RAM's David Ross charged over alleged $400 mln Ponzi scheme

Thursday 13th June 2013

Failed fund manager David Ross of Ross Asset Management has been charged with running a $400 million Ponzi scheme by the Serious Fraud Office.

The Wellington-based financial adviser faces four charges of false accounting under the Crimes Act and one charge of theft by a person in a special relationship after the SFO completed a joint investigation with market watching, the Financial Markets Authority. The case will be heard in the Wellington District Court.

The white-collar crime investigator alleges large portions of Ross's client portfolios were invested through a related broker Bevis Marks, with the value overstated by more than $380 million. A Ponzi scheme uses cash from new investors to pay returns to existing members, who typically think they're reaping the rewards of an astute investment plan.

"The allegations made amount to serious criminal matters," acting chief executive Simon McArley said in a statement. "The joint activity between the SFO and FMA demonstrates that we can work effectively together to both address serious criminal offending and protect as far as possible the interests of the victims of that offending."

Ross Asset Management's assets were frozen and receivers appointed last year by the FMA after the watchdog received complaints about delayed or non-payment of investor funds. Ross wasn't available in the early days of the investigation due to his hospitalisation under the Mental Health Act.

PwC's John Fisk and David Bridgman were initially installed as receivers and managers of the operation that Fisk had described as having the hallmarks of a Ponzi scheme. Some 1,720 investor accounts show investments totalling $449.6 million, though Fisk and Bridgman have only been able to identify $10.5 million of assets.

The SFO said today more than 1,200 accounts had been affected by the scheme.

FMA head of enforcement Belinda Moffat said the agency will wrap up its investigation into Ross's conduct under the Financial Advisers Act, and plans to issue best practice guidance for advisers providing discretionary investment management services.

BusinessDesk.co.nz

Comments from our readers

No comments yet