A Queenstown investor in a $400 million alleged Ponzi scheme has welcomed news the man behind it is facing charges.
The Serious Fraud Office has laid charges against David Robert Gilmour Ross – the man behind collapsed investment company Ross Asset Management (RAM), the Financial Markets Authority reveals in a statement this morning.
Ross faces four Crimes Act charges of false accounting and one of theft by a person in a special relationship. All charges have been laid in the Wellington District Court.
Cleaner Bev Nicholson welcomed the news.
“It’s been well overdue as far as we were concerned and I hope they throw the book at him.”
Nicholson is one of an estimated 27 investors in RAM from the Wakatipu, some of whom are said to have lost life savings.
All up, more than 1200 investor accounts, owed $450 million, have been told about $11m has been found.
Nicholson claimed in Mountain Scene last month that Ross convinced her not to withdraw her investment with RAM after her partner died in 2009.
Nicholson had been led to believe the $50,000 she originally put in with her partner Roger Macaskill had doubled in five years.
Nicholson alleged: “After Roger died, I wanted it out and [Ross] talked me into just taking some. I took $20,000. He was supposed to [also] give me $6000 a year – it never happened.”
Today’s statement says a joint investigation into RAM and related entities commenced in November last year after complaints were received regarding the delayed or non-payment of funds to investors.
It’s understood a Queenstown tourism industry player made a complaint in the matter.
Following enquiries by the FMA in October last year, the FMA took immediate action to preserve investors’ funds by obtaining asset preservation orders and orders appointing receivers and managers to the Ross Group of entities.
These orders were obtained under the Financial Advisers Act and remain in place. Initial inquiries by receivers showed investments of only $10.2 million actually existed.
In response to the potential loss, large number of victims, concerns of the receivers, complexity of the case and the significant public interest, both FMA and SFO commenced the joint investigation, the joint statement says.
The charges laid by SFO allege Ross conducted a Ponzi scheme which he disguised by falsely reporting clients’ investments.
They allege that 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 by more than $380 million.
More than 1200 RAM client accounts have been affected by Mr Ross’ scheme.
“The allegations made amount to serious criminal matters,” SFO acting chief executive Simon McArley said.
“However the saddest fact of all of this is the position that Mr Ross’ clients find themselves in.
“The joint activity between SFO and FMA demonstrates we can work effectively together to both address the serious criminal offending and protect as far as possible the interests of the victims of that offending.”
“FMA will now complete its investigation into conduct by Mr Ross under the Financial Advisers Act,” FMA head of enforcement Belinda Moffat said.
“We will also shortly release best practice guidance for financial advisers providing discretionary investment management services to ensure our expectations are well understood by advisers, as well as guidance for investors considering using such services.”