McIntosh can keep $500k initial investment in RAM, must return 'profits', Supreme Court rules
Former Ross Asset Management investor Hamish McIntosh can keep the $500,000 he invested with the failed Ross Asset Management but must return the fictitious profits, the Supreme Court has ruled in a majority decision.
McIntosh, a Wellington lawyer who represented himself in the appeal, invested $500,000 in RAM in April 2007 and gave notice in September 2011 that he wished to withdraw his funds.
He was repaid $954,047 including returns of $454,047 that were actually funds syphoned from other investors' deposits in what transpired to be New Zealand's biggest Ponzi scheme, with investors' funds misappropriated almost immediately and used to repay investors wishing to withdraw their funds plus the fictitious returns. Principal David Ross, who is currently serving a 10 year, 10 month jail sentence, also used the funds to pay RAM's operating expenses and fund his own drawings.
The respondents were liquidators John Fisk and David Bridgman of PwC, who took their action against McIntosh as a test case and had previously said they would pursue other investors who pulled out their funds before Ross Asset's collapse.
The Supreme Court ruling by a majority of Justices Terence Arnold, Mark O'Regan, Ellen France and William Young upholds the judgments of the lower courts while disallowing a cross-appeal by the respondents that the principle should also be repaid. The High Court had ruled the fictitious profits must be forfeited as had the Court of Appeal. Justice Susan Glazebrook issued a dissenting judgment that would have allowed the cross-appeal and required the full $954,047 to be repaid.
RAM was placed in receivership in November 2012 and liquidation in December 2012. The respondents were appointed first as receivers and then as liquidators.