Boss of South Africa’s biggest pyramid scheme gets ruling after death in Brazil

A Brazilian State Attorney General has dismissed allegations that Johann Steynberg, the late CEO of Mirror Trading International, was granted irregular access to a computer and the Internet while in prison.

Acting public prosecutor Lauro Machado Nogueira recently released a report stating that evidence from the prison authorities contradicted the allegations.

He also revealed that Steynberg had seen 17 different lawyers while in prison.

Steynberg was being detained in the Brazilian state of Goiás last year when a prison union representative publicly accused the warden and officials of allowing him access to the Internet.

Maxsuel Miranda das Neves, president of the Goiás Penal System Employees Union, alleged that Steynberg was working to preserve his ill-gotten wealth from inside the prison warden’s office.

Mirror Trading International (MTI) was the biggest pyramid scheme ever operated in South Africa.

It launched in 2019 and drew in members worldwide by promising average monthly returns of 10%. It also offered ways for members to earn substantial bonuses by recruiting more people into the scheme.

Even using the most conservative estimates for the scam’s value at the time of its collapse, at least R14.7 billion worth of bitcoin flowed through it.

This dwarfs all other South African pyramid and Ponzi-type schemes for which estimated deposits are available, including Krion, Travel Ventures International, and BHI Trust.

MTI completely overshadowed local cryptocurrency-based scams like Africrypt, the scheme perpetrated by South Africa’s “Bitcoin Brothers”.

MTI made headlines in September 2020 when a group calling itself Anonymous ZA exploited vulnerabilities in the scheme’s poorly-coded website.

Together with a MyBroadband investigative journalist and community members, the group exposed the inner workings of MTI.

Globally, financial regulators had also begun issuing warnings against MTI, including South Africa’s own Financial Sector Conduct Authority, which orchestrated a dawn raid of its offices.

As the noose tightened, Steynberg travelled to Brazil and went missing in December 2020. Withdrawals, which had already become a problem, completely halted.

Speculation abounded. Some believed he had absconded with everyone’s money, others that he had been killed.

Those who continued to believe in Steynberg’s character as a good, Christian man who loved his wife put stock in theories that “the man”, Russians, or Freemasons had got to him.

Disinformation circulated at the time sought to fuel these conspiracy theories.

It is unclear how much money Steynberg made off with when he fled.

One estimate said there were roughly 7,000 bitcoins in MTI’s wallets when Steynberg vanished — worth R8.965 billion today.

Almost exactly a year later, Steynberg resurfaced — this time in Brazilian news reports excitedly proclaiming that a cryptocurrency scam kingpin from South Africa had been arrested.

Goiás police had reportedly located Steynberg in the state capital of Goiânia and arrested him for using forged identity documents.

He was tried and found guilty, though his sentence was commuted to a substantial fine.

It later emerged that Steynberg was transferred from prison to house arrest pending extradition proceedings.

Court documents revealed that Steynberg had been living the high life while hiding in Brazil, including using a helicopter for leisure transportation.

They also stated that the contact who provided Steynberg’s fake ID had supplied him with cocaine.

According to the documents, he bought properties under the names of two girlfriends whose company he had kept at different times while living in different cities.

In Miranda das Neves’ allegations that Steynberg was receiving privileged treatment while in prison, he also dropped a bombshell — one of those girlfriends had become Steynberg’s wife at some point.

This was despite Steynberg having a wife and child back in South Africa.

Miranda das Neves alleged that Steynberg’s Brazilian wife came and went as she pleased at the prison without needing an appointment.

He also alleged that on at least one occasion, Steynberg and his lawyer were alone in the prison director’s office, where there was computer and Internet access.

After conducting its investigation, the Goiás Attorney General has dismissed both allegations.

“Despite the lack of documentation to support the charges, this ministerial body promptly requested a series of inquiries from the General Directorate of Penal Police,” it stated.

According to Nogueira’s report, the prison produced evidence contradicting the allegations regarding his wife being able to visit as she pleased.

These included visit reports, copies of the incident logbook, and other documents.

“Regarding the issue of unscheduled visits and bypassing the set procedures, the claims do not hold, as there is a record of all visits, both from lawyers and his partner.”

Nogueira said there was an official document authorising visits from his partner, along with instructions for regularising her entry into the prison unit.

There were also notes on about seventeen lawyers who saw him during his time in prison.

“As for the last allegation that the inmate had access to laptops in the director’s office of the prison unit, this also does not hold due to the lack of evidence,” Nogueira stated.

Steynberg reportedly died last month while under house arrest in Goiás. A local publication said he was on a farm in Pirenópolis, around 130km Northeast of Goiânia.

According to a medical report leaked online, Steynberg suffered acute respiratory failure followed by sudden death due to a massive bilateral pulmonary thromboembolism.

The medical report noted that Steynberg was a chronic smoker.

His lawyer, Thales Jayme, said that Steynberg had been facing a series of escalating mental health problems, including severe anxiety that may have led to panic attacks.