The extent of the alleged fraud in the scheme, which promised wild returns of up to 90% a year in the case of investor Christopher Leppan, is unknown. It was based on the apparent import and sale of ingredients for anti-AIDS drugs to companies including Aspen Pharmacare and Adcock Ingram.
Tannenbaums father, Harold, was an Adcock founder. Highprofile victims of the scheme include former Pick n Pay CEO Sean Summers, former JSE chairman Norman Lowenthal and former Bond Exchange of SA CEO Tom Lawless.
Reports say there could be at least 400 victims.
Documents published on a website by Goldblatts firm show that Barwa, a real estate company based in Doha, Qatar, negotiated to invest 40m in the scheme run by Tannenbaum, who lives in Sydney. Some of investors are too embarrassed even to get involved, said Ian Levitt, Leppans attorney.
In the style of US swindler Bernard Madoff, Tannenbaums scheme took money from new investors to pay long-standing clients. It collapsed last month when it ran out of new investors, the Financial Mail reported yesterday.
Investors hired Goldblatt a month ago to check if the scheme was legitimate. He met Dean Rees, Tannenbaums representative in SA, and Routledge Modise partner Warren Drue. Rees and Drue could not be reached yesterday.
There were various representations that were problematic, Goldblatt said. In normal business practice, if one has a debtor of the likes of Aspen, Adcock, one would be able to raise finance through banks at very preferable rates. That was the first telltale sign.
Some investors played down the losses.
Its got nothing to do with anybody. Its my own private funds, Summers told Business Day last night.
In life you take many decisions and unfortunately thats just the journey of life. At the end of the day youre as human as the next.
Investors face loss of their money and perhaps also prosecution. Pyramid schemes are illegal. If you take part, you are also part of illegal activity, said Financial Services Board (FSB) spokesman Russel Michaels. It was up to the Department of Trade and Industry, which combats malpractices such as pyramid and Ponzi schemes, to lay a complaint with police.
The FSBs concern was possible contravention of the Financial Advisory and Intermediary Services Act.
The Financial Intelligence Centre and South African Reserve Bank said they were investigating.