The Grand Scam – An Expert Dissection & Expose of a Classic Ponzi Scheme

Rating: 5 out of 5

By all accounts, Barry Tannenbaum was the most unlikely person to either be a crook or even to be able to harm a fly yet ultimately the extent of his fraud & lies was to affect not only the super-rich for which losses of R30m were like pocket money & were written off to experience without a second thought.

But it was not only the mega-rich who were financially affected but life-long friendships were annihilated as a consequence but ultimately the small players were sucked in through greed & their better judgment into this scheme.

The picture that is steadily built up about the chief architect, Barry Tannenbaum, is a person of very average ability but with serious credentials being a descendant of the founder of Adcock Ingram, a giant in the world of pharmaceutical industry in South Africa. With pretensions of being in the same league as his brother & his grandfather, all that he could manage was a mediocre medical chemical trading business with modest profitability.

Using the family name & a huge dollop of spin, exaggeration & outsize lies, he pretended to have acquired contracts for huge amounts of the active ingredients for ARVs at huge margins. The basis of the scam was that short term trade finance was required to fund shipments of APIs at enormous margins. For sixty days financing, margins in excess of 20% could be earned.

Combined with a slick sales pitch, the prospective customer was suckered into parting with their money. Once in Barry’s smooth palms, they were enticed to roll their investment over in order to fund the next shipment. Seeing dollar signs & huge returns, most of the Investors could not resist the allure of becoming fabulously rich.

They rolled their investment over and over and …………

Two scaly & unlikeable characters were drawn into this scheme as Agents. Both lawyers by training became veritable industrial strength vacuuming machines as they conned all & sundry into parting with their money. The most disagreeable of the two was Darryl Leigh, an obnoxious oaf of a man. His counterpart, Dean Rees, while not as unlikeable as Darryl, nevertheless flaunted his new found wealth & indulged in extravagant purchases such as R1m watches.

The money had clearly gone to the heads of these two scum-bags. By using every trick in the book, they conned all & sundry by all means – fair & foul – but mostly brazen & willful lies & their innate boundless confidence, that they were onto the best wicket that they would ever be.

Rees was the first to become suspicious of the whole scheme as Barry had to manufacture excuses in the form of forged letters, Purchase Orders & shipments to substantiate these claims. Like all such nefarious schemes, the ultimate downfall was the scale of the future investments required to sustain the cash flows. The banking crisis put pay to that. In a panic, Barry became even more brazen in his endeavors to quell the disquietude amongst the Investors.

From the flurry of emails circulating, one gains a picture of a nonchalant Barry swatting aside concerns as if everything was still under control – the demeanor of a true sociopath without a conscience.  The magnitude of lies escalates as the scheme implodes.

Due to Barry’s hail-fellow-well-met attitude & bumbling exterior, many people have cast Dean Rees as the villain in the piece. I am not convinced. For a start, Barry had been dabbling in this business for many years & knew the operations of the industry whereas both Darryl & Dean Rees were novices. Secondly all the cash & all the “shipments” were handled by Barry himself. Even at the very end, Barry was still unwilling to provide a complete – albeit forged – list of debtors & rebuffed all efforts at a complete review of the operations. His dilatory, cavalier & casual responses despite impending doom are breathtaking. With Investors in a panic, he calmly piled on the lies knowing full well that the end was nigh. Even at the end, his shameless conduct displayed no sense of foreboding in his chatty emails let alone any remorse.

This does not in any way remove culpability from these two disreputable individuals as they lied, sweet-talked & cajoled potential investors into parting with their hard earned cash. Most of these investors, even took second bonds on their houses in their rush to become rich overnight.

What this episode does indicate to me is that if the wunderkinds of industry & finance can be scammed so easily due to their greed, then how can lesser mortals -like the average citizen – not fail to be seduced by their devious plots.

Of the three dramatis personae, none apart from Barry himself is portrayed as having any redeeming features. Even today in spite of the catastrophe visited upon certain people, there is grudging respect for him as a person. Being in their shoes, I would not have given him the time of day let alone have made a positive observation regarding his character.

With South Africa’s National Prosecuting Authority at the forefront of the prosecution & Glynnis Breytenbach being snared in political battles together with a lack of an extradition treaty with Australia, Barry Tennanbaum is unlikely ever to face prosecution.

Rob Rose has skillfully crafted this expose with its endlessly fascinating portrait of willful lies, deceit & rank greed partly as a cautionary tale. However I fear that its words of wisdom will be discarded by a future generation of Investors eager to make their millions without undue effort.

 


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