Lotto Winner Nightmare

Lotto winners’ nightmare

IOL news lotto players001
Independent Newspapers
Two lotto winners have lost R27 million between them after an accredited bank official invested their winnings in a fraudulent share scheme. Photo: Simphiwe Mbokazi
It was tata ma millions for two national lottery winners when they trusted an accredited Standard Bank financial advisor to invest their winnings of R27 million.
The two Lotto winners, whose names have been withheld, are in the process of filing papers against Standard Bank in a bid to get their winnings back.
Standard Bank confirms that financial advisor Arno Döckel was in its employ at the time. But the bank claims the deal with the Lotto winners was made in Döckel’s private capacity and it cannot be held liable. The bank says Döckel’s deals fell outside the scope of his employment contract.
“The terms and conditions of his employment contract made it clear that he was only permitted to market a range of approved product categories, which consisted of life assurance policies, unit trusts and other collective investments,” the bank said in a statement.
“(Döckel) was precluded from acting as an intermediary in the sale of either listed or unlisted equities by his employment contract, FAIS and the Stock Exchange Control Act. At no stage did he request permission from Standard Bank to do so. Any such request would have been refused.”
The bank has not pursued any action against Döckel despite the fact that the same contract specifically prohibits its financial advisors from entering into private deals such as those concluded with the Lotto winners while in the employ of the bank.
Court papers are expected to be filed in the Western Cape High Court this week.
The court will hear that the lottery windfall was diverted into a complex and opaque series of share transactions that had the net result of enriching Döckel at the expense of the mining company Kimberley Consolidated Mining (KCM), into which it was supposedly invested.
KCM is in a process of liquidation that is being stringently challenged by a group of shareholders who claim the entity’s assets were emptied out in a series of questionable equity manoeuvres by a group of directors, which also includes another former Standard Bank financial advisor.
A KCM shareholder, who asked not to be named, said Döckel received 10 percent commission for “raising capital”.
“The two winners were advised by Standard Bank when they won the Lotto and both were referred by Standard Bank to their employee, Döckel,” he said. “The money was transferred to Döckel’s company Stone Gecko, which acted as a fundraiser for KCM.”
However, despite their massive investment, the Lotto winners never received share certificates in either Stone Gecko or KCM to guarantee their contribution. The understanding was that Stone Gecko was merely a vehicle for transferring funds ahead of a listing on the Johannesburg Stock Exchange’s Alternative Exchange (AltX).
“The winners have no share certificates or documentation regarding these investments,” the KCM shareholder said.
KCM was in the headlines late in 2010 when disaffected shareholders represented by former KCM director Johann Cilliers secured interdicts forbidding sale of a rare pink diamond found at KCM’s Bo Karoo diggings near Upington; then, when it emerged the diamond had already been sold for about R40 million, ordering that the proceeds be placed into a trust pending the outcome of legal proceedings.
A liquidator is expected to outline the way forward for the mining company on Monday.
In October several of the bank’s clients were sold shares in diamond mining companies where the advisers served as directors and shareholders.
Several of these clients have said they were led to believe that their investments were supported by Standard Bank as an institution. Standard Bank says this was not the case.
At the time, Döckel was mentioned alongside then-fellow Standard Bank adviser Hein le Riche, a former KCM shareholder. One client, theatre impresario Pieter Toerien, recently won a Western Cape High Court case against Döckel related to a R5 million deal.
Several attempts to reach Döckel on all his listed numbers failed. The Cape Times was repeatedly told he had left office spaces “several months ago” or that the number that was listed was incorrect.
Victims say deals were concluded at the bank’s Helderberg premises. Senior bank managers are on record as having advised clients to pursue investments in KCM proposed by Döckel and Le Riche. But Standard Bank continues to distance itself from the events that followed.
“At no stage did Döckel request permission from Standard Bank. Any such request would have been refused,” said the bank.
It said Döckel did enter into private contracts with four Standard bank clients “in terms of which (these clients) agreed to purchase some of the shares that he had earlier bought in KCM”.
“These contracts clearly showed that they in no way involved Standard Bank and these clients have confirmed that Standard Bank was not involved. These transactions would have been identified and prevented, in the normal course of business, had they been conducted under the banner of Standard Bank.
“(Standard Bank) subjects all transactions to the meticulous scrutiny of its advice, product and planning evaluation process. This rigorous procedure examines the financial needs analysis, compliance documentation, appropriateness of advice and the products or solutions offered on all transactions.”
The bank was not aware of any court action against it.
Thembi Tulwana, spokeswomen for National Lottery Operator Gidani, said it was bound to offer emotional counselling and financial advice for winnings of R50 000 or more. “The financial advice is provided by reputable financial institutions such as ABSA, Nedbank, Standard Bank and FNB, among others,” said Tulwana.
“While we have on-site financial advisors from Absa … winners are free to utilise a bank of their choice.
“It is also important to note that our well-trained prize payment advisors initiate discussions on the importance of investing their winnings even prior to transferring the money into their bank accounts.
“These discussions are a preamble to the formal financial advice session they would subsequently have with professional financial advisors from the banks.” - Cape Times

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