Ah, the rich are different from us. In case you don’t believe writer Scott Fitzgerald in pre-Great Depression America, ask former estate agent Wendy Machanik in post-financial crisis South Africa.
Following exposure by a whistleblower, Machanik admitted stealing R27-million of her clients’ trust account money. Since then, the sentencing deal she struck with the Specialised Commercial Crime Unit has elicited gasps in the world of criminal lawyers. Gasps of envy.
On 90 counts of theft she was last week given correctional supervision and fined R1.5-million, to be paid on a generous instalment system of R300 000 down and the balance at R25 000 per month. On two counts of not keeping proper trust account records she was fined R1 000 or 12 months jail, suspended for three years.
All charges were withdrawn against co-accused Bruce Bernstein, her former accountant. Bernstein appears to have been the sap in the whole set up, not personally benefitting from the thefts which – according to an independent forensic investigation – involved fictitious accounts, money being laundered in Angola, and tax-free handouts to Machanik’s 20-year younger ‘toy boy’ lover, a mysterious Israeli.
Aside from renovating her mansion with the stolen money and keeping her little Porsche runabout on the road, Machanik also spent R80 000 on a pair of earrings. In her defence, we should note that these were bought at a charity auction, which just goes to show what a mensch our Wendy is a regular Ms Robin Hood.
The Democratic Alliance’s justice spokesperson Debbie Schafer slammed the ‘disproportionately lenient’ sentence. ‘[It] is a bargain … steal R27-million and pay back 5.5% of it. The fine works out to about R16 000 per count’. And never a single day in jail.
Machanik however didn’t get away scot free, aside from the fine. Her two years of courtroom appearances and behind the scenes finagling a plea bargain took their toll. Her old soft-focus publicity photographs, showing a coiffed Johannesburg socialite, are at odds with recent newspaper pictures taken on court precincts of a haggard old lady, now more bejowelled than bejewelled.
In February last year Machanik’s lawyers had to ask for a postponement of the case because she lacked funds to pay for her defence. They painted a picture of an ‘emotionally shattered and financially destroyed’ woman.
At last week’s hearing her advocate had to paint a slightly different picture. Though reduced to depending upon the kindness of others – two friends had contributed the initial R300 000 of the fine and she would have to ‘rely on donations going forward’ – he also assured Magistrate Phillip van Niekerk that Machanik was employed and working hard.
Critical to sentencing are the issues of damage and restitution. It would have weighed heavily with Van Niekerk, when deciding on whether to accept the plea bargain, that amazingly none of Machanik’s clients are any longer out of pocket.
In fact, far from her trust account being illegally in the red, as it was when the investigators descended, when Machanik’s estate agency was liquidated some months back it miraculously had a surplus of R1-million in its trust account. All Machanik would admit to in her plea statement is that ‘the shortfall has been replenished with several loans’.
The intriguing question is who would lend around R27-million to a convicted thief who supposedly has to count on ‘donations’ to pay her fine? With such wonderful friends, it is odd too that she didn’t tap them rather than steal from clients.
The Estate Agency Board, through its lawyer Andrew Scarrott, makes the critical point: ‘The fact that an estate agent may repay the funds that have been misappropriated … constitutes theft.
The mechanics of Machanik’s machinations remain impenetrable without considerable further investigative resources being applied. Better, the National Prosecuting Authority presumably reasoned, to cut a deal and focus on the many other cases it has on its plate.
The reality is that embezzlement delivers a sound cost-benefit return to white-collar criminals. While public sector corruption, rightly, arouses condemnation, a crooked socialite gets sympathy and soft loans.
And one gets to keep the earrings.
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