Business Maverick

FSCA INVESTIGATION

Social media ‘stokvel scam’ leaves thousands of investors in a financial nightmare

Social media ‘stokvel scam’ leaves thousands of investors in a financial nightmare
Darren Langbein and his wife Shirley Langbein (not pictured) run United African Stokvel. (Photo: Twitter / @Am_Blujay | image sharpened using AI)

The Financial Sector Conduct Authority is conducting an investigation into United African Stokvel, reviewing evidence obtained in a raid and interviewing relevant parties.

Almost 100,000 people appear to have fallen victim to what seems to be a scam run by the Facebook-based United African Stokvel, which was the subject of a search-and-seizure raid by the Financial Sector Conduct Authority (FSCA) towards the end of June. 

The FSCA investigation, which is ongoing, followed a whistle-blower report and complaints from investors.

The FSCA statement notes that the stokvel had claimed to have applied for a financial service provider’s licence, but has no record of any such application. 

“The FSCA suspects United African of conducting unauthorised business and breaching certain financial sector laws. United African is not authorised to provide any financial products or financial services.”

The industry regulator also warns that although the social media pages of United African indicate it is a digital stokvel that invests clients’ funds in property and telecommunications, various complaints indicate clients have not been receiving promised returns. The returns were supposedly from said investments in property and telecommunications.

One investor told Daily Maverick that he had lost R152,000. He was initially promised that he could triple his money within six months. 

“The money was for my children’s education fees. Now I am battling to make ends meet and to try to make sure my four children are not deregistered,” he says. He has one child currently studying at university and three others at boarding schools. 

Other investors were lured in with promises of tripling or quadrupling their investments over 12 months.  

A second investor who put in R100,000 says he has lost his home and  furniture, and has been reduced to staying with a friend since he became homeless. 

“I am so stressed right now with that money gone. It’s like a nightmare,” he says.

Many distressed investors said they had used their retirement savings, or money set aside for their children’s education, and would now have to disclose to their families that the funds were no longer available. They say they just want their capital back.

A quick scan of the United African Stokvel Facebook page on Monday shows several clients complaining that they have not received any payments since March this year.  

The company has told members that the lack of payments is due to various reasons including load shedding, a backlog and getting the runaround from companies they have invested in. 

United African Stokvel is run by Darren Langbein and his wife Shirley Langbein. Calls to the cellphone numbers that investors had for the Langbeins went unanswered.

Examples of the returns offered by United African Stokvel. (Image: Supplied)

Examples of the marketing and returns offered by United African Stokvel. (Image: Supplied)

Ongoing FSCA investigation

The FSCA is currently conducting an ongoing investigation, reviewing evidence obtained in the raid and interviewing relevant parties. Clients can contact the FSCA directly on 0800 20 37 22 or 012 428 8000 or log a complaint here

The stokvel was started in 2020 by Darren Langbein and was featured on various media sites including Ventureburn and Disrupt Africa.

Andrew Lukhele, chairman of the National Stokvel Association of SA (Nasasa), confirmed that United African Stokvel was not a Nasasa member and was declined membership on 10 July 2019.

“Government and Nasasa are aware that there are so-called savings schemes purporting to operate on the ‘stokvel’ principle, but which are not savings schemes in the traditional sense. The sustainability of these schemes, unlike in the case of stokvels, relies on recruiting new members,” says Lukhele. 

“In order to pay higher returns on the ‘investments’ of members, the investments of new members are used to pay the promised returns of each previous membership level. [This means] an unlimited supply of willing investors has to be introduced to the scheme continuously as members for everyone to profit. 

“Therefore, as soon as there is a decline in membership, new members and existing members who have not yet qualified for any distribution will have to wait that much longer for their turn, or may even lose their contributions. 

“In fact, it is at times questionable whether these organisations are in a position to refund contributions if so required. It is also not clear whether members are made fully aware of these risks when they enrol,” he says.

Lukhele says not much is known about the internal operations of the United African Stokvel, pending the FSCA investigation. However, he did note that under certain circumstances, stokvels would need to be registered as financial services providers. 

“For example, stokvels are permitted to lend money among their own members at an agreed interest rate. However, the National Credit Regulator spokesperson Rishana Singh says if a stokvel lends money to people who are not members and charges them interest, the stokvel must register as a credit provider in terms of the National Credit Act (NCA) and to comply with the provisions of the NCA,” Lukhele told Daily Maverick.

Towards the end of June, journalist Devi Sankaree Govender managed to get Langbein on to her investigative show, Devi, with the promise of an investor who had R100,000 to invest. However, as soon as Langbein saw Govender, he left the premises, telling her she could talk to his lawyers and hightailed it. DM

This is a developing story.

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Comments - Please in order to comment.

  • Craig A says:

    Another pyramid scam? When do people start to learn? They are the first ones to say that banks are a rip-off but gladly give their money to a stranger who promised them ridiculous returns. A fool and his money………

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