MTI kingpin Clynton Marks siphoned off more than R30 million during the last two months before the scheme crashed, according to the liquidators’ answering affidavit filed after Marks and fellow-kingpin, Henri Robert Honiball, applied to the court to stop the scheme being declared a pyramid scheme.
The knives are out between the liquidators and Marks and his wife, Cheri and Honiball, with the liquidators saying that they “dug in their heels and are trying any trick in the book to try to hold on to their ill-gained profits”, after Mirror Trading International (MTI) imploded when the other kingpin, Johann Steynberg, fled to Brazil.
According to the liquidators, part of their strategy is to try and mislead the media, gross abuse of court processes, and trying to raise suspicion about the liquidators by using distorted court filings, unfounded statements, and rumour mongering.
While it is unclear when Brazil will extradite Steynberg, the liquidators are now going after the rest of the management and marketing team opposing their appointment, giving details in their court papers of about 1 000 pages about how Marks, who they also call “a mastermind of the crypto scams BTC Global and MTI”, fraudulently enriched himself with more than R30 million at present recovery value.
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Liquidators’ answering affidavit to MTI kingpins
The answering affidavit follows Marks and Honiball’s application to prevent the court from ruling that MTI was an illegal scheme because it will have significant implications for them and their cohorts, but will leverage the powers of the liquidators to recover the stolen money and bitcoin.
The liquidators argue in the answering affidavit that Clynton Marks does not have the right or capacity to bring this application, as he is not a creditor of MTI but in fact owes MTI millions. It is also disputed that he is a shareholder, although the MTI records suggest that Honiball is a creditor, if only for a minimal amount of about R9 000.
The court papers also indicate that the same law firm represents the Marks couple, but also Honiball and most of the management of MTI, as well as Andrew Caw who facilitated the cashing in of bitcoins for people behind the scheme, and a Mrs Kritzinger, MTI’s bookkeeper.
The Marks couple and Johann Steynberg were the masterminds and principal protagonists of the fraudulent scheme conducted by MTI, the liquidators say, adding that Honiball is also a so-called loser, an investor with a claim against MTI. Here separate attorneys actually represent him.
In opposing this application, the liquidators seek an order dismissing the application and that the applicants pay the costs of the application. The liquidators’ main defence is that:
- the application is not urgent
- it was not properly served
- no case was made for any condonation to be granted
- the application pursues an ulterior and concealed purpose, to manufacture a postponement of a different application
- the relief sought is not legally competent
- there is otherwise no basis in law for the relief sought
- the founding affidavit lacks the averments necessary to sustain an entitlement to the relief sought.
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Winners and losers
About 304 044 investors were involved in the MTI scheme and according to the latest reconciliations, about 39 193 bitcoin were invested in MTI and 32 285 bitcoin were withdrawn, leaving about 204 000 so-called losers, investors who have claims against MTI.
According to present data, approximately 58 000 investors gained from the scheme. They are called winners because they took more out than they invested. Marks is on of the top three winners in the scheme, investing only 21,98 bitcoin and withdrawing 219 bitcoin.
At liquidation MTI had a shortfall of approximately 6 900 bitcoin due to fraud and theft, the liquidators say. The value of one bitcoin was approximately R340 000 each, equating to a loss of at least R2,34 billion.
Now the Rand value of one bitcoin is even higher at about R480 000, representing a total current loss of approximately R3,3 billion that fluctuates daily.
MTI told its investors in December 2020, at liquidation, that approximately 22 222,54 bitcoin remained in the trading pool which would have a present value of more than R10 billion.
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Schemes within a scheme
The liquidators also point out in their court papers that some investors also devised their own strategy, by establishing their own little fraudulent schemes with ghost accounts. They would then pose as new investors under pseudonyms and defraud the scheme itself, drawing 10% referral bonuses and effectively stealing bitcoin from MTI and other investors.
They say Clynton Marks had no less than 189 138 investors in his so-called “left leg” and 71 631 more in his so-called “right leg”, although he only referred 16 investors directly.
All the other investors resorting in the different “legs” were all introduced under Marks who deposited 21,984 bitcoin and withdrew 219,71927847 bitcoin, which at the date of liquidation represented a Rand value of approximately R74,9 million.
Marks’ profit was in excess of R65 million, but the liquidators say this was just the tip of the iceberg, as Marks also siphoned off bitcoin in ways which were unrelated to his investment history.
The illegal scheme application was heard in part and was postponed for further hearing on 31 May 2022.
The Marks couple also brought an urgent interdict application to halt their questioning before a Section 418 enquiry, contending that MTI is not insolvent and that there are procedural irregularities concerning the continued enquiry of them before the co-commissioner, Magistrate Engelbrecht.
