Dr DS Grieve investment proposal august 2009


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Later financial proposal prepared by Dr DS Grieve to coax and entice investors into his web of deceit and lies. The walls came crumbling down in December 2009 when an investor called for return of funds and it was discovered that Grieve was paying early investors interest direct from investments by later investors - a bonafide Ponzi scheme.

Grieve submitted all business into voluntary liquidation after an initial application for simultaneous liquidation was rejected by The Master of The High Court in Pretoria.

Grieve defrauded all his investors, former patients, friends and family.



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Dr DS Grieve investment proposal august 2009

  1. 1. Confidential Proposal by Dr D S Grieve On DR DS GrieveBridging Solutions (Pty) Ltd Investment loan For attention: Dr D S Grieve 14 August 2009
  2. 2. ContentsProposal by ........................................................................................................... 11. Executive Summary ......................................................................................... 32. Introduction....................................................................................................... 53. Typical financial examples................................................................................ 74. Some of the Standard Procedures & a SWOT Analysis ................................. 105. Marketing and Current Clientele ..................................................................... 11 2
  3. 3. 1. Executive SummaryThank you for allowing me the opportunity to introduce you to my business. I havetaken this presentation and divided it into a few sections allowing me to introducemyself, the plan, the projections, the returns, the concepts and the basic structureof the business.In concept my plan is to lend money to clients introduced to me by attorneys. Allthese clients should have a property transaction in progress. The principle allowsfor short term funding as a bridging solution for people wanting their proceedssooner than their deals are registered at the deeds office.What makes this very secure is that at no time do I lend money without aguarantee being held from a bank, linked to an attorney’s undertaking. As I will bediscussing in detail later.There are three types of contracts/transactions I currently facilitate 1. Transfer duty bridging: This is where I charge the client a fee of 4,5% on the capital advanced for the contract and a further fee of R 1,60 per thousand rand advanced per day, after 30 days. 2. Transaction Bridging: ( Sale of Proceeds or sale of second bond funds ) This type of deal is where someone wants his or her property profits before the deal has been registered at the deeds office. For this type of bridging a fee of 4,5% is levied on the capital advanced. If the date of registration takes longer than 30 days a penalty fee of R 1,60 per day per thousand rand is levied. 3. Estate agents commissions: 3
  4. 4. This is where I charge the client a fee of 4,5% on the capital advanced for the contract and a further fee of R 1,60 per thousand rand advanced per day, after 30 days. 4. Developers bridging: ( equity assistance for developers ) This type of deal is used to support developers where they are short on equity for a transaction, but have sufficient security to support the transaction. Rates vary between 3,5% to 5% per month. Depending on the transaction, the equity available will determine the exact rate.I would not limit this business by only looking at these four types of contracts;however that is what has been working very well for the last few years. The neteffect is a potential return of between 15% per annum to all informed investors whomay invest directly into this business.The initial intention is to raise a 100 million rand from investors. I would then offer a15 % interest payment paid quarterly, and taxable in the investor’s hands.Should an Investor at any stage wish to withdraw his investment he would need togive a reasonable three month notice to withdraw his cash out of the business.Unless the contract determines otherwise.Basically this opportunity gives the investor the ideal chance to earn a good securereturn on his money without having any sleepless nights.More details follow…… 4
  5. 5. 2. IntroductionA little about myself:Born: 28 August 1970Matriculated: 1989Studied the following:MBChB (General Practioner) Worked as such for 5 years while I studied furtherthrough Manchester Business School and did an AMP(advanced managementProgramme) that included the following subjects:  Financial accounting  Management accounting  Economics  Business management  Human resourcesArrays of other subjects in the business field were also studied. Further to that I amenrolled in an MBA programme at Pretoria University. I have concluded all mysubjects with a high average and have only my thesis to complete by the 11November 2009.I left medicine and purchased Cynthias Restaurant (Maroelana) in 2003, which Ihave managed very successfully for the past five years, and have now sold thispast year.I am also a shareholder and a member of the board of trustees of the WildernessProtea Hotel.I also have been running a small bridging business with a debtor’s book of varyingbetween R 20 to 30 million for the last two to three years, and this is the promisingbusiness I am trying to fund further. 5
  6. 6. I am looking at raising a 100 million rand to invest in this business. Of course morewill also work.A little more about the business:I have structured the business in a Pty (ltd) company. The current structuredcompany is also registered with the NCR (National Credit regulator).I have already built up a fairly strong clientele and will easily expand this as Ialready cannot supply the demand.I have a string of regular attorneys that use my services and have been doing sofor quite some time. The nice part of this is that I am sitting on a fantastic clientbase with very few bad debt issues. The attorneys are repeat clients and really tryto look after me at every point in each transaction.On average the bridging deals are less than 90 days, with yields in the 4 to 4.5%per month. The business overheads are reasonable, with provisions made forexpenses as shown below.I am looking to find at least another R 100 000 000-00 or more to be used asalready explained. I would also like to achieve this with as few investors aspossible.I will have the books audited by Mozaars on an annual basis. My in-houseaccountant and I will handle all contracts and management statements. Forreference purposes the auditor’s details are as follows: Andre Kretzschemar and Sune de Lange of Mozaars, Roland and Bozaart Tel: 012 3464111 6
