New Zealand charged a 63-year-old financial adviser with running the biggest Ponzi scheme ever alleged in the South Pacific nation.
The Serious Fraud Office and Financial Markets Authority allege David Ross defrauded investors of about NZ$400 million ($317 million) through his closely-held Ross Asset Management Ltd., which collapsed in November last year. He will face four charges of false accounting and one of theft in the Wellington District Court, the agencies said in a joint statement today.
“It’s yet to be seen if he’s New Zealand’s Bernie Madoff, but the amounts were high by New Zealand standards and hurt a lot of people,” said Wellington barrister Kevin Sullivan.
Bernard Madoff, 75, is serving a 150-year sentence in the U.S. for what prosecutors said was the biggest Ponzi scheme in U.S. history after his victims lost $17 billion. Ross, who is accused of overstating investment positions by more than NZ$380 million, didn’t enter a plea today and is due to appear in court again on July 4, his barrister Gary Turkington said.
Ross “conducted a Ponzi scheme which he disguised by falsely reporting clients’ investments,” according to the statement. “Large portions of client portfolios shown as invested through a broker” were “fictitious and never existed.”
Initial inquiries by receivers showed investments of only NZ$10.2 million actually existed, the agencies said. The alleged Ponzi scheme is the biggest ever in New Zealand, the SFO said.
Ross has no comment at this stage, Turkington said.
Receivers PricewaterhouseCoopers said in November that Ross Asset Management owed clients about NZ$450 million. Investigations were hampered because many of the investment decisions were made by sole director Ross, who was hospitalized at the time and unable to assist, they said.
About 45 New Zealand finance companies failed between 2006 and 2011, according to the report of a parliament inquiry published in October 2011. The failures -- either receiverships or debt moratoriums agreed with investors -- put at risk NZ$6 billion of deposits and affected at least 150,000 people, the report said.