The investments of thousands of people are at risk following the decision of trustee and fund manager Craig Warriner of the BHI Trust, thought to be once worth R2.7-billion, to surrender to the police after admitting fraud.

Details of the case are sketchy and the investment house is not well known, but hundreds of investors have been issued warnings by their brokers that Warriner has been arrested, that fraud was involved, and that Warriner is in custody after handing himself over to the police.

The fund is understood to be an equity investment fund which has been operating for about 15 years. The precise nature of the fraud is not yet known, and neither is the current value of the fund.

The case contains multiple curiosities: bizarrely, when approached for comment, the BHI Trust referred investors to the lawyers who intend to apply for the fund to be liquidated and handed over to an independent trustee.

The legal firm involved, Cawood Attorneys, is itself an investor in the trust, and members of the legal firm have written a letter detailing the background of the case and outlining some of the bizarre events involved.

The letter was sent to the firm’s financial advisers, Longterm Financial. It says members of Cawood Attorneys were present when Warriner appeared in the Palm Ridge Magistrates’ Court south of Johannesburg last week.

The magistrate explained to Warriner that the purpose of the proceedings was to provide him with an opportunity to obtain legal representation, but Warriner confirmed that he would continue to represent himself. 

“He also confirmed that he waived his right to apply for bail,” the letter says.

“Warriner confirmed in open court that he wanted to plead guilty. He indicated that he would plead guilty to any charges that may have been brought against him. He stated that this had been his approach from the outset and that he had indicated during his initial appearance in court that he wished to plead guilty to any and all charges brought against him.

“He stated that he wished for his guilty plea to be entered on the record and that, following his guilty plea, sentencing procedures could be postponed to a later date.”

A clearly distraught Warriner stated that he could not understand why the matter needed to be postponed for further investigation. In discussions with the prosecutor, it was established that Warriner apparently handed himself over to the authorities after confessing that he had been running the BHI Trust in an irresponsible manner, using “the funds of Peter to pay Paul”.

“He allegedly suffered significant losses in the 2008 recession and has ‘since been attempting to trade the available funds of the trust in such a manner as to trade the trust back to a position of liquidity’.”

Cawood has proposed that to protect the existing assets of the trust, it should bring an action requiring a court-appointed trustee on an urgent basis. It also suggests bringing an urgent application to sequestrate the trust, which would result in a provisional trustee being appointed to safeguard the existing assets.

The trustee’s powers would allow for an insolvency inquiry into the trust’s financial affairs. The inquiry would also be able to subpoena those with knowledge of the trust and identify other people of interest.

 Further court hearings are likely this week. DM