Convicted fraudster David Ross has been sentenced to 10 years and 10 months in jail for running a multimillion-dollar Ponzi scheme.
The 63-year-old was sentenced in Wellington District Court on Friday over charges laid by the Serious Fraud Office and the Financial Markets Authority, including false accounting and theft by a person in a special relationship.
David Ross. Photo: RNZ
The Ross Asset Management director pleaded guilty on 29 August this year over the Ponzi scheme in which returns to investors come from their own money or other investors' money.
Ross falsely overstated the company's investments at about $400 million and the amount lost is $115 million of investors' money. The scheme was frozen last year in 2012 with 200 investors who had made money and 600 who lost money.
Crown prosecutor Kristy McDonald, QC, told the court on Friday that Ross was driven by ego and wanted to be considered a leader in the financial field, with the resulting benefits and adulation that would bring.
Four investors read out victim impact statements, telling of their anger at losing not only their life savings, but also losing trust in other investment providers.
One man shouted at Ross and told him to look at him when he was giving his statement.
Another spoke of feeling extremely suicidal and said he and his wife had lost $1.4 million. He said they thought they were wealthy and were ready to enjoy retirement but have had to sell their home of 18 years and their business interests.
A couple who had been saving to set up a home for their severely autistic son told the court they had lost the ability to do that and fear for what will happen to their son when they can no longer care for him.
Judge Denys Barry. Photo: RNZ
Judge Denys Barry told Ross that his hubris has done incalculable harm to vulnerable people. He said many people had lost life savings and were forced to continue working into their old age. Many of the victims are elderly, frail or ill, he said.
Judge Barry called Ross a liar and a thief and said the scale of his offending is unprecedented in New Zealand.
The judge said the common themes in the victim impact statements were guilt because those defrauded have lost money intended to support their families, and in some cases they encouraged others to invest with Ross.
He ordered that Ross serve at least five years and five months of the sentence before being eligible for parole.
Defence lawyer Gary Turkington said Ross was genuinely remorseful and concerned for his victims.
Mr Turkington also read an extract from a letter Ross had sent to investors, in which he said he had been having medical treatment but now had sufficient strength to carry on. It also said Ross had been cooperating with the authorities and wished that his offending had never happened.
Sentence 'too light'
Ross Asset Management Investors Group spokesperson Bruce Tichbon. Photo: RNZ
Outside court, some of the victims called the sentence a joke. The Ross Asset Management Investors Group, which is representing Ross' financial victims, said the sentence is nowhere near long enough.
Spokesperson Bruce Tichbon said it was not a sufficient disincentive to stop further white collar fraud in this country. He said there has been a raft of such fraud in recent years and confidently predicted there would be more.
Mr Tichbon said he lost about $1 million - the value of his family home.
"I met with him many times and he was extremely plausible but every word he spoke to me was a total lie. That really, really hurts," he said.
SFO pledge
The Serious Fraud office says it will continue to be vigilant in fighting financial crime to ensure there is no repeat of New Zealand's largest financial fraud.
Some investors believe there is money still hidden away, but SFO director Julie Read told Radio New Zealand's Checkpoint programme on Friday it looked at over 100,000 Ross transactions before charges were laid.
"The false accounting charge - the fifth charge which was the theft charge - covered the $115-odd million which was lost in terms of capital investment to Mr Ross' accounts. We've really done our job and we don't have a mandate to further investigate for the purpose of recovery I'm afraid."
Ms Read said next year's planned reform of the Financial Markets Authority law will address security of investors' money.
