SA investors bemoan the millions they have lost in OrbVest

South Africans who sank millions of rands into an investment scheme after being promised lucrative shareholdings in medical real estate in the United States say they have lost their life savings because they cannot withdraw their money and any return on investment. 

But directors and representatives of the companies that have promoted and enabled the investment scheme at different points since 2016, including Wealth Migrate, OrbVest Limited in the Seychelles and OrbVest SA, have blamed the poor performance of the property investments on the Covid-19 lockdowns and rising interest rates in the US. 

Several investors who spoke to the Mail & Guardian on condition of anonymity are demanding to know what happened to their $998  000 (about R18.5  million) three- to five-year fixed term investments and why they cannot access their money.

One investor, Neville Hanover*, an economist who said he had investigated the scheme over the past 10 months after not being able to withdraw $53  000 of his initial $67  000 investment, estimated that at least 500 investors around the world have sunk about $214  million into the scheme. OrbVest SA has put this figure at about $81  million.

Hanover alleged in a detailed 53-page investigative report seen by the M&G that Seychelles-listed entities involved in the investments violated South Africa’s exchange control regulations and that Wealth Migrate, OrbVest and associated companies listed on the Seychelles MERJ Exchange appeared not to have notified the treasury of their activities in the country.

In terms of South Africa’s exchange control rules under the Currency and Exchanges Act and related regulations, consent from the treasury is required to raise money in South Africa for capital investments abroad.

OrbVest SA operational director Justin Clarke vehemently denied all allegations of wrongdoing, saying the company had complied with all local and international regulations and that registration with the treasury was not required because investors had signed a “brokerage” agreement and effected the international funds transfers themselves. 

Wealth Migrate co-founder Scott Picken distanced his firm from OrbVest, saying they had parted ways in 2018.

Hanover has filed a complaint about OrbVest and its associated companies’ activities with the Financial Intelligence Centre. 

At the time of publication the treasury had not responded to questions about whether the companies had complied with regulations and the status of the complaint. 

The M&G’s repeated queries to Wealth Migrate, OrbVest Limited, OrbVest SA and PKF Capital Markets regarding the investors’ concerns and requests for shareholder certificates proving their part ownership of buildings to show exactly where individual investors’ funds were invested, did not yield the answers investors were seeking.

Clarke provided evidence of one article of incorporation in the US of limited liability company (LLC) ASC Medical 8 Project Inc’s ownership of a medical property in Texas, showing a 25% shareholding by a Seychelles-listed company called Shadow Glen Austin Limited.

But there was no indication in the documents about individual investors’ ownership of shares in the entities or the property.

Clarke declined to provide financial statements and share certificates, which would contain additional information and possibly help to clear up some of the investor concerns.

“We are prohibited from providing confidential information regarding the shareholding to anyone apart from the individual investor. Ownership is reflected in a combination of a loan and equity as demonstrated above in a typical K1 [Internal Revenue Service tax form],” he said.

Hanover said he had also asked OrbVest for financial statements and share certificates but had not received anything. 

Asked why Hanover was not provided with proof of where his investment lay, Clarke said Hanover had “enjoyed special treatment over the last two years and extensive engagement between the parties is on record”.

“We update all investors regularly through direct contact and webinars … Our most recent webinar was held in March,” he said.

Company leaders 

Picken and Hennie Bezuidenhoudt founded Wealth Migrate SA in 2015, while OrbVest Limited was listed on the Merge Exchange in 2018 and has Bezuidenhoudt as chairperson, Martin Freeman as chief executive and Louw Viljoen as chief financial officer.

From 2019 to 2023, Edmond Tuohy served as Seychelles MERJ Exchange chief executive and he, Nico Ackermann and Daniel S Carter were directors at Direct Markets Africa, which morphed into PKF Capital Markets Seychelles, the entity into which investors paid their funds. 

