R2.7m ‘fees’ for R1m loan: How Cape farmer got scammed

Some artful scammers managed to extract R2.7 million in ‘fees’ from a 68-year-old Western Cape farmer who responded to social media ads offering loans at very attractive interest rates.

He first came across an advertisement for loans on the Messenger app. “Affordable cash repayment at 5% rate from R20 000 to R20 million,” read the message.

The outfit offering the ‘loan’ goes by the name of Mileage Financial with a fake address at 2 Long Street in Cape Town. Try to visit the website, and a ‘suspicious website’ message pops up. The advertised phone number routes calls to a black hole. When Moneyweb phoned a cell number provided by one of the scammers, the person on the other line refused to give her name or company details and claimed we had the wrong number.

Read: A warning the FSCA shouldn’t have needed to issue

The farmer asked that his name be withheld as his wife knows nothing about this, so we will call him Jan Smith.

He’s clearly embarrassed that the thieves convinced him to empty his Momentum pension fund, topped up with some borrowings from his sister. What should have set off alarm bells was the fact that the scammers’ preferred method of communication was WhatsApp, which they used to deluge Smith with demands for fees.

But what stretches credulity is that he handed over R2.7 million over a period of months with the expectation of receiving a R1 million loan.

Why not take R1 million out of the pension fund and put that into the farm? Wouldn’t that solve the problem?

“I know, I feel stupid,” he said. “I came across this company on social media offering loans, so I applied for a R1 million loan for the farm. First, they wanted fees for the lawyers to draw up the loan, which seemed reasonable. Then they added what they called Fica [Financial Intelligence Centre Act] fees, then there were different agents that had to be paid.

`’I had to dip into my Momentum pension fund, and each time I thought I was a small step away from receiving the R1 million loan.”

Agents cashing in

Smith sent Moneyweb a long list of ‘agents’ that received amounts ranging from R7 200 to R13 500.

One lucky agent by the name of A. Dulini received two amounts of R34 000 and R13 500 in their FNB and Capitec accounts.

It seems Smith became an ATM for these ‘agents’ going by the names of A. Witbooi, Fanele Motaung, S. Bakubaku and S. Mgoduka – all received generous sums in their Capitec bank accounts.

When Smith became concerned about the never-ending demands for additional payments so that his loan could, at long last, be released, the scammers whipped out the graphic design tools and started fabricating letters from the South African Reserve Bank (Sarb), HSBC and others.

On 17 May, Smith received a letter purporting to be from the Sarb claiming that R2.5 million was cleared for payment provided he cough up R69 500 in additional fees, failing which the funds would be seized under Fica. Elijah Mazibuko, head of financial surveillance at the Sarb, supposedly signed the letter.

We suspected it was fake because the logo and letterhead did not match the official Sarb logo. We sent it on to the Sarb just to be certain. The Sarb confirmed the letter was fake and that Mazibuko had passed away in February.

Can you spot the fake Reserve Bank logo? (Hint: the top one)

FSCA verdict

Moneyweb asked the Financial Sector Conduct Authority (FSCA) to look into Mileage Financial, and it too came back with a fake verdict. “It’s clearly a sham [with] a fake Financial Service Provider number,” said Gerhard van Deventer, head of investigations at the FSCA. The matter has now been handed over to FSCA investigators.

Another letter with HSBC’s letterhead purported to be a promissory note for R2.5 million provided Smith paid fees of R40 150. Once paid, “he will not be ask (sic) to make any other payments or fees”. The address given for HSBC London is 8 Canada Square, Canary Wharf. There is an HSBC address at 5 Canada Square, but not 8.

A criminal case has been opened with the South African Police Services.

Spotting a scam

As with most of these scams, bad English and misspelling course through the correspondence.

The scammers were endlessly patient with Smith, bombarding him with WhatsApp messages up to 16 times a day. They never lost their cool with him, and reassured him that his funds would be released if he just paid this final set of fees. When he suggested they deduct the fees from the loan amount, he was rebuffed.

The last request was for R8 100, a discount from the previous R21 000 demanded.

Read:
FSCA warns ‘money mule’ bank account scams are on the rise
We track down funds scammed from a Moneyweb reader
AI scam calls imitating familiar voices are a growing problem

“Sir you have to pay this R8 100 since you don’t want to pay for the R21 000 fee you were asked so that three quarter (sic) of the money will be transferred into your account today now, because if you keep on saying the same thing that we owe you, that is why we are trying to help you get your money but clearly you don’t want to cooperate but wasting time, the longer it takes the Pernalty (sic) fee will be asked to you so let’s avoid that and finish this now because you should know that you are not doing it for us but for yourself we also have nothing to lose here but you have so think twice before doing what you are doing now,” wrote someone going by the name of Sandra Dube.

We had to break the news to Smith that he had probably lost his R2.7 million.

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