Evidence shows he roped in R2.9bn just since January 2020, but used less than 20% for legitimate trading. From Moneyweb.
BHI Trust mastermind Craig Warriner was sentenced in the Palm Ridge Commercial Crimes court to 25 years behind bars on Monday for fraud and operating an investment scheme without a licence.
He accepted a plea deal after the state charged him with 207 counts of fraud, corruption and operating without a financial services provider (FSP) licence in contravention of the Financial Advisory and Intermediary Services (Fais) Act.
Read:
Craig Warriner of BHI Trust surrenders to police for alleged fraud
FSCA investigates BHI Trust and Craig Warriner
The scale of the Ponzi scheme operated by Warriner appears much bigger than originally thought.
Evidence provided to the state by the Financial Sector Conduct Authority (FSCA) shows Warriner roped in R2.9 billion just since January 2020, but used less than 20% (R584 million) for legitimate trading.
The balance of roughly 80% was used to repay older clients and to fund his extravagant lifestyle.
The FSCA audit does not include the funds received from clients in the years prior to 2020. Warriner is known to have started trading on behalf of clients – many of them from his St Stithians College Old Boys network – in the 1990s.
This suggests the true scale of the Ponzi scheme, stretching back at least two decades, is likely to be several billion rands higher than this.
Head of enforcement for the FSCA, Gerhard van Deventer, tells Moneyweb the forensic audit had to limit itself to roughly the last four years due to the pressures of time and resources.
Crash, pressure, panic
Warriner, a former insurance salesman-turned day trader, admitted to authorities that he wiped out roughly half his clients’ capital in the 2008 financial crash, but believed he could trade his way back to solvency.
He kept this secret to himself, each month pushing out bogus statements of account while continuing to rope in new funds to pay out older clients.
In October last year he handed himself over to police and admitted he had been running a Ponzi scheme.
He requested a cell by himself after claiming his life had been threatened. Moneyweb understands he has been placed in a cell with several other inmates.
‘Powerful message’
“The FSCA did a very thorough forensic audit and we can say with confidence where the money came from and where it went,” says Van Deventer.
“We made this evidence available to the state prosecutor and this was key in securing the 25 year sentence against Mr Warriner.
“We are especially pleased at the length of the sentence not just for fraud, but for operating without an FSP licence. This sends a very powerful message that operating an unregistered business is a serious offence and with very serious penalties.”
A week ago, Warriner was debarred by the FSCA for 30 years from operating in the financial services sector.
Read: BHI Trust’s Craig Warriner debarred by FSCA for 30 years
The FSCA is currently investigating seven brokers who directed funds to Warriner’s BHI Trust, and recently suspended the licence of Global & Local, which reportedly received up to 5% commissions for channelling funds to Warriner. The regulator will decide the fate of several other brokers in the coming months.
Claims
BHI Trust was liquidated in November 2023 and joint trustees were appointed to see what funds, if any, were available for distribution. An amount of just R4.8 million was found in BHI’s main Nedbank account.
One of the joint trustees, Gert de Wet, told Moneyweb that claims of R1.64 billion had so far been received from 823 investors. De Wet says Warriner cooperated with the trustees and the state.
Read: There’s almost nothing left in the BHI bank account
Says Van Deventer: “He initially brought an application against the FSCA to frustrate our investigation, attacking the validity of our notices and the investigation itself.
“This case never went anywhere, as it was obvious that he needed an FSP licence for the activities he was involved in – and which he did not have.”
Warriner’s attorney told the court that his client would assist the state in recovering assets. The trustees hope to recover some funds after sending out letters of demand to certain investors.
