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How The Mighty Have Fallen – The Tragic Tale of Two Ponzi Kingpins

How The Mighty Have Fallen

How The Mighty Have Fallen – The Tragic Tale of Two Ponzi Kingpins

There’s a saying that truth is stranger than fiction, and I would have to agree. But I also believe that truth is often hard to separate from fiction – and nowhere is this truer than in recent reports of the death of founder and CEO of the Mirror Trading International (MTI) Ponzi scheme, Johann Steynberg.

Since his apparent death on April 25th this year, numerous news reports have surfaced on the circumstances surrounding his passing. But there have also been news articles that, to paraphrase Mark Twain, say reports of his death have been greatly exaggerated.

Social media abounds with stories that he has staged his own demise, creating parallels with notorious convicted rapist and murderer Thabo Bester, who famously faked his own death to escape from prison in South Africa. 

Brigadier Nomthandazo Mbambo says the Hawks, who have been investigating the MTI case for the past three years, are now trying to confirm whether the 40-year-old is, in fact, dead.

Apparently, Steynberg was suffering from mental health issues and was diagnosed with severe anxiety just a week before he died. A death certificate allegedly sourced by ICT publication Mybroadband, suggests that he suffered acute respiratory failure followed by sudden death caused by a massive bilateral pulmonary thromboembolism.

He was under house arrest on a Brazilian farm at the time, serving a three-and-a-half-year mitigated jail sentence. He was also awaiting the results of an extradition hearing that would determine whether or not he would be brought back to South Africa to face charges relating to the MTI scandal.

The story takes another strange twist in reports that Steynberg’s “Brazilian wife” told local authorities that he left no will and had no assets to be inventoried. Yet back in South Africa, his legal wife and child are still suffering from the fallout of their husband and father’s deceit, waiting for the outcome of the investigations so they can at last begin to rebuild their shattered lives.

Dead or alive, the entire saga has all the makings of a Hollywood movie. Before his arrest (for using forged identity documents), Steynberg allegedly travelled everywhere by helicopter, was supplied cocaine by the same person who’d given him his fake ID, and bought two properties – one for each of his Brazilian girlfriends (one of whom later became his “wife.”)

Even once he was arrested, he allegedly continued to use his money and influence to ensure his incarceration was as comfortable as possible.

According to reports, accusations made by Maxsuel Miranda das Neves, president of the Goiás Penal System Employees Union, the prison warden and officials allowed Steynberg:


  • Access to the Internet

  • Unrestricted visits from his Brazilian “wife”

  • Visits from at least 17 lawyers

After conducting its investigation, the Goiás Attorney General dismissed these allegations.

But who really knows the truth? I don’t and neither, it would appear, does anyone else.  As I write, there is yet to be absolute confirmation of Steynberg’s death, but one thing is for sure: the MTI scandal was South Africa’s biggest ever Ponzi scheme, and likely one of the biggest globally too.

Estimates are that he absconded with around 7,000 bitcoins – worth about R8.965 billion today. And while he was living it up in Brazil, the people whose money he stole were left to pick up the pieces.

If Johann Steynberg really is dead, any hope of his victims ever getting any of their money back may just have died with him.

But the woes befalling South Africa’s biggest fraudsters don’t end there.

At the end of last month, Craig Warriner, a former insurance salesman-turned day trader, and the mastermind behind the BHI Trust, was sentenced in the Palm Ridge Commercial Crimes court to 25 years behind bars.

The charges?  Over 200 counts of fraud, corruption and operating without a financial services provider (FSP) licence in contravention of the Financial Advisory and Intermediary Services (Fais) Act.

Warriner is an old boy of St Stithians, an elite private school in the affluent northern Johannesburg suburb of Bryanston. This gave him access to many wealthy people and enabled him to make numerous “friends in high places” connections.

Warriner lured in his privileged clientele with his charismatic personality, convincing them that he was an expert day trader who focused only on BHP Billiton and Anglo American stocks. 

He apparently understood their price movements “so well” he was guaranteed to make small profits daily, which he immediately banked.

But things came crashing down towards the end of last year. Initial reports suggested that 206 investors had suffered losses, but fraud investigator Bart Henderson believes the number of victims to be far higher, with total losses in excess of R3 billion.

“The liquidators claim 800 victims and R1.6 billion in losses,” he says. “However, many victims haven’t reported their losses because of a lack of confidence in the liquidators or fear of having to repay previous pay outs. This could easily push the total losses beyond R3 billion.”

Warriner’s lawyer, Piet du Plessis, claims that he didn’t set out to defraud people. Indeed, he was once a highly respected broker, but ran into serious trouble in the 2008 financial crash. After losing about half of the money he’d been entrusted with, he started his Ponzi scheme in an attempt to claw back some of the lost capital.

“He started with good intentions, but once he began losing money, he found himself trapped in a cycle of deception,” du Plessis told the court.

Warriner eventually handed himself over to the police and has apparently been co-operating fully with them and their investigations. As he starts his 25-year sentence in Johannesburg’s notorious “Sun City” prison, you can’t help but be shocked at the contrast to his once lavish lifestyle.

This is a man who used to rub shoulders with South Africa’s political and business elite, host extravagant parties and enjoy many luxury perks.

I can’t imagine, however, that Warriner’s many victims will waste too much time feeling sorry for him.

The BHI Ponzi scheme has left a trail of financial devastation in its wake. So far, only around R100 million in assets has been recovered – a very small percentage of the claims currently in place.

In addition, ongoing investigations continue to unearth more shocking revelations, including the alleged involvement of several financial advisory firms and multiple discrepancies in auditing practices.

There is no doubt that Craig Warriner’s sentencing and considerable jail time sends a significant message to those involved in financial fraud, as well as an encouraging step forward for the people fighting it.

It also, however, shines yet another light on the many vulnerabilities in our financial system, and on the greed, but also sometimes desperation, of Warriner’s victims. Investing in a “too good to be true” scheme is not usually the act of someone in a privileged financial position. This is what makes the massive losses so truly devastating.

Sasfin Securities’ David Shapiro says that the complexity of the case means it will be difficult for those who have lost money to get it back, and our thoughts go out to all the innocent victims of Craig Warriner’s and Johann Steynberg’s greedy, selfish and destructive schemes.

I’d like to leave you with this advice, if I may:

If it sounds too good to be true, it usually is. Please always do your homework before entrusting anyone with your hard-earned cash. The way to make your money make more money is through savvy investing with reputable institutions offering realistic returns.

“There is no such thing as a successful ‘get rich quick’ scheme; investments – like babies – always take a certain amount of time to grow.”

Warren Buffet