Is Jabulani Cashflow Ngcobo a Fraudster?

One of Durban’s youngest millionaires, Jabulani “Cashflow” Ngcobo, who currently resides in Johannesburg, where he is living a lavish lifestyle, has been accused of defrauding a number of people of their hard earned money through his mysterious foreign exchange (forex) trading businesses, namely Cashflow Pro, Cashflow Equities and Knowledge to Trade, all of which are not registered with the Financial Services Board (FSB).

Recently, the Sunday Times published reports alleging that Ngcobo, together with his business partner Mzabalazo Dlamini, who routinely conduct forex trading seminars across the country, have enticed thousands of people into investing with them in the highly volatile and risky forex market, where only 5% of traders are said to be consistently profitable in the long term. It is reported that Ngcobo’s company, which charges hefty training fees of R10 000 – R12 000, not only teaches people how to trade, but also accepts investments from clients who want experienced traders to trade on their behalf. It is alleged that some of those who trusted Ngcobo’s company with their money lost all their investments. Now they want their money back and Cashflow is nowhere to be found.

One trader we talked to spoke in defence of Cashflow, saying, “The forex market is well known to be unpredictable and investors are always advised to invest the amount of money they are willing to lose. If Ngcobo warned his clients about the risk of losing their money but they still signed up, he is not the only one to blame.  The optimism of many investors makes them underestimate the riskiness of forex trading, despite being warned about it. They end up risking more money than they can afford to lose. When their investments are wiped out, they find it convenient to put the blame on someone else and demand their money back, claiming to have been conned while they knew from the start what they were getting themselves into. Like most traders, it is possible that Cashflow lost the money his clients invested while earnestly trying to generate profits for them, without any intention to commit fraud.”

However, although Ngcobo may not have deliberately defrauded his clients, his business modus operandi borders on fraud if viewed from the perspective of the Consumer Protection Act, which expressly forbids direct or indirect promotion of and participation in multiplication schemes. The Act describes a multiplication scheme as any investment scheme that promises returns at least 20% above the repo rate, which is currently at 7%. Therefore, promising investors an annual interest of 27% and above would be in breach of this Act. Cashflow Ngcobo has been promoting his forex trading business in South Africa for a while now, flaunting his wealth on social media, showing people that it is possible to make substantial profits in the forex market in a short space of time. This has resulted in many investors trusting him with their money, investing large sums of cash and paying thousands for training. One of Ngcobo’s clients, who is now taking legal action against him, claims that Cashflow introduced him to an investment opportunity that would grow his money by up to 70% in six months. He then invested R200 000. However, Cashflow failed to deliver and he lost his money. Another group of people who lost their money claims that Ngcobo promised that their R40 000 would grow by up to 300% in one year but that never happened.

On his website, which is currently suspended, Ngcobo describes himself as follows: “Jabulani Ngcobo is a young, ambitious entrepreneur. He is calculated amongst the youngest most successful business men in South Africa. He has made a name for himself by training and exposing most South Africans to the trading business. ‘Jabu’ has produced thousands of traders over the years working together with one of the most successful and popular broker[s] well known as CM Trading.” However, CM Trading distanced itself from Cashflow, saying he and his buddies were using their name to dupe the public.

The allegations leveled against Ngcobo have somewhat negatively affected his image. While some see him as a role model, others are starting to see him as a fraudster.  Another thing that raises eyebrows about the legitimacy of his business is the fact that it does not appear on the database of authorised financial services providers (FSPs). All FSPs, including financial advisors, are required by law to register with the FSB. According to reports, a case of fraud has been opened against Cashflow. If evidence shows that he acted in breach of the legislation governing FSPs, he and his business partner(s) may find themselves behind bars. Alternatively, they could be asked to pay back the money.