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SFO charges David Ross over alleged $400m Ponzi scheme

Five charges laid. Serious Fraud Office says David Ross overstated investment positions by more than $380m.

NBR staff
Thu, 13 Jun 2013

Former financial adviser David Ross (63), principal of Ross Asset Management, has been charged by the Serious Fraud Office, which alleges he operated a $400 million Ponzi scheme.

Mr Ross faces four Crimes Act charges of false accounting and one charge of theft by person in special relationship.

The charges, laid today in the Wellington district court, follow a joint investigation between SFO and the Financial Markets Authority into Ross Asset Management and related entities.

Their investigation began in November last year after investors complained about late or non-payment of funds.

In October the FMA obtained an asset freeze and had receivers and managers appointed to the Ross Group of entities. These orders were obtained under the Financial Advisers Act and remain in place. Initial inquiries by receivers showed investments of only $10.2 million actually existed.

The charges laid by the SFO allege Mr Ross conducted a Ponzi scheme which he disguised by falsely reporting clients' investments. They allege that 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 1200 RAM client accounts have been affected by Mr Ross' scheme.

SFO acting chief executive, Simon McArley says: "The allegations made amount to serious criminal matters. However the saddest fact of all of this is the position that Mr Ross' clients find themselves in.

"The joint activity between SFO and FMA demonstrates that we can work effectively together to both address the serious criminal offending and protect as far as possible the interests of the victims of that offending."

FMA head of enforcement Belinda Moffat says: "FMA will now complete its investigation into conduct by Mr Ross under the Financial Advisers Act.

"We will also shortly release best practice guidance for financial advisers providing discretionary investment management services to ensure our expectations are well understood by advisers, as well as guidance for investors considering using such services."

SFO and FMA acknowledge the assistance provided to them by the receivers of the Ross Group of entities and their advisers, as well as the many investors who have provided information.

NBR staff
Thu, 13 Jun 2013
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SFO charges David Ross over alleged $400m Ponzi scheme