Ponzi scheme operator jailed

A foreign exchange broker, Kelvin Wood, who defrauded his clients of more than $7 million has been sentenced to six years and three months’ imprisonment and a minimum period of imprisonment of two years and 11 months.

Wood was sentenced today at the Auckland District Court on representative charges of ‘Obtaining by deception’ and ‘Theft by person in a special relationship’ brought by the Serious Fraud Office.

The Auckland man created a Ponzi scheme after his foreign exchange brokerage began to suffer net trading losses. He used new investors’ funds to pay other investors their reported gains or to refund investment principal. None of Wood’s clients were aware that their funds were being used to repay other investors.

More than $7 million of investment principal belonging to 18 investors was lost by the defendant over an eight-year period. The defendant knowingly reported fictitious profits and false or inaccurate foreign currency trades to investors.