There is a big difference between knowingly investing in a high-risk technology business and being sold misinformation.

I recently wrote about a group of companies: AllQuotes, BuyDirect and MiBiz, which fall under a parent company called FinGroup. I wrote about concerns raised by investors and insiders about the business practices behind these companies which sell “licenses” in the business which they claim will produce a passive income. The promises range from 26% to 40% income per year, yet the investors have received no income since October last year.

Further investigation into the MiBiz operations has revealed how these companies and their key role-players operate.

MiBiz has been contracted to be the marketing arm of a payment technology called Pay2, developed by tech entrepreneur Llewellyn Morkel. In a nutshell, Pay2 is a payment system that allows small businesses to collect payments from customers without having to have a credit card or debit order facility. Pay2, like any technology, has potential to grow, but over time. It is almost impossible to deliver to its investors an income of 40% in its first year. Yet that is exactly the marketing pitch that MiBiz is using to get people to spend between R39 000 and R50 000 on a MiBiz license. Sources indicate that the number of current transactions has been hugely exaggerated as well as the timeframe of reaching certain transaction levels. These sources further claim that the level of involvement of businesses that MiBiz claims to have signed up has also been exaggerated.

The problem for MiBiz, and therefore Pay2, is that people have no interest in high-risk, long-term investing. Marketing material that says “this is a high-risk venture that will only see meaningful profits in 3 to 5 years’ time ‒ if at all” would likely attract no investors. The key individuals behind the marketing of the product know that the best way to lure  investors is to talk about passive income and very high returns, and to turn on the charm.

Robert Weimar is listed as the director of MiBiz although sources say that Kevin Cholwich and Theuns Schoeman are central figures and have been involved in previous “passive income” schemes. Weimar told me that Cholwich and Schoeman are independent consultants.

Inflated figures and unrealistic projections

Marketing material which was sent to a potential “license” holder shows Pay2 as having 5 000 transactions per day in month one, which will increase to 51 000 transactions per day by month 12, and that MiBiz receives 15c per transaction which is paid to license holders. Based on the spreadsheet contained in the marketing material, license holders can expect to receive a total income of R15 104 per license over a year – around a 40% income return.

I met with Pay2’s tech developer Llewellyn Morkel to discuss these figures. When Morkel saw the current and projected transactions used in the marketing material, he told me that current transactions were a fraction of these figures and that the goal of 51 000 transactions a day is years away. Based on this, it is not vaguely possible for MiBiz to meet the income projections used to market the licenses to potential investors.

The marketing presentation made to potential license holders also claims MiBiz has signed up various companies, churches and foundations to use the Pay2 system.  In response to questions specifically about one church and one foundation mentioned in the marketing presentation, Robert Weimar, listed director of AllQuotes, BuyDirect and MiBiz as well as spokesperson for FinGroup, stated that “this church uses or (sic) facilities to collect tides on Sundays” and “this charity uses us to collect donations.”

When I contacted these entities, they asked not to be named in the article due to negative association, but in neither case was there an active payment app or existing transactions. The foundation/charity said the app was still in development and the church informed me that they were still making a decision as to whether it made sense for their members.

Promises that they are signing up with major retailers turns out to be part of a project with the WiGroup which Morkel says has not happened yet because of a limited development budget.

Morkel is understandably upset that what he believes to be a promising technology is getting bad press due to being associated with MiBiz. MiBiz has already received over R800 000 from new license holders yet Morkel says Pay2 has not received a single cent to use towards development costs. According to the brochure, the 2 000 licenses for sale (which would bring in around R78 million) would be used to market Pay2 and MiBiz.

Another issue is that the hundreds of existing license holders in AllQuotes and BuyDirect who believe they have lost their money (an estimated R120 million), are pinning their hopes on Pay2’s success and that it will generate sufficient income to at least give them their money back. Morkel believes this may be possible but they have to be realistic about what those returns will be and how long it will take before they see any real benefits.

Robert Weimar has re-iterated that the license holders have not lost any money. “We have been working under difficult circumstances to maximise income to share with licence holders, further each licence holder has had ample opportunity to generate their own income from the licence and others have chosen not to utilise the licence to generate their own income.”

So the question is: if it seems too good to be true, is it? You decide for yourself.

This article first appeared in City Press.