IN THE NEWS: Judge uncovers false insolvency valuation scheme

In a recent case in the Cape High Court, a judge uncovered what may be the tip of an iceberg of deceit and perjury in respect of the voluntary winding up of the estates of individuals who are purportedly insolvent but may really just be abusing the system to avoid their creditors.

The scheme involves a Pretoria-based attorney, who has since admitted wrongdoing and reported himself to the Law Society, and a valuation firm, also based in Pretoria, whereas the applicants and the properties that needed to be valued were all situated in Cape Town. The fact that applicants who were allegedly insolvent and resided in Cape Town would appoint attorneys and a valuer in Pretoria made the judge suspicious. On further inquiry it became apparent that the valuer had actually never inspected the applicants’ assets, even though he confirmed in court papers that he had. In other words, the valuer misled the court as to the value of the applicants’ estates, which means that the evidence relating to their “insolvency” was a complete fabrication. The judge then delved into the court’s files in similar cases and found that in the vast majority of such voluntary surrender cases the applicants were represented by one of a very small number of attorneys’ firms – including a whole number of applications brought by this particular combination of Pretoria-based attorneys and valuers.

The court has forwarded its findings to the National Credit Regulator and the relevant provincial law society for further investigation and has provided copies to the director of public prosecutions and the Pretoria High Court for further action against the attorneys involved in the scheme.

#Fraud #scam #propertyvaluation #insolvency #liquidation #bankruptcy #HighCourt