CHEATING THE TAXMAN
Inside Nafiz Modack’s multimillion-rand VAT fraud case – a family affair with his mother and brother
Suspected organised crime kingpin Nafiz Modack is not only the accused in a murder case, but faces charges in a massive tax fraud matter involving more than R46m – and his mother is allegedly the criminal enterprise’s manager. We unpack the SARS case and Modack’s modus operandi.
Nafiz Modack faces several court cases and his legal bills could run into the millions.
Even though a matter involving fraudulent firearm licences being heard in Gauteng was provisionally withdrawn in May this year, Modack is still at the centre of two other cases.
He is an accused in a major murder case involving more than 3,000 charges. Much focus has been placed on this murder case as it hinges on the assassination of Lieutenant-Colonel Charl Kinnear, who was shot outside his Bishop Lavis home in September 2020.
The murder exposed deep distrust and backstabbing among officers in the South African Police Service (SAPS).
Modack has been behind bars since April 2021, after a failed bail bid.
Along with facing charges in connection with Kinnear’s murder, Modack is central to the VAT fraud case that is unfolding in court.
Both cases involve several other suspects and are set to be heard either in the Western Cape High Court, or in a new courtroom expected to be opened at Goodwood Prison in Cape Town in October 2023.
The VAT fraud case
The R46-million SARS fraud and corruption case hinges on the state’s allegations that Modack and others claimed VAT refunds that were not owed to them.
The case came about when members of the SARS criminal investigation unit were tipped off that 25 corporate organisations were registered as VAT sellers and e-filed claims for large VAT refunds.
SARS faced a potential loss of more than R219-million for the total payments claimed by the several VAT suppliers participating in the alleged fraud.
SARS did not pay the full amount and the revenue service suffered an actual loss of R46-million, after paying a portion of the claimed reimbursements.
According to the state, the businesses involved were registered as VAT vendors and collectively styled as “Modack Family Business”.
Mother and brother accused
The accused in the case are Modack, his mother Ruwaida Modack and brother Yaseen Modack, as well as Faried van der Schyff, Bashier Syce, Nadia Sait, Layla Bedderson, Dominique McLachlan and Kulsum van der Schyff.
The group faces 711 charges including racketeering, fraud, money laundering, uttering, and violating tax and organised crime acts.
According to the indictment against them, Modack was the head of the family business and, along with his mother Ruwaida, and his bookkeeper Faried van der Schyff, managed the enterprise’s activities.
Faried van der Schyff, according to court papers, was also listed as the e-filer for the vast majority of the scheme’s enterprises, and was believed to be in charge of submitting and uploading the returns.
Modack pulled the strings
It is the state’s case that Modack orchestrated the collation and filing of false information to obtain refunds to which the VAT vendors were not entitled. And that he ultimately controlled the bank accounts used to squander the undue reimbursements after they were received.
“Modack caused false VAT claims to be made to the advantage of the businesses involved in the scheme and styled as the Modack Family Business,” a summary of facts in the case reads.
His mother Ruwaida was also a manager of the enterprise, albeit at a different level.
Many of the VAT vendors used her residential address as their registered place of business.
Cheating the taxman
A summary of substantial facts in the VAT fraud case details how the group allegedly cheated the taxman.
The various entities were managed as car dealerships or businesses involved in the property or building industry, and they were associated with members of the Modack family.
“Many of the entities ostensibly had the primary purpose of obtaining VAT refunds from SARS. Many existed in name only, and the only activity in the business bank accounts was the receipt of VAT refunds.”
According to the summary of facts, in others, there were actual business dealings, but not nearly sufficient business activities to justify the magnitude of the VAT expenses claimed.
“Where documents were submitted in support of the VAT refunds claimed, those VAT schedules or invoices contained false information. The aim of the scheme was to obtain VAT refunds from SARS, to which the entities were not entitled, and to dissipate the monies received.”
Headed to trial twice
Western Cape High Court Judge Nathan Erasmus is overseeing both the Kinnear murder case and the VAT fraud case.
Erasmus has been appointed to manage the matters ahead of trial.
He is expected to retire later this year, and has also declared a conflict of interest in the murder case, meaning he cannot preside over it.
Erasmus has tried to ensure that the accused in both cases can pay their lawyers.
