Liquidator circles shooter’s investment scheme

30 Jul

Author:  Julius Cobbett

Publications: MoneyWeb

Date Published: 30 July 2012

UPDATE: Lawyer asks for postponement. Judge Burton Fourie will decide on Wednesday

JOHANNESBURG – An investor has applied for the sequestration of Herman Pretorius’s investment scheme. This comes barely four days after the ex-hedge fund boss allegedly shot his former business partner, Julian Williams, before turning the gun on himself.

On Monday Morné Strydom, an attorney at Mostert & Bosman, and client of Herman Pretorius, applied to the Western Cape High Court for the scheme’s sequestration.

Pretorius had been operating an unorthodox investment scheme called the Relative Value Arbitrage Fund (RVAF). The scheme had reported returns in the region of 20% a year for at least the past five years. If genuine, these returns would rank Pretorius among the country’s best money managers. However, the RVAF had no independent verification of returns. This did not seem to bother Pretorius’s loyal investors.

Moneyweb has in its possession two different types of statements from the RVAF. In one the scheme is labelled an “en commandite partnership”, and in another it is the “RVAF Trust”.

On Monday many of Pretorius’s investors received a letter from liquidator Lambertus Von Wielligh Bester from the firmProgressive Administration. The letter was addressed to investors in and creditors of the “RVAF Trust”, registration number IT 932/2004. This is the same registration number that appears in the top right-hand corner of investor statements in which the RVAF is labeled a trust.

Von Wielligh Bester wrote: “We wish to confirm that an application for the sequestration of this trust will be heard in the Cape Town High Court on Tuesday, July 31, 2012.

“If a sequestration order is granted, the Master of the High Court will appoint a curator to manage the affairs of the trust.”

Von Wielligh Bester offered himself as curator to investors. Absent from Von Wielligh Bester’s letter were reasons why he considers himself best suited for the curatorship position.

Von Wielligh Bester asked investors to fill out an attached requisition form which calls for his nomination as curator.

The sequestration application does not bode well for investors. Few sequestrations, liquidations or curatorships of investment schemes have happy endings. They are usually drawn-out affairs that can take years to unwind. The fees of liquidators’ or curators’ and their lawyers can seriously erode any eventual payment to investors and creditors. In some cases liquidators take legal action against investors who received interest payments and withdrawals from a scheme. The failed investment schemes Krion and MoneySkills are examples where this has happened.

UPDATE:
A further letter distributed by Von Wielligh Bester to investors states: “Our switchboard has since been swamped with telephone calls at a rate of more than 120 per hour. At times our switchboard and answering machine are unable to handle these volumes and it has become impossible for writer to immediately respond to queries and reply to messages. Please have regard to the fact that there are approximately 3 000 investors.”

The application to sequestrate was heard before Judge Burton Fourie. A lawyer representing an investor asked Judge Fourie to postpone the matter by a week to give investors time to decide whether to oppose or support the application.

Fourie will announce his decision on Wednesday morning.

 

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