City Press has revealed details of a massive Ponzi scheme it says is worthy of infamous Wall Street scamster Bernie Madoff.

Craig Warriner, who is in a Johannesburg prison and had admitted to running the scheme, was a trustee of the BHI Trust, which invested funds on behalf of individuals.

He managed the funds and claimed to have a trading strategy that delivered consistently high returns, irrespective of market conditions.

While the full extent of the fraud has yet to be revealed and the figures verified, investors who are conducting their own investigations reportedly told City Press they believed it involved more than 2 000 clients and amounts of more than R3bn.

Many of these investors had placed their life’s savings in Warriner’s BHI Trust, including pensioners who rely on the fund for an income.

Entire families have now lost their savings, after high-profile financial advisers placed significant amounts of their money into the scheme.

During a court appearance by Warriner,  documented by Cawood Attorneys, he confessed that he had been running the BHI Trust in an irresponsible manner and ‘using the funds of Peter to pay Paul’.

Cawood Attorneys was awarded an interim order to have BHI Trust placed under sequestration last week.

Warriner has chosen to represent himself, has not applied for bail, has pleaded guilty and has asked to be kept in a single prison cell, for fear of being recognised and attacked or killed.

The document of Cawood Attorneys reads: ‘He claimed that he suffered significant losses on investments with trust funds during the 2008 recession. Rather than inform his clients, he tried to trade the available funds of the trust in such a manner as to trade it back into a position of liquidity. In the process, he incurred further substantial losses. He now believes that the trust will not be able to recover from those losses.’

It appears that Warriner voluntarily handed himself in after his partner Christian Ashcroft reported him to the police.

Investors said they had been informed that Ashcroft, the second trustee of the BHI Trust, had tried to make a withdrawal from his fund at the end of September and this withdrawal had been refused by Warriner. 

Ashcroft, who had invested his entire inheritance with the BHI Trust, had then become suspicious of Warriner and told the police of his concerns.

He is being represented by Gottschalk Attorneys and will be making a statement in due course.

The extent to which the authorities and regulators were aware of these activities is unclear, notes City Press.

The Financial Sector Conduct Authority says it will be issuing a statement.

Investigations suggest that several companies and entities will be implicated.

Full City Press report