Noseweek magazine claims it's stumbled upon a so-called Ponzi scheme involving several hundred wealthy South Africans.

A Ponzi scheme is a fraudulent investment operation that pays returns to investors from their own money or money paid by subsequent investors rather than from any actual profit earned.

Noseweek Editor Martin Welz says their information shows that some 400 millionaires invested an estimated R2-billion with businessman Harold Tannenbaum, with the promise of great returns.

Tannenbaum, who also goes by the name Barry, is the son of the founder of pharmaceutical company Adcock Ingram.

According to Welz some of those on the list include a former MD of a major retail chain, as well as the former CEO of another retail chain.

Welz alleges Tannenbaum got his investors to pay upfront so he could import raw materials for the manufacture of pharmaceuticals here in South Africa.

"He was supplying several of these local manufacturers at a huge profit, but he got their orders two months in advance and if he could buy for cash in China or India or wherever else he was buying, he could make a more than handsome profit so he could afford to offer his investors wait for it, a 20 percent return every eight to ten weeks."

Welz says the extent of the scheme finally became apparent last week, when the investors called a meeting.

"When they arrived at the meeting at a well-known firm of attorneys? office in Johannesburg, Routledge Modise, they discovered that two hundred of them turned up and there were as many more who hadn?t managed to make it to the meeting, and as I say then the whole sorry, sad saga has started unraveling."

The editor claims the magazine had evidence to substantiate their information, as the deals were all well documented.

He also alleges that Tannenbaum had a few agents working for him, including lawyer Darryl Leigh who hit the headlines a few months ago when a friend of his died after the two of them raced each other on William Nicol Drive in northern Johannesburg in their expensive sports cars.

The other is apparently Dean Rees, an attorney, who has since emigrated to Switzerland and bought a mansion in Lucerne from his estimated R600-million made in the scheme.