Questions: What to do

Just as an aside that occurred to me as I was writing this entry. Edwafin registered its last issue of Debentures on 1 December 2008, months after they (we all) discovered they were in trouble. Lawrence (FSB), please take note.

I write this entry with some trepidation, as I am not an attorney, and my attempts to get my money have also been unsuccessful thus far. Many of the readers have written to me, asking me what to do, and I need to tell them right from the start that they need to see an attorney as soon as possible if they want to act on the situation.

Before doing that, however, consider a few choices that are possible in my view. Whatever steps you decide on, keep in mind that you may possibly lose some, most or all of your investment capital and probably interests due as well.

1. Do nothing, and wait to see what happens in the weeks ahead. If Edwafin gets back on its feet, you might be a winner after all. Alternatively, other more experienced individuals, may perhaps as a group, decide to take legal action. It is possible that the authorities will also step in to try and resolve issues. You will need to take your cue from that.
2. Try and get your investment back. There are strict steps to follow in this respect and you need an attorney to assist you. Keep in mind that you might not succeed before everything collapses.
3. Apply to have Edwafin liquidated. Obviously an attorney is also needed for this, and the word is out that such an application is already being brought against Edwafin.
   

What not to do

• Don't get your hopes up too high, whatever you do. The possibility that you have lost, or will be losing money is rather high, and there is no magic to change that. Accept your possible loss, even though it is extremely hard to do. Should the tide turn in your favour you will only be happier for it.
• Don't try and phone Edwafin. Even if they answer, and even if you speak to the main man himself, you will achieve nothing but frustrations. These people are beleaguered, and don't or won't listen to your reasoning.
• Don't visit the Edwafin offices hoping to appeal to them or get some sensible response from them; you can't, they won't - it's a waste of time and you will lose your temper and your dignity.
  
• Don't threaten physical violence. It's not going to happen! Your feelings of hatred and revenge is only harmful to you, and it does your karma nor your health any favours.
• Don't write to Edwafin with threats of legal action. Useless - they have heard it all. As I said they are under pressure, they are impervious to your threats. If you want to take legal action, then do so by a visit to your attorney.
• Don't return you debenture certificates willy-nilly - with a possible covering letter - in an effort to get your money back. You will simply be ignored. I'll tell you in a moment what I did, and how I still didn't get my money back.

What I did in an effort to get my money back
Please note that the steps I took were not successful to date, but at least I think I'm covered in case the whole business collapses and I have to claim my stake. It is important that you get the assistance of your attorney, as the clauses of the prospectuses need to be followed to the letter (discovered to my chagrin).

The steps I was instructed to follow by Patrick Stapleton are:

• Fill in form CM42. It is a government form, and can be downloaded from here (if link is broken, please let me know. Asking Edwafin for a copy is also a fruitless exercise).
• Write a letter stating that you want to place a "put option" on your debentures.
• Send the above documents along with the original debenture certificates to the Edwafin head office.
• Wait for your money to arrive in your bank.

Yet, it is not as as simple as it sounds. What I did:

• The first step was to obtain copies of the prospectuses from CIPRO. That is a total nightmare, and I will provide you with some help below.
  
• Completed form CM42, and wrote a letter to place a "put option".
• Made certified copies of my debenture certificates.
• Armed with the prospectuses, and convinced of my case, my attorney wrote a letter and enclosed everything in a dispatch by courier to the Edwafin offices.

The result - well your reading this blog. They don't even have the common decency to acknowledge receipt - I had to wring it out of them, and then it was a halfhearted attempt by Verona Cowan. These people are extremely devious - always keep that in mind.

I cannot put enough emphasis on the advice to consult with your attorney, and that you need to go through clause 12 with a tooth comb, to get it all legally correct. Unless you are in the law field, you cannot do it by yourself.

Getting Prospectuses
If you have debenture issues C or D, then you can download the prospectuses from my website at this link. Just folow the Edwafin links. You have it easy!

