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Ross Asset liquidators puts investors on notice over withdrawals

Investors who managed to withdraw funds in recent years from the Ross Asset Management group of companies, found to be a Ponzi scheme, have been put on notice that the liquidators may try to claw back the cash.

PwC's John Fisk and David Bridgman said they have a valid claim on any funds withdrawn from the investment scheme since December 2010 under the Companies Act on the basis investors would receive more than their entitlement under a liquidation. The liquidators also believe they can make a claim on anyone who drew funds within the past six years under the Property Law Act on the basis they were part of David Ross's fraud. The managers weren't able to cut deals with three investors who withdrew some $3.8 million in the lead-up to Ross Asset Management's collapse in 2012, and expect to "imminently" file proceedings in the High Court, they said in their latest report.

"Subject to the outcome of the above proceedings, the liquidators intend making further demands on any investors who have received monies in the above circumstances," Fisk and Bridgman said in their report. Because a successful voidable transaction claim could potentially change an investor's net contribution position, they can't agree to final claims until all legal issues have been settled, they said.

Last month the Court of Appeal turned down a bid by Ross to reduce his 10-year, 10-month jail term, which carries a minimum non-parole period of five years and five months.

Wellington-based Ross built up a private investment service by word of mouth, producing regular reports for shareholders indicating healthy but fictitious returns. Between June 2000 and September 2012, Ross reported false profits of $351 million from fictitious securities trading as part of a fraud that was the largest single such crime committed by an individual in New Zealand.

Fisk and Bridgman are seeking to claw back some of the $100 million to $115 million that was lost in the fraudulent scheme for some 1,200 investors. As at June 16, they estimated the realisable value of shares held by Ross Asset Management entities to be about $5.4 million, with estimated total realisations available for investors and creditors of $3.98 million.

Ross Asset Management's assets were frozen and receivers appointed in 2012 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.

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.


Comments and questions

All sounds very honourable of the PWC liquidators but isn't their incentive purely creating a money go round that they can once again fee gauge from?

By the time they collect funds and achieve a 50% strike rate less the PWC fees of say $20M to $30M plus legal fees there will be bugger all left to share around the investors

The only winners here will be PWC

What a waste of money

PwC know a little about voidable transactions having recently been involved in a case heard in the High Court.

They also know a lot about keeping the income stream going.

Investors don't hold your breathe and keep your hand on your wallet!

about time one of these matters went all the way. You would expect costs associated with claim to follow the event in court. Too many confidential settlements muddy waters that should be clear. It should not be difficult to determine if a party falls on one side of the line or the other. Otherwise legislative change should be made to clarify the whole area for the future.

Voidable transactions - a dog's breakfast - good luck!!

PWC know a little about voidable transactions having recently been involved in a case heard in the High Court in Wellington.
In that case they argued against The voidable allotments.
In this sad case you can be sure they will run the argument as long as their fees keep coming in.
I feel for all the investors who have any faith and confidence in PWC.

In the circumstances of this case there seems every reason why those who have withdrawn fictitious profits, even if in ignorance of their character, should be pursued for disgorgement of excess payments. It sounds as though some have not been prepared to play ball, with no regard for the interests of outstanding depositors.

How can these be excessive profits?
the investments were supposedly in highly specialized funds and you would assume that the payments investors received were in line with the"Fictitious portfolio"
in regard to pursuing the investors who "pulled out"
if they were ignorant of the scheme, received money in line with the supposed gains then they were actually smart to realise the gains and take their cards of the table.
if they had not of , then they would be in the same position of the remaining investors.

maybe the lesson from this is: If you want to find excitement in your life, don't try it with your money unless you are managing it yourself, make your non self managed money boring and the rest of your life exciting.

It would seem to me that the money is actually that of the investors. If they have received it back then that would seem appropriate.

Liquidators like PWC won't pass a cent back to the actual investors as they will simply justify it all in fees and disbursements. How convenient.

Look at pretty much any liquidation that PWC gets involved in. They simply swallow any available cash for themselves. Leeches praying on victims. This should be treated like court solicitors, a set fee only. Then see how keen they were to do this type of work.