Although Craig Warriner confessed that he ran BHI Trust as a Ponzi and was recently sentenced to 25 years in prison, it means nothing to the Smith family.
The family lost millions in what they believed was a legitimate investment recommended by a family member who is an expert.
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Read: BHI’s Craig Warriner nailed for 25 years by FSCA forensic audit
Around 2 000 investors lost about R3 billion they invested in BHI Trust that Warriner (60), instead of investing, used to pay interest to earlier investors. He was sentenced to 25 years for fraud recently in the Palm Ridge Commercial Crimes Court after concluding a plea deal.
He handed himself over to police in October last year, confessing to fraud and misusing the trust’s funds irresponsibly for 22 years. The Financial Sector Conduct Authority (FSCA) also barred him for 30 years after investigating the conduct of the BHI Trust and Warriner between 7 February 2013 and 30 September 2023.
Read: BHI Trust’s Craig Warriner debarred by FSCA for 30 years
Warriner was sentenced to 15 years for each of 38 counts (570 years) but these will run concurrently. For the remaining counts except count 207, he was sentenced to another 15 years of which he will serve 10 years concurrently with the first sentence. He was also sentenced to 10 years on count 207 which will also be served concurrently with the first and second sentences.
His debarment means that he will not be allowed to provide or be involved in the provision of financial services, act as a key person of a financial institution or provide specified financial services to a financial institution, whether under outsourcing or otherwise.
Jail time of 25 years is ‘nothing’
However, the Smith family does not care much for the sentence or the debarment. Bruce (81) and Karin (58) Smith lost R1.4 million of their savings. Bruce’s daughter lost R5.5 million. Bruce’s ex-wife also lost money, but does not want to disclose how much, while his son and his sons in-laws also lost a substantial amount.
Bruce says Warriner will probably be out in 12 years. “In twelve years, my daughter will be 66 and she will have nothing. Not one cent. She is now working contract and cannot afford to save. All her retirement savings are gone. A sentence of 25 years sounds like great punishment, but it is not.”
His son now has to look after his mother because she was left without a cent as well as his in-laws.
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Karin is very bitter about what happened. The family member whose investment club recommended that BHI Trust is a good investment shrugs his shoulders when asked about it. He took all his money out for something else before the scheme came crashing down. “Nobody speaks to him now and he wants to know nothing about us.”
Warriner founded and managed BHI Trust and lived a high life, rubbing shoulders with the elite of Johannesburg.
He was also the former chair of the Old Boys’ Association of St Stithians College. This was a far cry from the man who appeared in court wearing a black T-shirt and sleeveless jersey.
He pleaded guilty to 207 counts of fraud, corruption and practising without a financial services provider license in violation of the Financial Advisory and Intermediary Services Act. Evidence in court showed Warriner used less than 20% of the funds invested in BHI Trust for legitimate trading.
Warriner left hundreds of investors in ruin
He left hundreds of investors in financial ruin when the trust collapsed in August last year. His lawyer, Piet du Plessis, told the court how Warriner turned to fraudulent practices after losing about half of the capital invested.
Warriner told the court that he was “doing alright” as an equity investor until the financial crash of 2008, when he lost roughly half his clients’ capital.
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He believed he could trade his way out of this but ended up faking it for another decade and a half, using the funds of Peter to pay Paul, as he describes it himself.
Du Plessis said Warriner did not initially plan to defraud investors but as his financial troubles worsened, he resorted to a Ponzi scheme. “He started with good intentions, but once he began losing money, he found himself trapped in a cycle of deception,” du Plessis argued.
He also pointed out to the court that Warriner handed himself over to authorities and cooperated fully with the investigation that followed. Captain Ernest Khangale, lead investigator on the case, confirmed Warriner’s full cooperation.
Warriner admitted that he ran the trust without having a financial services license and confessed to misusing investor funds. The FSCA also indicated that Warriner gave his full cooperation.
Gert de Wet, one of the court-appointed trustees told Moneyweb that Warriner previously admitted to authorities that he defrauded roughly 220 people of R1.18 billion, but the trustees’ latest figure is much bigger: R1.64 billion from 823 investors and the figure is growing.
The big question remains: where is the money? Investigators could only find R4.8 million in BHI Trust’s main Nedbank account.
Two more arrested in Warriner’s Ponzi scheme case
The FSCA expanded the scope of its investigation of BHI Trust last year in November to include financial services providers who may have encouraged investors to invest in the Trust’s products.
“The main focus of this part of the investigation is to determine whether these providers acted with due care and diligence and considered suitability and risk when advising their clients. It is also not permissible for financial services providers to recommend financial products that are not issued by licensed entities,” the FSCA said then.
Earlier this month, the Hawks Serious Commercial Crime Investigation unit arrested Sona Pillay (54) and Michael Philip Adam Haldane (55) who are implicated in the BHI Trust case.
According to a police statement, Pillay was arrested on Friday, 31 May 2024, after he attempted to flee overseas where he was refused entry and sent back to South Africa where he found the Hawks’ investigating team waiting for him at the OR Tambo International Airport.
Haldane handed himself over to police on the morning of 3 June 2024. Pillay and Haldane then appeared in the Palm Ridge Specialised Commercial Crimes Court sitting in Palm Ridge Magistrates Court. They were granted bail of R100 000 each on 10 June.
It is expected that more individuals will be arrested in this case.
This article was first published in The Citizen here.
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