Ackermann was on the team that wrote the listing requirements and consulted on the formation of the MERJ Exchange in the Seychelles and has since 2017 served as a non-executive director of the exchange. 

Tuohy, Carter, Ackermann and his father Jan Ackermann are directors of Solid Oak Insurance registered in the Seychelles. Jan Ackermann and Viljoen sign the annual financial statements of each of the property listed companies on the MERJ exchange.

OrbVest SA was registered in 2018 under the name Wealth Create SA. Viljoen, Machiel Johannes Lucas, Martin Zonny Freeman and Clarke served as directors.

During 2016, Wealth Migrate SA and later OrbVest SA started to market and sell investments into medical buildings located in the US. 

Flow of funds

According to investors such as Hanover, who trusted Wealth Migrate, OrbVest Limited and OrbVest SA, they were advised when they signed up to transfer their funds to invest in the US properties to PKF Capital Markets, which would transfer their funds to the building once the investment was fully subscribed. 

Clarke said no funds were paid directly to OrbVest. 

“Medical 8 Shadow Glen as per the Certificate of Filing provided … is one of the assets inherited from Wealth Migrate. This asset has been rehabilitated and is planned to be sold later in the year by OrbVest,” he said. “Investors in Medical 8 have been kept updated … If they do not want to wait longer and are prepared to sell their shares at a discount, other investors in the building have indicated their willingness to buy shares.”

Hanover said the annual financial statements for the Seychelles-listed companies indicated they had provided loans to the US LLCs. He therefore repeatedly demanded evidence of investors’ shareholdings in the LLCs and of these entities’ ownership of the properties. But he said OrbVest had not provided the documents.

Now, after repeated demands and allegedly not receiving their capital and returns on their three- and five-year fixed investments since 2017, investors’ funds have been channelled into a new AccretivPlus Healthcare Portfolio Limited entity in the Seychelles, and they are still unable to withdraw their money.

One investor was Johannesburg-based Johan Kriel*, who ploughed in $330  000 (about R5.9  million) on the promise of annual returns of 11% to 13%. 

He said he had trusted Wealth Migrate’s Viljoen and Lucas when they presented the scheme, because they were introduced at the home of a business associate in 2018.

“These guys were Afrikaans people, and I know it is terrible, but we all grew up in these Calvinistic homes and we thought we could trust each other, and of course, they opened [the meeting] with prayer,” Kriel said.

He also trusted the scheme because the concept was sold as a “safe” investment because the medical building facilities provided were specialised and it was not easy for tenants to end a lease and relocate.

“They also advertised it a lot in interviews on the radio … and that legitimised it,” Kriel said.

But, seven years later, Kriel said he had received only a $33  000 “return” that was not paid to him but “reinvested” in AccretivPlus Healthcare Portfolio Limited.

“I’m in a position now that I don’t really care what happens to these people, as long as I get as much of my money back as possible,” he said.

Another investor, Pieter Landman, said he was introduced to Picken in December 2016 at a seminar in Cape Town. 

“At the seminar I was convinced to invest in Cypress Ridge property development in the USA, which … turned into a nightmare but I finally got my funds back. In the interim I invested in Medical 7 in July 2017. I still own shares to the value of $19  873. This has now become AccretivPlus,” he said.

“Following this investment, I invested in the Medical 10 building [in June 2018] to the value of $200  789, which turned out to be a disaster,” he said. 

“What concerns me is Med 10 was somehow incorporated into Medical 25, which was a separate investment. In between Wealth Migrate evolved and OrbVest arose with different directors … These funds I have not been able to retrieve.”

Landman said his wife Emily had invested $200  000 in Medical 9 in October 2017, but has been unable to recover the money. She then poured $200  789 into Medical 10 in June 2018 which was also “unrecoverable”, although both investments, according to marketing brochures, were supposed to be three-year fixed-term investments.

“Over the course of several years and one excuse after another together with promises, our funds have not been returned to us as well as the loss of so-called dividends and hence we feel the only solution is to go legal,” he said.

