Nearly eight years after Regal Treasury Bank collapsed, CEO Jeff Levenstein was finally found guilty on all eight charges against him by acting judge Naren Pandya in the South Gauteng high court last week.
This practically concludes a criminal trial that began two years ago and a judgment that took 10 days to read.
Jeff Levenstein - Fired dissenters
The time taken to secure the conviction underlines the near impossible task of prosecuting complex corporate fraud. Levenstein's case is the first to reach judgment out of a number of corporate prosecutions started early this decade, a list that includes Tigon CEO Gary Porritt and alleged tax offender Dave King. Levenstein himself was arrested in May 2003.The case has now been postponed to August for sentencing, while Levenstein remains under house arrest on R500 000 bail. Levenstein told the FM after sentencing that he planned to apply for leave to appeal - implying further delays.
Levenstein said: "I'm not the type to be blown over, but I want to respect the court system and use the judicial resources available to us." But he says the case has wiped out his family financially. "We're out of money. I rely on charity, I rely on benefactors," he says.
But Levenstein isn't the only one with much to lose after Pandya's judgment.
Certain of Regal's non executive directors now face a R170m legal claim.
In one instance, discussed by Pandya last week, Levenstein issued an instruction to Regal Asset Management head Mark Springett in July 1999 not to sell any Regal shares. Springett raised concerns about the legality of such an instruction, so Levenstein fired him.
WHAT IT MEANS
 Jeff Levenstein guilty on all eight charges
Liquidators issue summons on directors
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Two of Regal's non executive directors - Bertie Lubner and Gerald Schneider - refused to sanction Springett's firing before a board discussion, so Levenstein fired them too. The other non executives simply signed a resolution confirming Springett's dismissal.
Pandya said: "This court finds [that] if you look at the [evidence], it confirms Lubner's view of the lack of independence of a number of board members."
Harold Jacobs, lawyer for Regal's liquidators, says "summons has already been served on members of the board for R170m, including chairman Jack Lurie; non executive director Ronnie Buch; Levenstein; chief financial officer Jonathan Davis; and Derek Cohen [who was Regal's chair in its final days]".
Jacobs says the claim is based on the fact that these directors either allowed the company to trade recklessly, or were supine when they ought to have reined in Levenstein. The R170m was the final "loss" to shareholders and depositors on Regal's liquidation.
