Man linked to R2.9 billion South African Ponzi scheme fined R1.5 million and debarred for 20 years

The Financial Sector Conduct Authority (FSCA) has imposed a R1.5 million fine on Ian Roscoe, who was linked to the BHI Trust Investment scheme run by Ponzi king Craig Warriner.

Roscoe was also debarred for a period of 20 years. This comes shortly after Warriner was also fined and debarred by the FSCA.

Dubbed “South Africa’s Bernie Madoff”, Warriner ran this scheme using his strong social network to raise money from thousands of wealthy clients.

Warriner offered these clients three fictitious investment strategies – the BHI Strategy, BHI Plus, and the BHI International Strategy.

He told his clients that he was an expert day trader focused on the stocks of two global mining giants, BHP Billiton and Anglo American.

Warriner claimed to “understand their price movements so well that he was guaranteed to make small profits daily, which were immediately banked”.

However, during an investigation, the FSCA found that this was nothing more than a Ponzi scheme.

Of the R2.9 billion Warriner received from clients, only R584 million was invested in a legitimate investment vehicle.

The remaining funds were held in a money market account and used to pay returns to other investors in a Ponzi scheme fashion and fund Warriner’s extravagant lifestyle.

Warriner ultimately surrendered himself to the police and was found guilty of 207 counts of fraud.

He was sentenced to 537 years of imprisonment, which ended up as an effective 25 years, and was debarred by the FSCA for 30 years from providing financial services.

On Thursday, 9 April, the FSCA announced that it had also taken regulatory action against Roscoe, following an investigation that found he had rendered intermediary services that resulted in his clients investing in the BHI Trust.

The FSCA explained that BHI Trust and Warriner were previously found to have contravened the Financial Advisory and Intermediary Services (FAIS) Act when they acted as discretionary financial services providers (FSPs).

“At the time that Mr Roscoe rendered the intermediary services, he was not authorised as an FSP. Therefore, Mr Roscoe contravened section 7(1) of the FAIS Act,” the regulator explained.