He previously recommended that all the accused complete application forms with Legal Aid South Africa to assess whether they qualify for such pro bono presentation.
When the murder and VAT fraud cases are back in court, Modack and his co-accused will appear virtually and not in person.
The VAT case will be heard on 18 July, and the criminal case on 11 August, so Erasmus can assess who still may require legal representation.
It is anticipated that once the legal representation issues are sorted out, Erasmus will set a trial date for the VAT fraud case. DM
The ‘dubious’ vendors in the VAT fraud case
According to court papers, the companies in which Modack, his mother and brother allegedly played a pivotal role are:
1) Contessa Gold Investments CC, of which the directors/members/representatives for VAT were Nafiz Modack, his mother Ruwaida Modack and Abel Hlongwane. Nafiz Modack was the authorised signatory on the bank account.
2) N Modack Family Trust. The directors/members/representatives for VAT were Bashier Syce, with the trustees being Syce, Ruwaida Modack, Moneena Samsodien and Nafiz Modack. Nafiz Modack was the authorised signatory on the bank account. The state claims that Modack, his mother and Syce were involved in the control and management of the N Modack Family Trust.
3) N Modack, trading as Auto Investment Cars, with Nafiz Modack as the VAT representative, director and authorised bank account number and signatory.
4) Auto Exotic Cars (Pty) Ltd, of which the VAT representative was Ruwaida Modack and the directors were Dominique McLachlan, Ruwaida Modack and Abel Hlongwane. The authorised bank account number and signatory was Nafiz Modack, as well as Ruwaida Modack.
5) Durban Road Centre Property Trust, with Nafiz Modack as representative VAT vendor and the trustees Nafiz Modack, along with his mother, Ruwaida and Lisa Marie Spammer. Again, Nafiz Modack is the authorized bank account number and signatory.
6) Eagle Property Trust, with Themba Dhlamini as representative VAT vendor, and trustees which included Yaseen Modack, Themba Dhlamini and Ruwaida Modack, with the authorised bank account number and signatories Nafiz Modack, his mother, Ruwaida and brother Yaseen.
7) Maritime Commercial Property Investments (Pty), with Nafiz Modack as VAT representative vendor, as well as director and authorised bank account number and signatory.
8) Maimi Fem Trust, with Yaseen Modack as the VAT vendor representative as well as one of the trustees with Syce. And the authorised bank account number and signatory being Nafiz Modack.
9) Eagle Recovery and Asset Management (Pty) Ltd, with Nafiz Modack as the VAT representative and one of the directors, along with McLachlan, Yaseen Modack and Thabo Kubeka, and the authorised bank account number and signatory being Nafiz Modack.
10) Point of Money (Pty) Ltd, with Nafiz Modack as representative VAT vendor, one of the directors with Thabo Kubeka and the authorised bank account number and signatory being Nafiz Modack.
11) Sizwe Family Trust, with Nafiz Modack’s mother Ruwaida as the representative VAT vendor, and one of the trustees and the authorised bank account number and signatory being Ruwaida Modack.
12) Tashea 13 (Pty) Ltd, with Nafiz Modack as the representative VAT vendor and one of the directors, along with his brother Yaseen and Gugulethu Makhubu, and the authorised bank account number and signatory being Nafiz Modack. DM
Funding violent criminal activities
This is not the first time Modack has been accused of being central to an alleged illegal money-making enterprise.
Papers tendered before the Blue Downs Regional Court, during Modack’s failed bail plea in the Kinnear murder case, in which Modack and co-accused Zane Kilian are the main accused, showed that Modack’s Empire Investment Cars was allegedly used to fund his criminal activities.
This argument was emphasised further when Abongile Nqodi, a confessed member of the TWS gang, stated in a plea deal on 8 April 2022 that Modack funded the assassination of Nicholas Heerschap.
Heerschap, 74, was the father of ex-Hawks detective Nico Heerschap, who was investigating Modack.
On 9 July 2019, Heerschap senior was gunned down and killed outside his Melkbosstrand home.
The murder now fits into the broader case in which Modack and his co-accused are charged in connection with killing Kinnear.
It was the state’s case that the murders of Kinnear and Heerschap senior were orchestrated by Modack because, at the time of the incidents, Kinnear and Heerschap junior (who was the intended target of the shooting that killed his father) were investigating him. DM