Skip to content

How The Mighty Have Fallen – Greed, Need, And The Catastrophic Collapse Of MTI

Scam alert

Death and taxes. Conventional wisdom has it that those are the only two things in life we can be sure of.

But after having been involved in the extensive investigation into the recent financial collapse of Mirror Trading International (MTI) on behalf of the Financial Sector Conduct Authority (FSCA), I would like to add a couple more to the list:

  • If it sounds too good to be true, it probably is.
  • If it walks like a duck and talks like a duck, it’s very likely a duck.

I’m adding these for a reason.

The rapid, public and spectacular crash of MTI raises numerous questions, but one of the biggest has to be this:

Why do people fall for these schemes (actually, let’s call a spade a spade – scams) in the first place?

Is it the age-old allure of easy money? Or the irresistible siren song of a get-rich-quick scheme? Perhaps it’s just good, old-fashioned greed.

There must also be, I am sure, an element of being very bad at maths.

Because when you apply mathematical logic to a setup like MTI, there can always only ever be one end result – collapse.

Imagine, for example, you join up today and have to recruit six other participants. Each of those six also has to recruit an additional six people. You only have to repeat this 11 times before you need to more participants than the entire population of America just to keep the scheme making money.

But even if you’re terminally mathematically challenged, or you’re not very business savvy and don’t really understand the mechanics of how money is made, you could still find hundreds of articles online and in the newspapers warning you about the dangers of pyramid schemes.

And if you’re about to argue that MTI isn’t a pyramid scheme, consider this definition from Investopedia:

“A pyramid scheme is an illegal investment scam based on a hierarchical setup of network marketing. New recruits make up the base of the pyramid and provide the funding, or so-called returns, in the form of new money outlays to the earlier investors/recruits structured above them in the scheme. A pyramid scheme relies on the constant inflow of money from additional investors that works its way to the top of the pyramid.”

Sound like any scheme you know?

Furthermore, consider this:

MTI claimed its automated trading programme could yield growth of 0.5 percent to 1.5 percent a day.

Our Consumer Protection Act (CPA) defines anything that offers an effective annual interest rate of at least 20% above the repo rate as a multiplication scheme, and prohibits anyone from directly or indirectly promoting, or knowingly joining or participating in such schemes.

South Africa’s current repo rate is 3.5% per annum. Twenty percent over this would be 23% per annum. MTI was promising up to 550%.

Not to mention, of course, the fact that several warnings were issued from official bodies both here and internationally, including the Texas State Securities Board, Canada’s Autorité des Marchés Financiers, and South Africa’s Financial Sector Conduct Authority (FSCA).

In its warning its August last year, the FSCA recommended that people withdraw their money from MTI “as soon as possible.”

For the most part, those warnings fell on deaf ears.

But although my mind boggles at why savvy investors would want to come within a mile of something like MTI, my heart also goes out to the thousands of desperate souls who ploughed their scant savings into the scheme, hoping it would prove to be the silver bullet they were looking for. A way out of the financial crisis exacerbated by the COVID-19 pandemic, but which turned out instead to be a nightmare from which they may never fully wake.

Which brings me to the man at the centre of all the controversy: MTI CEO, Johann Steynberg, a 37-year-old computer programmer from Polokwane with a dubious past in get-rich-quick schemes.

At time of writing, he was thought to be in hiding in Panama, Brazil or another South American country. Keeping him company is the nine billion Rands of investors’ money he allegedly took with him. No one has heard from him since the middle of December last year, and he left his wife and daughter behind in South Africa to deal with the fallout.

It seems incredible that Steynberg managed to dupe over 280 000 investors worldwide, when he was known to have previously been involved with at least two other network marketing opportunities that went belly-up.

“The thing is, he was upfront about his involvement in these failed ventures: something that won him plaudits for his ‘honesty’ amongst many,” says a man we know only as Gerard, who speaks about his experience with MTI this article. “After all, many of us in the cryptocurrency space have found ourselves victims of scams, and so it was easy to also view him as a victim.”

Gerard goes on to say, “It beggars belief that a man who until recently was held up as a paragon of virtue, a ‘really nice guy’ and a person who stood up for the ‘little guy’ and the financial empowerment of those struggling globally, could instead well be a scamster of note, and someone out only to look after his own personal interests.”

This is sadly such a common lament among people who have fallen victim to fraudulent schemes – the one doing the scamming is so often seen as the quintessential “good guy,” the poster child for helping ordinary people achieve extraordinary things through a little brave investing.

But, as Gerard so poignantly points out, “The real tragedy is all the people who have been left destitute by the collapse of the company. Those who gave up their jobs to work MTI as a full-time business. Those who took out loans on their properties to fund their MTI accounts. Those who cashed in their pensions to maximise their MTI weekly binary commissions…”

So, what is being done to find Johan Steynberg and bring him to book? And what recourse, if any, do MTI’s victims have?

I personally find it very hard to believe that Steynberg was the only one at MTI who knew the full story. Surely his inner circle must have been in on the act, enabling him in some way to get away with what he seemingly has?

Take Cheri Marks, for example, MTI’s head of communications and marketing. She has delivered a highly polished performance right from the start. She continues to deflect critics and the FCSA, maintaining her stance that MTI is doing everything required by the FSCA to prove its legitimacy.

She also states that Steynberg is the only one who can conclusively explain what really happened at MTI.

“I cannot decide what the deciding factor was that led to all of us being here, since so little confirmed or verified information is available,” she said. “The only time I ever had any doubts about MTI was when I saw the FSCA’s report from the 17th December. The answers to all our questions lie with Johann Steynberg.”

The entire saga plays out like the plot of a low-budget movie – which is a little ironic considering how much money is at stake.

In early January, for example, a Zoom call between several members of MTI’s leadership and management was leaked to YouTube and other social media. During the call the chief operating officer of MTI said he was working on an “extraction” plan to bring Steynberg back to South Africa.

Part of this plan involved tricking his wife into signing over control of their silver holdings worth R1.6 million, which would then be used to fund the “extraction” team.

Marks denies all knowledge of these plans and says she has not been in contact with Steynberg since December 14th.

Whether or not there is truth in that remains to be seen. There is definitely no doubt Steynberg is a master manipulator.

In a letter to MTI members in August last year, issued in response to the FSCA’s advice to withdraw money from the scheme as soon as possible, he says, “We are excited about MTI’s future and we look forward to new developments and new heights.”

Three months later, the company was placed into liquidation.

So, what lessons can we learn from the MTI debacle, and how can we protect ourselves from scammers like Steynberg in the future?

Before you invest one cent in any scheme, no matter how legitimate it may seem, look out for these red flags:

  • Interest rates that are “too good to be true” – much higher than those offered by established institutions, such as banks and investment portfolios.
  • Promises of a guaranteed return on investment in a short amount of time.
  • The mandatory requirement to recruit additional members.
  • No link to established organisations.
  • The investment does not disclose how returns are made.
  • The institution running the scheme is not licensed as a financial services provider with the Financial Services Board.
  • There is little or no information or an official mandate or documentation relating to the scheme.

We could also do worse than take this advice from Gerard:

“Being a victim of the MTI scam has taught me a number of lessons. Amongst them:

  • The importance of doing thorough due diligence on any crypto-related platform or business opportunity you’re looking to join.
  • The importance of risk mitigation – invest only funds you can afford to lose, and withdraw your capital as soon as you can so you are essentially “in” risk-free.
  • The need to ask the hard questions that others are not asking. Don’t worry about coming across as ‘silly’ or ‘foolish.’ It’s YOUR money you’re investing so you have the right to ask as many questions as you like.”

Please be careful.