David Ross pleads guilty to all charges, remanded in custody
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David Ross, former manager of Ross Asset Management, pleaded guilty to five charges laid by the Serious Fraud Office and three charges by the Financial Markets Authority in the Wellington District Court and has been remanded in custody.
Ross faced four charges of false accounting and one of theft by a person in a special relationship. He had previously been charged on three counts in June.
The SFO charges alleged that Ross conducted "a Ponzi scheme which he disguised by falsely reporting clients' investments," according to a statement from the SFO. "Large portions of client portfolios shown as invested through a broker 'Bevis Marks' were fictitious and never existed, resulting in an overstatement of investment positions by more than $380 million."
More than 1,200 RAM client accounts were affected.
Judge Geoffrey Ellis remanded Ross in custody until Oct. 24 to set a sentencing date and ordered sentencing and reparation reports.
Ross Asset Management's assets were frozen and receivers appointed last year by the Financial Markets Authority 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.
In a press statement, the Serious Fraud Office said a joint agency investigation between the SFO and the FMA into Ross Asset Management (RAM), and related entities, saw SFO charge Mr Ross on 13 June. The charges comprised four counts of false accounting and one count of theft by person in special relationship.
On 28 June the FMA charged Mr Ross with one count of providing a financial service when he was not registered for that service, one count of knowingly making a false or misleading declaration or representation to FMA for the purposes of obtaining authorisation to become an Authorised Financial Adviser, and one count of supplying information or producing documents to FMA which he knew to be false or misleading.
The investigation into RAM and its related entities commenced in October last year when the FMA received complaints from investors who had been unable to withdraw funds. The FMA took immediate action to preserve investors’ funds by obtaining asset preservation orders and appointing receivers and managers to RAM and its related entities. A joint investigation with the SFO subsequently commenced.
The SFO charges alleged that Mr Ross conducted a Ponzi scheme which he disguised by falsely reporting clients’ investments. Large portions of client portfolios shown as invested through a broker ‘Bevis Marks’ were fictitious and never existed, resulting in an overstatement of investment positions by more than $380 million.
SFO Acting Chief Executive, Simon McArley said, “While a guilty plea does not address the significant losses incurred by a large number of victims, it will bring some relief to those victims. The SFO and the FMA have worked well together, applying their respective specialist skills in order to progress the investigation quickly and enable this timely outcome.”
FMA Head of Enforcement, Belinda Moffat said, “The financial adviser regime relies on advisers providing truthful information when they apply for any licence and Mr Ross’ conduct has seriously undermined the integrity of that regime. We are committed to restoring investor confidence and will continue to respond immediately to investor complaints against market participants.”