  7. 7. 3. Typical financial examplesA Typical monthly income statement would look something as follows.Income generated from a capital base of 10 Million based on an average of 4% permonth. Just as an example, this amount is less than the actual amounts alreadydeployed.Income from profits, fees & Interest R 400 000-00Income from contracts R 10 000-00Gross profit R 410 000-00Direct overheadsAccountant & book keeping fees R 15 000-00Telephone & Fax R 2 000-00Bank fees & interest R 1 000-00Stationary & other R 2 000-00Provision for bad debts R 10 000-00NCR registrations R 10 000-00Smartfin and systems including ITC R 10 000-00Indirect overheads R 50 000-00Gross profit R 360 000-00Profit then applied further to  Marketing  Entertaining clients  Petrol 7
  8. 8.  Cell phone  Support staff  Office rental, electricity, etc.  Salaries  Furniture  Computers  Fax machines, copiers  Other, including my drawingsThis does leave all distributions taxable in each individual’s hands.On the model currently presented we should achieve an average return of 15% perannum as a return for each investor (in rand terms), this is not a bad returnconsidering the current money market rates are less than 10% per annum in SouthAfrica and less than 4% globally . This is obviously a before tax profit.What also makes this an attractive investment is that all loans are based on bankguarantees and/or backed by attorney’s undertakings. If not, sessions and bondsare put in place over fixed property with sufficient equity in place. So the capitalwill be and is always well protected.Liabilities.It would be of good service to the company if an overdraft facility can be put inplace to ensure that the entire capital amount can be used to build a debtors bookof R 30 million rand, than a small overdraft can ensure liquidity with the maximumamount of funds out to earn interest.This would ensure that contracts can roll over and that no clients have to wait formoney to return before they borrow from us.This would in short ensure that every cent from an investor could work to themaximum for the company at all times. This is only a concept and debt has notbeen raised from any financial institution. 8
  9. 9. A typical & idealistic balance sheet should read as follows (based on only 10million book):AssetsDebtors book R 10 000 000-00Current account (investors returns due) R 200 000-00Total Assets R 10 200 000-00LiabilitiesDirectors loan accounts and investor capital R 10 000 000-00Directors returns due R 200 000-00Total Liabilities R 10 200 000-00The main idea will be to keep the books as uncomplicated as possible.The overdraft facility will be a potential liability however that will have a positive netresult for the following reasons:  Allow for faster money movement.  Allow for the roll over of contracts and then the company and investor/s would benefit from a slightly higher possible return.  Would allow for every cent to be borrowed out and thus allow us to have a lower reserve level for current clientele.  Would allow for higher earnings percentage 9
  10. 10. 4. Some of the Standard Procedures & a SWOT Analysis  Payments to investor would be made no later than the 15th of every month that follows the quarter unless otherwise agreed upon.  All contracts, undertakings would be available for all investors to peruse  Any investor wishing to withdraw his or her funds will have to notify us of his or her intention of such in writing. Such withdrawal could take up to 4 months to effect.  Occasionally a free agent may be used who will be given a commission for his duties however this will be seen as an out of contract arrangement and his commission would be in addition to our normal fees charged. Therefore it would not affect our profitability.This list is also something that will be added to, on a frequent basis so as to keepall investors.Strengths: Weaknesses:  Quick & speedy results to  Other players in the market with clients lower rates  Super fast turn around times  Potential changes to the banking on applications act that may affect our way of  Easy secure way to generate doing business a cash flow  Not enough capital for the  Can be managed with very demand, even though there are little office space and fixed other players in the market place monthly overheads  This investment is for cash flow  This investment is a cash flow and not for capital growth investmentOpportunities: Threats:  Many attorneys looking for  Interest rates changing could bridging solutions for their reduce the demand, however clients there are other “financing”  The whole country is our opportunities available oyster, there is a massive  Other players as competition demand for large amounts of could place pressure on the money, for short term bridging demand. 10
  11. 11. 5. Marketing and Current Clientele5.1 Marketing to current clientele I would strongly focus on my current client on making them very happy with my service levels and to ensure that they talk to their friends so that word of mouth does the rest. My current customer list is small and can be easily extended given the extra capital. I currently service the following customers frequently with substantial debtors books in each of their practices:  Bert Smith Attorneys  Kondred Kunssman Attorneys  Salti Verziano Salvatore Veneziano  Vezi De Beer  Celeste Beyers  Buys & Partners  Roux attorneys  And a few others on a more ad hoc basis5.2 New target market I have my eyes set on various practices for the new capital generated, and these are just a few of the first potential clients I will approach. Then any investor with any relation or connection to an attorney’s firm is welcome to give me a lead and I will soon follow it up and show them why we have grown so fast. 11
  12. 12. 5.3 Agents I have occasionally made use of agents too. This is where a third party is involved in bringing in a contract, I normally charge an extra fee which is payable to the agent and this has no impact on our normal profit.5.4 Continued support All these clients like to be treated and made to feel special. So the whole wine and dine thing becomes an important thing to do. So I need to treat them every now and again. All these “functions” are financed out of my half of the profits and has no impact on the profitability to the investors5.5 General The list of attorneys and clients to provide with bridging solutions is endless and carries on and on. It is not just my intention to stay in Pretoria looking for clients. I have a few leads into Johannesburg and will be focusing on the whole of Gauteng in this coming year and then the year after that perhaps the whole of South Africa. One of the fastest ways we have grown was by referral and word of mouth, and on average we can grow by 20 million per month with almost no effort. So with some effort I would certainly get the desired result which would be to grow a debtors book of in excess of R 200 000 000-00, in fact my current debtors book is already close on R 30 million and I am already having to show clients away, rather terrible I would say!!! Please check my website for interest www.grievegroup.co.za I trust that this will be interesting reading for all. Thanks for taking the time to read through this summary of what I do. 12
  13. 13. My contact details are as follows:Dr DS Grieve (David)E-mail: david@grievegroup.co.zaMobile: +2782 927 9734Office: +2712 643 0498Fax: +2786 689 9874PO Box 12095Clubview00145 Larch NoekZwartkops extension 4Centurion0157 13