury vehicles

Although the scheme had received R42 720 501.82 (Forty-two million seven hundred and twenty thousand five hundred and one rand eighty-two cents) between 4 May 2020 and 2 July 2020, more than R12.5 million was blown through purchases at various retail stores, and buying the three luxury motor vehicles.

The National Credit Commission (NCC) was alerted to the pyramid scheme by a complainant from East London. The Commission’s investigation revealed that Up Money (Pty) Ltd contravened the Consumer Protection Act by promoting and causing members of the public to join and participate in a pyramid scheme.

Following requests from the NCC, the Financial Intelligence Centre (FIC) traced how the funds were laundered through various methods, accounts and transactions.