Tech Vault ‘Ponzi’ scheme busted, liquidator says elderly woman with dementia among cold-calling victims

A New Zealand business, Tech Vault Enterprises, operated under a “Ponzi operation model,” according to liquidator Pritesh Patel. The company, incorporated in April 2020, took money from customers via an intermediary called Flo 2 Cash and used those funds to fulfill orders for previous customers, rather than generating revenue through legitimate sales.

The Scheme Unravels

Rahil Munir Tharani of Hamilton is listed as the sole shareholder and director of Tech Vault Enterprises. When contacted, Tharani stated, “I’m not good at the moment…I’m not right with my health,” and claimed no knowledge of Flo 2 Cash, stating, “They’re a different entity.” Patel, however, reports that Tharani is “fully co-operating” with the liquidation process.

Did You Know? Tech Vault Enterprises pleaded guilty at the first available opportunity to a breach of section 7, a prohibition against unconscionable conduct.

The liquidation began on January 30th, and Patel’s initial report reveals a troubling pattern. Tech Vault rarely held stock, instead relying on funds from new customers to purchase goods for those who had already paid. A call centre was reportedly used to target vulnerable individuals nationwide, including at least one elderly woman with dementia who expressed confusion about continued sales pitches.

Financial Fallout

Currently, 51 customers are owed a total of $38,865.50. The situation is further complicated by significant debts owed to the Inland Revenue Department (IRD). Patel explained that customers who had already paid taxes on their purchases now become unsecured creditors, potentially reducing their chances of recovering their funds.

Expert Insight: The use of an intermediary company, Flo 2 Cash, to handle customer funds is a common tactic in Ponzi schemes, creating a layer of separation and complicating the tracing of funds. This structure often hinders recovery efforts for defrauded investors.

Patel has requested the release of approximately $15,000 held by Flo 2 Cash, but has yet to receive a response. The Commerce Commission investigated Tech Vault, trading as HouseSmile, for compliance with the Fair Trading Act and has also filed proceedings against Brand Developers Limited, trading as The TV Shop.

Frequently Asked Questions

What was the primary method used by Tech Vault Enterprises to operate?

Tech Vault Enterprises used a “Ponzi operation model,” taking money from new customers to fulfill orders for existing customers, rather than generating revenue through legitimate business activity.

How many customers were affected by the scheme?

51 customers, located from Invercargill to the north of New Zealand, are currently owed $38,865.50.

What role did Flo 2 Cash play in the operation?

Flo 2 Cash acted as an intermediary company, collecting deposits from customers on behalf of Tech Vault Enterprises.

As investigations continue and the liquidation process unfolds, what steps can be taken to better protect vulnerable consumers from similar fraudulent schemes?