The man credited with conceptualising a new city 20km from Cape Town called Wescape, borrowed millions of rands from private investors and Absa bank and didn’t repay these debts. The Western Cape High Court has since made judgment against the property developer, ordering him to pay, but around R1 million is still outstanding.

GroundUp has previously reported on the controversial proposed new city of Wescape designed to house 800,000 people, in 200,000 homes on the west coast. Questions have arisen over who will finance the new city, whether the remote location will leave residents isolated and how the developers will manage the numerous regulatory loopholes that they need to jump through, including court opposition from Eskom.

In a book produced by communiTgrow, which is an association of companies that will be developing Wescape and projects like it, David Lee Pearson is described as its “founder” and is credited with coming up with the vision for Wescape.

Absa sues Pearson - and then sues him again

Last year Pearson was taken to court by Absa after failing to pay back just over R3 million. In 2008, PACT Developments, which Pearson directed, borrowed the money from Absa. Pearson signed surety for the deal.

A settlement agreement was reached in the Western Cape High Court whereby the proceeds from the sale of one of Pearson’s properties would go to Absa. The shortfall of about R500,000 would then be paid in monthly instalments.

Pearson never paid these instalments. Absa then went back to court and obtained an order in May this year that states that Pearson must pay back the shortfall, with interest.

Pearson responded to GroundUp via Lara Preston from the Red Flag Design and Marketing agency. She stated that the outcomes of any court action against Pearson were on the public record and that he had settled his debt to Absa, “save for an amount of interest that will be repaid in due course.”

“He’s a fraud”

In 2015, Pearson was also taken to court by Katherina Falkonerth, after failing to repay a R1 million loan. Pearson is described by Falkonerth’s husband Gunter Pauli as a man who builds up relationships with people, convincing them of his scheme, and then defrauds them.

“He presents himself as a Buddhist, as a person committed to housing for the poor. He is a fraud,” said Pauli.

Pauli, an entrepreneur, was originally convinced by Pearson’s dream of Wescape. When Pearson came to Pauli’s home and asked his wife for R1 million that was to be borrowed for a week, then repaid, Pauli and Falkonerth believed him. The money was transferred into a trust account of MHI Attorneys.

Directly after visiting them, Pearson sent Pauli and Falkonerth an email where he thanked them for “assisting and playing a role at this crucial junction of Wescape”. He assured them that the repayment of their R1 million was “not linked to the project finance approval” but he nevertheless attached a letter to show that the funding for Wescape was “in place”.

Pauli says that they have come to the conclusion that what Pearson was presenting was “totally incorrect”. “What he pretended to own or control was not true at all,” he said.

“He involved quite a few people. All had to come to the same conclusion, [that he is] a fraud,” said Pauli, adding that Pearson “owned a myriad of companies. Every time someone narrows down on him, these companies close down and they vanish.”

In response to these claims, Preston told GroundUp on behalf of Pearson that, “As regards to the other unsubstantiated and vague claims around Mr. Pearson’s personal reputation or religion, these do not warrant a response as they appear to be personal opinions that have no specific relevance to the issues raised.”

She also informed GroundUp that on 18 January 2016 the executive of Wescape had decided that “Mr Pearson should no longer be involved in Wescape, although he is still completely committed to seeing Wescape become a reality”.

Falkonerth’s case was brought against Pearson and PACT Diversified (not the same company as the PACT Developments involved in the Absa case).

Falkonerth was represented by Wietz Viljoen of WVA Attorneys and they won their case. But the sheriff of the court stated that Pearson was unable to pay back the R1 million and that most, if not all, of the items in his house in fact belonged to his brother.

During GroundUp’s investigations we heard of other investors who had lent money to Pearson, which he failed to repay, but we were unable to find records at the High Court to confirm these allegations.

For R15 million here’s an “opportunity that … does not come along often”

In an email sent in April last year to a potential investor, Pearson made several claims about the potential of Wescape. He stated that the City of Cape Town had recently established “a 30+ team at their cost to assist us with rezoning.”

In response to this claim, Councillor Johan van der Merwe, the City’s Mayoral Committee Member for Energy, Environmental and Spatial Planning told GroundUp that “planning legislation requires that pre-application consultations take place between the professional team of the applicant and the technical officials of the City for all large-scale applications.”

“This was done for Wescape, as is the case for most other developments across the city. At no stage were as many as 30 officials involved, and for those who were involved, it was as part of their normal duties.”

In the email to the investor, Pearson also calls on him to assist with a 12 month loan of R15 million to secure a 5% shareholding in the company DEVCO. The investor would also need to have business, property interests or experience to add to Wescape down the line.

“The 5% shareholding for a R15m loan is an opportunity that clearly does not come along often,” writes Pearson.

“We will control what happens in a 31 square km area i.e. every business activity needs our approval. We control everything, even the Utility company, as you know,” he states.

Preston said to GroundUp that the email correspondence between Pearson and an investor “refers to the publicly stated business model of Wescape; namely the creation of jobs and the selling of houses to those employed in Wescape, many of whom are still awaiting affordable homes to be built.”

“The Wescape project is a massive, complex and important economic initiative for the Western Cape. The attempt to tarnish the many stakeholders and role-players involved in the process through personal and vaguely worded attacks on one individual is not in the interest of anyone, including the people of the City of Cape Town and surrounds,” said Preston on behalf of Pearson.