South African Ponzi Scheme Operators Sentenced in 'Platinum Forex CC' FX Fraud Case

Two suspects behind a major Ponzi scheme have been sentenced to 12 years in prison each—three years suspended—for defrauding investors through an illegal forex trading operation. Colin Davids, founder of Platinum Forex CC, and marketing manager Derek Bredenkamp were convicted on 56 counts of fraud and money laundering involving R5.8 million.

Between 2009 and 2015, the duo solicited R329 million from victims, falsely promising monthly returns of 2% to 8%. Platinum Forex, based in Parow, was not registered as a financial service provider and unlawfully collected funds under the guise of legitimate forex investment.

Despite losing funds through trading, Davids and Bredenkamp issued falsified statements showing annual growth of between 24% to 94%. One investor’s R300,000 deposit was falsely reported to have grown to R4.5 million over four years. In reality, funds from new investors were used to pay earlier ones, while Davids used portions for personal luxury expenses.

The Western Cape High Court granted a preservation order in 2015, enabling the Asset Forfeiture Unit to recover over R90 million, which was refunded to victims. The Financial Intelligence Centre, the Directorate of Priority Crime Investigations, and the Police led the investigation.

Victims have suffered severe financial hardship. Investigating officer Ronald van Niekerk was called as a witness for the state to testify in aggravation of sentencing, who told the court that the funds were meant to be held in trust and for forex trading on behalf of investors, but were misused in a Ponzi scheme.

As reported in May, South African forex trader Mfundo Manci was sentenced to ten years in prison for operating a fraudulent investment scheme that defrauded investors of millions.