McIntosh must pay almost five years' interest on Ross Asset 'profits'
Wellington lawyer Hamish McIntosh must pay interest on the fictitious profits he received from Ross Asset Management, New Zealand's biggest-ever Ponzi scheme, the Supreme Court has ruled.
The ruling on costs follows the Supreme Court's May 26 judgment that McIntosh could keep the $500,000 of principal he invested in Ross Asset Management but must return the $454,047.62 of fake profits to the liquidators, PwC's John Fisk and David Bridgman.
In the July 31 decision of Justices William Young, Susan Glazebrook, Terence Arnold, Mark O'Regan and Ellen France he must also pay interest at a rate of 5 percent a year starting from Dec. 17, 2012, the date the liquidators were appointed.
The question of interest on the $454,047.62 was reserved in the original High Court judgment.
The Supreme Court found that the purpose of an interest award wasn't punitive, but was meant to compensate for the loss of the use of money in circumstances where the party in receipt of the money has had the benefit of its use.
The liquidators are also attempting to extract fictitious profits from other former RAM investors who were paid out before the company collapsed. Following the May 26 judgment, they wrote to 160 investors with an offer to settle for $21.6 million. The offer closed on July 21. The liquidators have already cut deals with another 54 investors allowing them to recover $9.7 million for the 1,200 or so investors out of pocket.
Wellington-based David 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 such crime committed by an individual in New Zealand.
In reality, about $100 million to $115 million of investor funds were frittered away in the Ponzi scheme, and the liquidators sought to claw back funds paid out to investors in the lead-up to the collapse, going all the way to the Supreme Court, so as to equally share the money with Ross's victims.