This was an expedition in itself, and for your convenience I have a downloadable table of Edwafin prospectuses below. These are not the prospectuses itself but provide you with the tracking number of the prospectus that may pertain to your debenture issue.
To work out which prospectus applies to your debenture, look at the date of your debenture issue. Scan the "Receipt Date" of the table for the date that just precedes the date on your certificate. That prospectus, or possible the one just before that (if the date on your certificate is very close to, or coincides with, the "Receipt date" on the list) in all probability applies to your situation. It is identifiable by the unique tracking number.
There are two ways of getting the copy you need (you have to pay about R200.00 per prospectus). The easiest way is to go to an accountant, and request them to do it for you. They regularly have contact with the CIPRO offices to register companies and the like, and should easily be able to get you the copies you need. I said "should", as my accountant seemed to find it hopelessly difficult to do this for me, thus I did it the more difficult way.

1. Log on to the CIPRO web site and register as a customer (Menu - left hand side under "Log in"). Remember the name that you have supplied as you will need it later.
2. Deposit some money (about R200.00 per prospectus) by following the instructions. Like most organizations they make it real easy for you to pay them.
3. Log off, and write a friendly letter to the Disclosure Department, requesting a copy of the prospectus and provide them with the dates and tracking number.
4. Send the letter by fax to: 0866738168. Provide them with a phone number and email address in case they need some more money. Also, if it is a large parcel they won't email it to you, so you need to give them a postal address as well.
5. Wait!

Here is the list of debentures that are registered with CIPRO at the moment.
Debenture Prospectuses at CIPRO

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Holding my Breath 2

When I posted the previous entry, I wasn't quit done yet. As it contained a bit of pleasant news I didn't want to taint it by including it with this posting.

To begin with: the Edwafin site is down. Now, that may be to do maintenance on the site, or perhaps things are changing so quickly, that it needs repeated revision. Let's face it, they have removed all the pictures from their site - Edwafin has become faceless. Not that I could add more pictures, though, the blog-server has informed me that I have used up my allocation. Thus, no more prity pictures of Edwafin and its human population; and I so much wanted to include one of Ms Cowan. Perhaps if Marc (FIN24) has found a picture, I will erase one of the many of old Patrick to make room for her. While we are at it, you wouldn't have one of Brian Poliah as well, would you?

Except for two short, curt sentences - each in a separate email - from Patrick, they are as quiet as their bank account. Because of their synoptic character I did not think is necessary to publish the whole email here. The one said:

My wife does not drive a brand new Merc, you are mixing fact and fantasy in your spite.

And the other one said:

So you broke your word

Well, now, we have come to know Patrick as a man of a few words, especially when it comes to providing information or speaking the truth, and this is no exception.

Let me categorically state: Patrick's wife does not drive a new Mercedes. It only is very shiny and looks new, but that does not imply that it is. My informer must have it wrong.

Yes, I did not wait until 31 May, as it became evident, that the masters of Edwafin were not going to refund their investors in any case. When I pressed Patrick on this he refused to respond:
20090325 Email Respond to Stapleton 1

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Shame on you, Patrick for being so selective in your arguments.

That brings me to a matter I have been pondering for a few hours now.

There might be investors who are frowning on the actions I'm taking in respect of Edwafin, and they have all the right to do so. Obviously, it might put pressure on Edwafin and its subsidiaries. However, if they are not in financial difficulties, they could easily overcome my arguments by proving me wrong. That would make a fool of me and make their case so much stronger, and everybody would be paid his/her due. I don't mind looking the fool if that happened!

On the other hand, if my supposition is correct that they are essentially bankrupt, then every week that we let pass means that they will spend more and more money on directors salaries and other expenses - at our cost.
In the mean time they will continue roping in gullible investors that might just end up in the same situation as we are. And that for a few months more interest payments, we hope, and possibly/hopefully a recovery that would allow them to cover our investments. Has anybody out there seen the balance sheets of Edwafin recently? I wonder.

