David Ross sentenced to 10 years, 10 months jail over Ponzi scheme

Friday 15th November 2013

David Ross, the former manager of Ross Asset Management, has been sentenced to 10 years and 10 months after pleading guilty to charges that he ran a Ponzi scheme. He will spend at least half that time in jail.

"The cold, hard reality is you were a liar and a thief," Judge Denys Barry said in sentencing Ross in the Wellington District Court.

The judge adopted a starting point of 16 years and discounted that to take into account the early guilty plea, offer of reparations and some degree of remorse.

Ross's lawyer, Gary Turkington, told the court a deed of settlement was entered into yesterday that would see Ross forgo his share of several properties including his family home to help make repayments.

Turkington said the losses to investors are in the order of $100 million to $115 million and that may be reduced by $1-to-$2 million by the latest settlement deed.

In August, Ross pleaded guilty to four charges of false accounting and one of theft by a person in a special relationship, laid by the Serious Fraud Office.

He also pleaded guilty to charges laud by the Financial Markets Authority that he provided a financial service when he was not registered for that service, he knowingly made a false or misleading declaration or representation to FMA for the purposes of obtaining authorisation to become an Authorised Financial Adviser, and he supplied information or produced documents to FMA which he knew to be false or misleading.

Ross's prosecution related to $384.8 million of assets recorded in the accounts of a Ross vehicle, Bevin Marks, at Sept. 30 last year, which court documents described as being the product of "fictitious transactions."

The SFO claimed 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 is a money-go-round arrangement which uses cash from new investors to pay returns to existing members, who typically think they're reaping the rewards of an astute investment plan.

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.

Earlier this month, the High Court in Wellington extended asset preservation orders over the assets of Ross, RAM and related entities to include DRG Ross Family Trust, also known as the David Robert Gilmour Ross Family Trust.

PwC's John Fisk and David Bridgman were appointed to preserve the assets of the Ross family and related trusts as part of the wider investigation into Ross Asset Management.

BusinessDesk.co.nz

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