Craig Warriner is dubbed South Africa’s Bernie Madoff for running a multi-billion Ponzi scheme involving thousands of wealthy clients.
Last week, Warriner made headlines after he handed himself over to police for running a fraudulent investment scheme through his BHI Trust.
He appeared in the Palm Ridge Magistrates Court in Katlehong, where he represented himself and said he wanted to plead guilty to all charges.
He also waived his right to apply for bail and, therefore, remains in custody. He requested to be moved to a single cell because of death threats from fellow inmates.
Initial information points to Warriner using a Ponzi scheme structure for BHI Trust, essentially robbing Peter to pay Paul.
Biznews founder Alec Hogg reported that Warriner’s marketing message to his elite clientele was that he was an expert day trader who focused on two stocks – BHP Billiton and Anglo American.
He claimed to “understand their price movements so well that he was guaranteed to make small profits daily, which were immediately banked”.
City Press reported that the investment scheme involved more than 2,000 clients who invested over R3 billion.
It added that many investors trusted Warriner with their life savings, and many high-profile financial advisers placed large amounts into the scheme.
Initially, details about Warriner, BHI Trust, and the scheme were sketchy. He had no social media presence, and his company was not well-known publicly.
However, information shared by Cawood Attorneys Incorporated, attorney Caitlin Gottschalk, and media reports shed more light on the controversial fraudster.
The second trustee
Warriner is a St Stithians private school old boy, which gave him access to many wealthy people and good connections.
One of these was Christian Ashcroft, who socialised with Warriner as part of his school’s alumni group.
Ashcroft’s relationship with Warriner grew from a friend to a personal assistant and later as the second trustee of the BHI Trust.
Gottschalk, who serves as his attorney, said Ashcroft was not a businessman and was hoodwinked into becoming a trustee.
“Warriner explained that another trustee became too old to perform his function and asked Ashcroft to become the other trustee,” she said.
“Ashcroft had no clue what this meant, but Warriner was his hero, his mentor. He believed it was a privilege that he had to do it.”
She added that what Warriner did was absolutely despicable and that Ashcroft had lost his entire inheritance as part of the scheme.
Despite claiming to be duped by Warriner and being an innocent victim, Ashcroft may still be criminally liable.
He is now engaging with authorities to secure the BHI Trust’s funds and get the bank account frozen. After being stonewalled, he approached Gottschalk for assistance.
“We are helping him engage with the Commercial Crimes Division and the Hawks. We are busy waiting for the appointment of a curator for the trust,” she said.
The BHI Trust and Warriner’s trading
Werner Cawood, a senior partner at Cawood Attorneys who’s been sucked into the Ponzi scheme and is representing a few of the other victims, provided further details.
Cawood said his financial advisor, who was linked to Warriner from around 2009, introduced him to the fund.
He explained that high-profile financial advisors had their clients invested in the fund and advised them to do so.
“Financial advisors sold this as a very good product. It became like a savings account for many people because your money is accessible quickly and receives fair returns,” he said.
He said many of Warriner’s clients withdrew and deposited funds, and there was never a problem, Most payouts were processed within 24 hours.
“One entity had around R4 million invested, and we got the money out quickly when I needed it. It was a normal withdrawal form that you complete, and your payment is made,” he said.
The fund also did not make substantial returns. It was market-related and, therefore, did not raise alarms among clients or stakeholders.
He said Warriner was trading under or was using the license of Axiom Capital, an FSP license holder with whom he has a full representative capacity.
The bank account of the BHI Trust was at all times being managed by AfriFocus, stockbrokers listed on the JSE.
He said the involvement of regulatory bodies and the fact that most trades involved the top 20 companies listed on the JSE made people trust the scheme.
Warriner provided daily and weekly updates on his trading to all his clients and showed steady returns.
The next steps
The letter from Cawood Attorneys said the financial livelihoods of hundreds, if not thousands, of investors are at risk. They proposed:
- The existing funds and assets of the Trust need to be protected with the court urgently appointing a trustee.
- Proceeding with an urgent application to provisionally sequestrate the BHI Trust to ensure that a provisional trustee is appointed to safeguard the existing funds and assets.
- The Master of the High Court can extend the trustee’s powers to enable them to apply for an urgent insolvency enquiry into the financial affairs of the Trust.
- This enquiry will provide a platform to subpoena all known persons and parties involved with the Trust.
- Cawood Attorneys proposed the appointment of Olga Kotze from Kaapvaal Trust as the provisional trustee of the BHI Trust.
“Our firm also invested funds with the Trust. We will do our utmost to ensure that the events leading up to the current situation will be investigated as soon and as thoroughly as possible,” it said.