Let's be realistic about it. Except for loud protestations stating that they are not bankrupt, they haven't shown investors there financial statements, or have made any attempts to proof that they are not - words, words, words, words.
In reality they have admitted that they are bankrupt, by actually telling us so on 19 December 2008:

CERTAIN INVESTORS, DUE TO THEIR WORRY AND CONCERN, HAVE LEVIED THREATS AGAINST US, WHICH THEY ARE WITHIN THEIR RIGHTS TO BE CONCERNED ABOUT (AND OF COURSE WE DO UNDERSTAND HOW THEY FEEL). HOWEVER WE NEED TO MENTION THAT IN TAKING THE MATTER FURTHER BY GOING PUBLIC OR INSTIGATING ANY OTHER FORM OF ACTION AGAINST THE COMPANY, WOULD NOT ONLY PUT YOUR CAPITAL IN JEOPARDY, BUT THE CAPITAL INVESTMENTS OF ALL OUR CLIENTS WILL SIMULTANEOUSLY BE PUT AT RISK.

Now, isn't that a beautiful encapsulation, if clumsy at best, of the status quo, Edwafin's attitude, and the company's financial health.

Usually I have a cash flow problem, when I don't have money to pay for things - perhaps Edwafin is different. Tutt, tutt, tutt, Patrick, have we been talking ourselves into a corner again? Below is a copy of part of a brochure used to entice me to invest with Edwafin:
Brochure

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FIN24, FSB, NPA and Documents

FIN24
Marc Ashton of FIN24 visited me this morning. He is a very nice, and intelligent young man who appears very sincere and wise.

Marc will in future be following the Edwafin story on FIN24, and has invited anybody who would like to share information or experiences to email him at marca@fin24.com, or to call him on his cell phone: 082-561-1585. Perhaps Marc will also remember to see if he can find a photograph of Carole Gardiner in their files - it would give one such a feeling of completeness to have them all in focus; a happy family.

Documents
Then, I have made all the documents that are included in this blog public and downloadable. Thanks to modern technology, that took merely a few clicks of the mouse button. There are a few documents in my possession that have not yet been published yet, and these include the copies of the prospectuses that I have managed to obtain. They are for the debenture series, C and D (what an adventure it was to obtain those!). I would like to offer copies of these prospectuses to any who would like to have them - even if your debentures are part of another issue, it may be handy to know that the contents of the prospectuses are mostly the same.
Unfortunately, these are hefty documents and cannot be transferred to the Scrib server, but what I will do is scan them and place them on my own website at www.chromatique.com. On the left hand side of the page, on the main menu there you will find the "Free Download" tab, just follow that and you will arrive at a category called "Edwafin" (how else), follow that and you will be able to download the documents that are available there. I will try and make some direct links available as the documents are uploaded to the server.
You might want to go there again in the future, as I might make available more documents as they become available.

FSB
Once before I tried to contact the FSB to see if they would be prepared to investigate the Edwafin story, and I have noticed that others have approached them as well. To date nobody seems to have had any response from them. Perhaps they have not yet realized that the holidays are over, and that a new year already started a few months ago.

I wrote another email, today and we shall see.... In any case I have added the Liason Director, Mr Russel Michaels to the email list for new postings on this blog, and let's hope that some response will be forthcoming. One should keep in mind that they should be well aware of the situations, as Mr Stapleton (CEO: Edwafin) told me some time ago that the authorities had been informed. Nevermind, though, we should keep in mind that our little Republic has many empty offices, identifiable by the customary acronyms, dotted around the country, that they possibly did not inform the correct authorities. This would never be known as information provided by Edwafin, as per usual is prity scant.

Perhaps, I may suggest one thing (amongst many others) that the FSB might want to investigate: old Patrick told me once that he had invested R10,000,000.00 in Edwafin, and let's say that he is frugal in giving himself an interest rate, no not 25%, not 20%, not 18% but only the basic 15%. That means he would receive a monthly interest of R125,000.00, and we are not talking of the interest received by other family members and colleagues. I think that I as investor would already feel som much better if they treated themself with the same restrictive measures as they do us. I am actually sure they do, but it would be nice to know for sure.