Picken said his company has been “involved in bringing investors and sponsors [partners] together through its platform” while “OrbVest focused on buying deals, managing the properties and overseeing the investments”.

“Since 2018, the companies have been independent, with Wealth Migrate having no direct involvement in the management of property deals, including the ongoing medical office building project in Austin, Texas. As of 2018, OrbVest is responsible for investor communications or payments related to the property side of things and any queries related to those investments should be directed to OrbVest,” he said. 

Hanover said he had invested $67  000 from 2017 but recovered only $14  000. He said OrbVest told him he could sell his shares on the MERJ Exchange if he could find a buyer, which was contrary to the fixed five-year investment agreement.

Clarke issued a nine-page statement to the M&G in response to questions — blaming the Covid-19 lockdowns, a US managing agent that went bankrupt and rising interest rates for the investments’ poor performance and losses on some buildings.

Superfund

Clarke said the company had been unable to liquidate or refinance the “legacy assets” [buildings] during the extended period of high interest rates and had created the AccretivPlus Healthcare Portfolio Limited and AccretivMed Real Estate Fund 1 for offshore and domestic investors, respectively.

“OrbVest advised investors across all projects to consider contributing their investments to create a super fund,” he said. “Apart from significantly reducing exposure to individual building performance, there were significant savings to be made, which would improve overall outcomes to investors.”

“The operational costs of managing 17 listed companies and 50 underlying entities and the associated inefficiencies were significant … 

“Shareholders in various syndicated buildings were approached towards the end of 2023 and offered the opportunity to join this new fund to strengthen the offering and work towards achieving a more profitable exit for the 27 qualifying buildings. This proposal received near-unanimous approval at various AGMs and SGMs … Approximately 90% of investors voted to transfer their shareholdings into this consolidated structure.” 

Clarke said some non-performing buildings did not qualify for inclusion and would be sold “including Medical 8/Shadow Glen that we aim to sell in the first half of 2025”.

“The total equity value invested from over 20 countries stands at $81  856  839 and the value of the assets at cost stand at over $200  000  000. We do not revalue the assets and all are accounted for at cost, some over 10 years since acquisition,” he said. “These funds currently distribute over $4  000  000 annually as dividends … we have distributed returns well within our mandate of 5% to 8% per annum and averaged closer to 7% over time.” 

OrbVest had demonstrated “unwavering commitment to transparency, investor protection, and ethical business practices”. 

“While we regret the difficulties experienced with some of the legacy assets … we have taken decisive actions to stabilise our portfolio and create more resilient investment structures. Our transition to the Accretiv fund model represents a strategic response to changing market conditions and investor preferences,” Clarke said.

He provided a report by Freddie Eilers of Assent Legal Solutions, whom OrbVest SA commissioned to investigate investors’ complaints. The report found the company had complied with regulations.

It noted that OrbVest SA is a registered financial services provider under the Financial Advisory and Intermediaries Services (FAIS) Act and an accountable institution under the Financial Intelligence Centre (FIC) Act. 

His report found clients were given documents detailing properties, historical income and growth. 

“Disclaimers within these documents emphasised that OrbVest does not offer financial advice, and that clients should consult their own advisers. Risks associated with property investments, including potential decreases in property values, vacancy rates, and currency fluctuations, were clearly stated,” Eilers wrote in his report. “No breaches were identified regarding FAIS or FIC requirements. As OrbVest does not conduct foreign exchange transactions, no South African Reserve Bank registration is required.” 

He noted that all documents provided to investors “stated that investments … were not guaranteed. Based on our investigation, OrbVest SA … appears to have adhered to industry regulations and disclosed all pertinent risks to investors.”

But Hanover, Kriel and Landman said they had been advised that the investment was for a fixed term and that it was a safe investment with decent returns because of the nature of medical properties, which have fixed internal medical equipment, making it cumbersome for tenants to end leases and move. They are considering their legal options.

*Not their real names