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Wellington firm Ross Asset Management may have taken management fees of $30 million since 2000, receivers say after pinpointing just $10 million of assets out of a purported $450 million.
Receiver John Fisk says the situation "looks pretty grim at the moment".
Mr Fisk and David Bridgman of PwC were appointed receivers of Ross Asset Management and nine other entities last Tuesday after a raid by the Financial Markets Authority.
Early indications suggest RAM owner David Robert Gilmour Ross may have been operating a giant ponzi scheme, Mr Fisk says. (A ponzi is a scam whereby investors are enticed with the promise of very high returns in a very short time, but is based on paying off early "investors" from the cash from new investors.)
“If you look at the returns that were being reported and the lack of assets that we are unable to identify, it just doesn’t add up,” he told NBR ONLINE.
“So far, we haven’t been able to reach a conclusion on whether it was a ponzi scheme, but we can certainly say it has characteristics of a ponzi scheme.
Click diagram to enlarge. Source: PwC
“We’ve only been in there for just over a week and we’ve investigated all of the obvious avenues.
"We’ve investigated brokers and registers that Mr Ross has advised the FMA of and we haven’t been able to find anything like the level of assets that are supposed to be held in the group’s names.
“But in terms of whether the missing millions will turn up, I can't say definitely not at this stage because there’s still obviously other avenues we are trying to pursue. But it looks pretty grim at the moment.”
Mr Ross is in hospital, said by investors to be suffering from head injuries, and unable to give instructions to his lawyers.
Last week Chapman Tripp lawyer Victoria Heine, who represents some of the Ross entities, told media she had been unable to take instructions from Mr Ross.
Asked about his condition today, Ms Heine said she was “not able to comment.”
‘‘The analysis of the receivers and managers to date indicates it is likely the historical returns advised to investors are exaggerated and may possibly be fictitious.
"Therefore, the actual cash loss that may eventually be suffered by the remaining investors will differ from the amounts currently showing as the “value” in individual investors’ portfolios.’’
NBR understands Mr Ross initially adopted a high-risk global equities strategy.
The funds are also understood to have essentially underwritten start up junior mining explorers.
The receivership report tables the apparent flow of funds since 2000, taken for RAM’s database.
It shows investor contributions of just over $303 million during that period, management fees of $29.78 million and withdrawals of $290 million.
Funds withdrawn over the last five years have exceeded funds contributed by more than $60 million.
Mr Fisk says the numbers were taken out of the company’s database.
“What we tried to look at is what was the actual cash that was coming in and what was going out. This is a summary of what we can find, but as you can see there are some pretty significant outflows from 2008 onwards.
“That’s just an indication though – we still have work to do on that.”