Fraudster who ripped off Queenstown investors gets 10 years in slammer

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Ponzi scheme fraudster David Ross has been sent to jail for 10 years, 10 months, The New Zealand Herald is reporting.
 
Ross pleaded guilty to charges laid by the Serious Fraud Office and the Financial Markets Authority, including four of false accounting and one of theft by a person in a special relationship. 

According to authorities, the former finance adviser, aged 63, conducted a Ponzi scheme involving 1200 customer accounts at his business Ross Asset Management, which he disguised by falsely reporting clients’ investments. 

A Ponzi scheme is when investors are paid out using incoming money from new clients rather than legitimately made profits or returns. Such schemes generally require a constant stream of new investors, who believe their funds are being properly used rather than being paid out to other clients. 

Ross told his clients their investments were worth $380 million more than was actually the case. 

The total amount clients actually invested with his business was $115 million.

The investigation into David Ross, 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. A joint investigation with the SFO subsequently commenced. 

Reacting to today’s sentence, Serious Fraud Office director Julie Read said that more than 1,200 client accounts were affected by Ross’ scheme ” so his offending has had a devastating impact on many lives.” 

“The financial losses are not only significant to those individuals but they will have a flow on effect as those investors’ dealings in the New Zealand economy are impacted. It is important the SFO remains vigilant in fighting financial crime so we don’t see a repetition of this sort of scheme.” 

FMA chief executive Sean Hughes, said he had the utmost sympathy for investors who had trusted their finances with David Ross and that the law had been changed as a result. 

“From next year financial advisers who manage a client’s portfolio under an investment authority will no longer be able to hold that money or property themselves. 

“This change will better protect the security of investors’ money and FMA’s risk-based monitoring of AFAs will assist in ensuring that they are meeting their new obligations,” said Hughes. 

Meanwhile, out-of-pocket investors hit by Wellington businessman David Ross’ fraud hope they will be refunded $15 to $20 million from Inland Revenue, The New Zealand Herald is reporting.
 
Ross Asset Management’s liquidators received a letter from IRD yesterday detailing a mechanism for investors to file amended tax returns. 

This would be done on the basis that the actual value of their investments was lower than when they filed their original tax returns. 

“As the actual RAM related investment values determined by the liquidators are lower than the values in the original reports, investors may seek to have their income tax returns amended,” the letter from the IRD said. 

Ross Asset Management Investors Group spokesman Bruce Tichbon said this was a “big win for investors” 

“We estimate that about $15 to $20 million will be refunded by IRD. We will seek confirmation of these figures by IRD,” he said yesterday evening. – The New Zealand Herald