Businessman loses claim against legal fund after fake lawyer friend scammed him over R8. 5 million before fleeing to the US
A businessman found himself ensnared in a web of deceit after losing over R8.5 million to a fake lawyer who vanished without a trace.
Ian Julian Smith said he met Andruw Stephens in 2012 as a member of the Houghton Golf Club where they became friends. Through their interactions, Smith learned that Stephens worked at Dadic Attorneys.
When Dadic emigrated from South Africa to Australia, in 2015, Stephens was left in charge of the firm. However, Smith was not an attorney; he was employed as a financial officer.
It was through this relationship that Smith won a legal case against a UK company, receiving R900,000 after he was assisted by Dadic Attorneys. The money was deposited into the firm’s trust account but was never transferred into Smith’s account.
Sometime in October 2015, Stephens told the unsuspecting Smith that there was a lucrative deal where Flake Ice was in the process of purchasing immovable property and needed R5 million as bridging finance. Stephens said Flake Ice was obliged to produce guarantees of over R6 million to the seller of that immovable property.
Stephens asked Smith to invest R1 million in the business transaction promising him a five percent monthly interest. Despite the transaction being fake, Smith earned a total of R1.3 million between October 2015 and February 2018. He received monthly payments of R50,000, with one payment being R100,000.
In June 2016, Stephens informed Smith of a client in urgent need of a loan, to whom R7.5 million was owed. Stephens proposed purchasing this debt for R6.1 million. As Stephens possessed only R2.1 million, he asked Smith to provide the remaining R4 million.
Stephens promised that the R4 million loan would be repaid in 10 months, which included an additional R950,000 payout. Smith was happy with the deal and subsequently transferred R4 million. However, it later turned out that the debt was R1 million and not R7.5 million as Stephens had claimed.
The relentless cycle of deception continued, in July 2017, Smith was again approached by Stephens about a book debt of R44m which was going to go on tender and that he could acquire it for R4 million. He told Smith that they could each contribute a loan of R1 million to another company to acquire the book debt and get the remaining R2 million from a third party. After reaching an agreement, Smith volunteered to lend Stephens R2.7 million with a promise of 25% interest – for yet another false venture.
In March 2018 while attending a golf tour in Durban, the facade came crashing down when Smith received a call from another attorney at Dadic, Trevor Swartz, informing him that Stephens had checked himself into a psychiatric facility in Cape Town and subsequently disappeared.
Following the devastating news, Smith spoke to a bookkeeper at the law firm and was informed that all the money he believed to be held on his behalf could not be found in their trust account. He subsequently learned that all the business transactions proposed to him by Stephens were fictitious.
He also discovered that Stephens had been using a fraudulent Ghanaian passport and that his actual name is Andrew Steven Rapport. Since then, Stephens has been living as a fugitive, moving across the US and taking on various jobs under different aliases.
In an attempt to reclaim his lost funds, Smith lodged four claims with the Legal Practitioners’ Fidelity Fund, only for his claims to be rejected. Undeterred, he took the matter to the North Gauteng High Court in Pretoria, arguing that he had not merely invested in Stephens’ proposals but had entrusted the money to him. The court dismissed his claim, citing lack of proof of ‘entrustment’ despite Smith’s arguments.
Determined, Smith escalated the case to the Supreme Court of Appeal, where a full bench of judges was tasked with determining whether his funds had indeed been entrusted in accordance with the Attorney’s Act.
Acting judge Gerald Hercules Bloem reviewed the evidence and ruled in favour of Smith regarding the initial R900,000, acknowledging it was entrusted to Dadic Attorneys and warranted reimbursement.
However, regarding the other three claims where Smith deposited over R8.5 million to the trust account, Bloem said there was no evidence that the money was entrusted. Instead, Smith had made the payments to the trust account which would then be diverted to other companies for Stephen’s proposed loans and investments.
sinenhlanhla.masilela@iol.co.za
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