National Prosecuting Authority
An email was also written to the NPA - very famous in South Africa and I explained the Edwafin investors problems to them. Especially, the fact that the company is illegally keeping our money. We'll see what they make of it. Perhaps one's hopes should not rise to high, as they suggest that one uses the call centre, and call centres and me just don't get along very well. How, in any case, are you going to explain such a complex tale to someone over the phone. So I put them on the mailing list as well. If they don't like it, they can tell me.
Should you want to write to them as well here the address: communication@npa.gov.za.

Currently, I have a list of about 40 co-investors who I intend to sms with the details of this blog and the forum tonight. Should the reader have access to contact details of any investors, you are welcome to contact me at mkoppers@chromatique.com, and perhaps we can compare notes. With a class action being a real possibility against Edwafin and its directors it would be prudent to have as many individuals involved as possible.

Let's Blog

With the energy and eagerness of a wasp trying to find worm to lay its eggs in, I feverishly started this blog. I published two articles, and sent Mr Stapleton an email, thanking him for the intended partial payment of our interest, and informing him of the establishment of the blog. At this point, I didn't want to be unkind and remind him of the earlier promises of restitution by the end of February, which he had now reneged on. It was picture clear to me, that contrarary to all the denials of bankruptcy and playing down their financial woes, they are in dire straights. My suspicion at this point is that they have no money due to them by debtors, but are desperately trying to find new investors to finance the interest obligations they have at this point.
Anyway. As the letter makes clear, the blog still contained limited information, and was closed from the scrutiny of the world at large:
20090224 Email From MK About Blog

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That made no impression on EDWAFIN's human interface at all and from all evidence on the logs, nobody had seen the entries. OK. The next step is to start a Group on Facebook. That was set up and a few strategic emails entered. These emails would be informed of the establishment of the group and they would be informed anything in the Group would be added or edited.

That elicited a certain response, and the next day I received a rather surreal letter from Mr Stapleton (now extremely tiny):
20090226 Stapleton Responds to Blog Idea

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What is so sad about the letter is that it shows the degree of pressure the man is under. He tries to vilify me for demanding my rights, blames everything on the economy, and tells me that I am no expert of EDWAFIN, and that I should not try an be journalist. For all the angels in paradise, how can the CEO of a company so miss the point?
I responded by pointing out the errors of his ways, and invited him back onto the narrow path - please, all I want is may money back:
20090227 Email Reply by MK

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Please, can I have my Money back

Of course Mr Stapleton's comment, and badly veiled threats were not very tasty. Yet, I decided not to react with force in return, but to request that our money be returned by us. Edwafin was now clearly in breach of its commitments, and we were entitled to our money. In view of Mr Stapleton's later arguments I would like to repeat his words from a previous email, where he clearly outlines when the company is in default:

* As I have pointed out to you we are not in breach of our prospectus nor have we ever been, even now in paying within 15 days from month end as is clearly stated in the prospectus. (Only then are we in breach) So we are not in breach and I pointed out it is a temporary problem. That is just about resolved.

The nature of the beast is now slowly revealing itself. The honourable, trustworthy EDWAFIN, smooth talks you into parting with your cash (frequently pension money of the elderly and the source of the only income they have), but when it comes to the push - shove: here is the letter of the law. Yet, as will be seen as we go along, these "legal letters" are not always perceived as being applicable equitably.
Thus my letter to Mr Stapleton:

Non Payment of Interest 20081221

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The reader must please take note that this is a pivotable point in our investment saga with EDWAFIN. We seriously want our money back. Nothing else has any further bearing on the matter. We don't care about Mr Stapleton's sincerety, the reliability of the company and how progressive and impressive it is. The bottom line is that we want our money back and are so entitled by the clauses of the prospectus.