My Broadband 27th April 2023 by Jan Vermeulen
Acting high court judge Alma de Wet has finally declared Mirror Trading International (MTI) an unlawful scheme.

“MTI’s business clearly amounted to an unlawful Ponzi scheme, i.e. a fraudulent investing scam promising high rates of return to investors and generating returns for earlier investors with investments taken from later investors,” De Wet wrote in her judgement, handed down on Wednesday.

De Wet ruled that statements made by the scheme’s promoters themselves proved it was a pyramid scheme.

She specifically called out MTI CEO Johann Steynberg, communications head Cheri Ward, her husband and 50% shareholder Clynton Marks, and promoter Ignatius Bell as having inadvertently provided evidence that it was a pyramid scheme.

Steynberg traveled to Brazil in the weeks before MTI finally imploded and disappeared. He was arrested almost exactly a year later for allegedly presenting a false passport to police.

A shareholder agreement between Steynberg and Marks shows they each owned 50% of the company.

As spokesperson, Ward publicly defended MTI from criticism in online videos and also posted explanations of how its multi-level marketing scheme worked.

Bell appears to be an early promoter of the scheme. His testimonial is still available on YouTube.

De Wet’s statement regarding the unwitting evidence these three provided is quoted in full below:

On the conspectus of the evidence, it cannot seriously be argued, that MTI did not conduct a pyramid scheme, in contravention of [sections] 42 and 43 of the CPA if one considers the evidence of Steynberg himself, the binary structure explained by Ward during the enquiries and in the public domain, Marks’s explanations at board meetings regarding the growth of membership numbers through teams and leaders, and the evidence of Ignatius Bell who, save for an investment of R7,000.00 on his behalf by Steynberg, made no further investment but recruited investors and had approximately 190 000 investors in his “downline” in the MTI binary system. Based on the MT compensation plan, dependent on the investors recruited by Bell, he was enabled to earn an income of R6 million per month.

Judge Alma-de-Wet
MTI was put into provisional liquidation on 29 December 2020, and De Wet granted a final liquidation order against the scheme on 30 June 2021.

While MTI was still operational, Steynberg claimed it was using an “unregulated broker” called Trade 300 to execute trades on behalf of members.

A preliminary investigation by the Financial Sector Conduct Authority revealed Trade 300 was, in fact, being run by Steynberg himself.

De Wet mentions this finding in her ruling.

“It would appear that there is no pool of members bitcoin, Trade 300 does not exist, the artificial intelligence bot never existed or traded and the remarkable trading results presented to investors were prima facie false,” she concluded.

De Wet also declared all agreements concluded between MTI and its investors unlawful and void ab initio — they are to be treated as if they never existed.

De Wet refused the rest of the relief the liquidators sought, including:

    • An order stating that MTI has been factually insolvent since 18 August 2019.
    • Declaring all funds invested in MTI as dispositions without value in terms of the Insolvency Act.
    • Declaring all dispositions since 23 June 2020 as prejudicial towards certain MTI creditors in terms of the Insolvency Act.
    • An alternative order allowing the liquidators to recover these dispositions from investors.

De Wet also made several costs orders.

    • “By reason of the exceptional facts, the complexity of the matter, the voluminous documents filed… and, to an extent, the novel issues raised, it will be fair in my view, for the purpose of doing justice between the parties, to find that it was reasonable to employ two counsel and to allow the fees of those counsel,” De Wet stated.
    • “During the proceeding various interlocutor applications, ranging from postponement applications, intervention applications, applications to strike out and applications for the stay of the declaratory proceedings pending other proceedings were launched by various parties,” said De Wet.
    • “At the time of the final hearing of the matter the record consisted of more than 7000 pages. Most applications were either settled or withdrawn.”
    • Marks was ordered to pay the costs incurred by his counter-application.
    • A third respondent, Henri Honiball, was ordered to pay the costs for an application to refer the matter to oral evidence.
    • Marks and Honiball were also ordered to pay the costs occasioned by their opposition to the liquidators’ application to have MTI declared an unlawful scheme.

MyBroadband contacted the MTI liquidators, Marks (via Ward), and Bell for comment but they did not immediately respond. Steynberg could not be reached for comment.

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