Western Cape High Court judge Anton Veldhuizen handed down the judgement and gave a 75,000 rand fine for each fraud count.
In an investigative report done by Moneyweb investigative journalist Julius Cobbett, it was revealed that Fidentia Asset Management spent over a billion rand worth of widows’ and orphans’ money, which was kept in the Living Hands Umbrella Trust (LHUT).
“This is a report that the financial curator George Papadakis was asked to compile by the National Prosecuting Authority (NPA) because he was expected to testify in the trial against Brown. For reasons that I can’t understand, he was never called to testify. And I have asked the NPA why, and they refuse to answer,” Cobbett told CNBC Africa on Wednesday.
“The fact of the matter is he prepared a comprehensive report, down to the last rand and cent, of over one and a half billion rand worth of money which flowed into Fidentia then flowed out to various expenses.”
According to Cobbett’s report, Fidentia Asset Management received other investments from a number of companies, which were in turn used to pay amounts owed to existing investments. Antheru Beleggings Trust, Baltron and Tetra were among the companies that had invested in Fidentia, alongside the LHUT.
Some of the expenses included the acquisition of Sante Hotel, a 10-bedroomed hotel Fidentia bought for 86.5 million rand, 2.9 million rand on gym equipment and 7.9 million rand interest free “loan” to businesswoman Danisa Baloyi from the LHUT.
“One of the funny things is the hotel, which is one of the biggest expenses, there’s no evidence to suggest that Brown actually got a kickback from that expense. It was outrageously expensive,” Cobbett added.
Curators have so far recovered 300 million rand, which has been distributed back into the LHUT.
Brown was also given 18 months in jail for each count of fraud, which has been suspended for four years on condition he is not convicted of fraud again.
“He did exploit a loophole in the law, which I’m told has been plugged. We can also see he made various attempts to try and get his hands on other money, which is retirement fund money and medical aid administration money, and in those attempts he was unsuccessful,” said Cobbett.
Cobbett's full report can be found on www.moneyweb.co.za.