It is being termed as the largest ponzi scheme scandal to hit New Zealand. The country's Financial Markets Authority (FMA) and Serious Fraud Office (SFO), on Thursday, prosecuted David Robert Gilmour Ross, a financial professional from Wellington, on four counts of false accounting and one count of theft by person in special relationship. He has been taken into custody and will be sentenced in Oct.
The charges on Ross, is the result of the joint investigation conducted by FMA and SFO. Regulatory authorities have been looking into business operations of Ross, his company Ross Asset Management (RAM) and its related entities. The prosecution termed his operation as the largest ponzi scheme to have ever unearthed in the history of the nation.
Investigations into Ross' operation followed after complaints from investors, who were unable to withdraw funds, they had invested in his company.
Following its investigation, FMA, in late June, had charged Ross on several counts of fraudulent practices. He was charged with providing a financial service for which he was not registered. Another charge against Ross was for knowingly making a false or misleading declaration to obtain authorisation to operate as Authorised Financial Adviser. Additional charges include knowingly supplying false and misleading information and documents to FMA.
Following investor complains, it was reported that FMA took immediate steps to preserve investors' funds. Prior to launching its joint investigation with SFO, FMA obtained asset preservation orders and appointed receivers and managers to oversee company operation.
SFO alleged that Ross conducted the ponzi scheme by falsely reporting clients' investments. It said, large portions of client portfolios shown as invested through a broker, 'Bevis Marks,' were in fact fictitious and never existed. All this resulted in an overstatement of investment positions by more than $380 million.
Investigators alleged that Ross carried on the scheme by luring new investors to his Ross Asset Management fund with promises of returns of up to 30 per cent.
Reports say, more than 1,200 RAM client accounts have been affected by Ross' scheme, of which investigators believe, 700 will never recover their investment.
Forex Magnates which reported the case, says, in New Zealand, the Financial Markets Authority (FMA) has risen in the course of a year, from just a register of companies with very little administrative, compliance or regulatory enforcement abilities, in to a fully-fledged financial markets' regulatory authority with stringent procedures and powers to prosecute individuals and firms.
Internationally, ponzi schemes, though, strictly monitored, succeed in swindling investors who are lured by promise of high returns.
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