Gqeberha brokers acquitted without taking the stand

Two Gqeberha stockbrokers accused of running a multimillion-rand Ponzi scheme have walked away free men after the commercial crimes court dismissed all 163 counts against them.

Nearly six years after their arrest, Helping Hand Invest directors Leon Lewitton and Michael Rathbone were acquitted without ever taking the stand.

And while the ruling brings to an end a marathon trial and months of gruelling testimony, a string of investors have been left out of pocket and with no criminal recourse.

Some complainants told the court they had lost thousands of rand.

One family reportedly lost more than R300,000, while Christiaan Engelbrecht previously told The Herald that he had lost his life savings, a total of R1.1m.

But, he said at the time, his biggest burden was that he had convinced his friends to do the same.

Engelbrecht and his family lived in Springbok, a small town in the Northern Cape.

However, the state faced a myriad of problems in proving their case, including “absent” or “unknown” investors, a jurisdiction issue with at least one of the complaints, and the fact that the witnesses admitted to knowing the company was not registered with the Financial Services Board (FSB) at the time.

Defence attorney Alwyn Griebenow had successfully argued under Section 174 of the Criminal Procedure Act (CPA) that the state had failed to present a case strong enough to require a defence.

Lewitton and Rathbone had pleaded not guilty to fraud, theft and contraventions of the Financial Advisory and Intermediary Service Act at the start of the highly publicised trial.

They were accused of defrauding more than 100 investors out of more than R22m between 2017 and 2019.

Though the court sympathised with the investors who had lost their nest eggs, magistrate Nolitha Bara, with the evidence placed before her — or lack thereof — had no option but to dismiss the case against the two men.

Helping Hand Invest had its primary office in Newton Park, with smaller branches elsewhere in the country.

According to the charge sheet, investors were promised guaranteed returns of between 15% and 45% annually through property and vehicle trading, loans and other ventures.

Instead, the prosecution alleged, their money was used to pay salaries, settle debts and fund the men’s personal and often luxurious lifestyles.

The state also argued that Helping Hand Invest operated as a Ponzi scheme, paying one investor with the funds of another until the scheme ultimately collapsed.

But, according to the testimony of the investors themselves, at least two of whom had worked for the company at a stage, the invested money was placed in a private investment pool and then used for various new developments or to buy and sell repossessed property and assets.   

Griebenow further highlighted inconsistencies in the witness testimony and stressed that investors had signed contracts acknowledging that the business was not regulated by the FSB at the time.

He said many payments were made before the company was legally registered in October 2016.

“The money set out in the counts were either part payments or payments in full by the complainants for a product that would enable them to play stocks on the Stock Exchange, Stock Market College, or payments for investment purposes and for payment of the Stock Market College product,” he said.

“The money set out in the undermentioned counts was money the state alleged was paid over for investment purposes, but where the complainants [investors] were unknown.”

He said it was his submission that there was no jurisdiction established for the court to hear some of these counts, such as the one in Springbok.

No centralisation application was brought.

He said the witnesses also confirmed the content of the contracts concluded with the complainants, which read that “the private investor acknowledges that Helping Hand Invest will transfer the funds into the various Private Investment Portfolios at their discretion”.

The court heard how, if a client was interested in investing, a quotation would first be prepared and handed over for scrutiny.

If the client was interested in receiving the quotation to continue with an investment, an appointment would be set up.

An agreement would then be drafted and explained to the client, paragraph by paragraph.

The client signed once satisfied.

“The prosecution must establish a prima facie case against the accused.

“If the evidence of the state witnesses is of such poor quality that it cannot be relied upon, an application for discharge should be granted,” Griebenow argued.

“For the sake of completeness, I find it prudent to state the provisions of Section 174 of the CPA, which provides that if at the close of the state’s case, the court is of the opinion there is no evidence the accused committed the offence referred in the charge sheet, the court may return a verdict of not guilty.

“In deciding whether the accused person is entitled to be discharged, the court may take into account the credibility of the state witnesses.

“Where the evidence of the witnesses is of such poor quality it cannot be safely relied upon, and there is accordingly no credible evidence on record, an application for discharge should be granted.

“The prosecution [at this stage of the matter] must establish a prima facie case against the accused as opposed to the applicable test in criminal cases being that the state must prove its case beyond a reasonable doubt.

“Satisfaction of the cautionary rule does not necessarily warrant a conviction for the ultimate requirement is proof beyond reasonable doubt, and this depends upon an appraisal of all the evidence.

“With the greatest respect this seems to me to be the correct approach in matters of this nature where one finds oneself in a morass of suspect or contradictory evidence.

“Simply because a witness has no apparent motive to lie, it does not follow that they must be telling the truth.

“Indeed, the absence of a motive to lie should not be used to enhance the complainant’s credibility. Likewise, it should not prejudice an accused.”

The defence further contended that the Hawks had crippled the company by seizing its computers and database during their investigation, making it impossible for the business to continue trading.

In the end, the funds could not be retrieved.

“It is also common cause that everything went quite well until the Hawks visited the offices and confiscated all the computers and the whole database of the business.

“It is also common cause that the Hawks told the personnel they were not allowed to continue with the business of Helping Hand.

“The Hawks, by taking away the database of all clients, took away the brain of the business and it was impossible for the accused to operate.”

Bara agreed with Griebenow’s submissions that the state had no case when it came to the “unknown investors” listed in the charge sheet.

She said for those who had contracts, it was explained to them that Helping Hand was not FSB registered at the time.

The company was then given carte blanche to do what it wanted with the contracts.

The majority of the payouts were also not due at the time of the arrests.

The Herald