Ross given 10 years' jail

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Former AFA David Ross has been sentenced to 10 years and 10 months in jail for running the biggest Ponzi scheme in New Zealand history.

Friday, November 15th 2013, 2:00PM 3 Comments

by Niko Kloeten

The sentence, handed down in the Wellington District Court today, includes a minimum non-parole period of half the sentence (five years and five months), while an order has been made for reparations, to be determined by receivers of Ross’ companies.

It is more than four years longer than the sentence of six and a half years imprisonment handed down to former Bridgecorp directors Rod Petricevic and Robert Roest over their role in the failure of the finance company.

Ross’ sentencing follows a joint agency investigation by the Serious Fraud Office (SFO) and the Financial Markets Authority (FMA) that found investment positions had been overstated by almost $400 million.

The Wellington based financial adviser pleaded guilty in August this year to four Crimes Act charges of false accounting and one charge of theft by person in special relationship laid by the SFO.

He pleaded guilty to three FMA charges of providing a financial service when he was not registered for that service, knowingly making a false declaration to FMA for the purposes of obtaining authorisation as an Authorised Financial Adviser (AFA) and producing documents to FMA which he knew to be false or misleading.

Late last year he became the first adviser to be stripped of AFA status.  The case also prompted a review of the Discretionary Investment Management Services (DIMS) regime, which is one of a number of new licensing requirements up for consultation.

The investigation into Ross, his company Ross Asset Management (RAM) and related entities began in October last year when FMA received complaints from investors who had been unable to withdraw their funds.

Ross has admitted running a Ponzi scheme which he disguised by falsely reporting clients' investments.

Large portions of client portfolios shown as invested through a broker ‘Bevis Marks' were fictitious and never existed, resulting in an overstatement of investment positions at September 2012 of more than $385 million.

Between June 2000 and September 2012 Ross reported false profits of $351 million from purported trading of the fictitious securities. The overall loss to investors is in excess of $115 million.

More than 1200 client accounts were affected by Ross' scheme and SFO director Julie Read says his offending has had a “devastating impact” on many lives.

Niko Kloeten can be contacted at niko@goodreturns.co.nz

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