Ross withdrew $3.5m from firm before collapse

Fraudster David Ross took $3.5 million from his company before it went broke, and liquidators want it back.

Part of the cash will come from Ross's share of household goods from his Lower Hutt mansion, due to go under the hammer at Dunbar Sloane auction house.

Liquidators will seek to bankrupt Ross, following the settlement of a $3.5m debt he and his wife owed his company, Ross Asset Management (Ram).

In November, Ross was jailed for 10 years and 10 months for operating a fraudulent scheme in which private investors lost about $115m.

Ram fleeced at least 700 investors through portfolios in which they thought they had more than $380m.

Ross and wife Jillian were jointly indebted to Ram for $3.49m, according to new financial statements. But the value of half of the proceeds from the sale of the family's $2.2m mansion, including half its chattels, as well as two other properties, were to be paid to investors in settlement of this debt.

In February, the High Court at Wellington approved the deal, under which Jillian Ross would take half, to the fury of investors who felt "very uncomfortable" with the deal.

The deal was not opposed in court, with Jillian Ross being said to support it. "Yes, I suspect she would," Justice Kos said at the time.

The Woburn Rd home eventually sold for about $1.8m, nearly $400,000 below its rating valuation.

Yesterday, PricewaterhouseCoopers liquidator John Fisk said Jillian Ross's debt had been settled with Ram, but liquidators now wanted to bankrupt her husband.

Two other properties he owned - a $195,000 section on the Wairarapa coast and a $690,000 house in Eastbourne - were about to go up for sale.

Half of the household chattels were being sold by Dunbar Sloane, meaning about $1.8m of the $3.5m debt could eventually be settled.

"Once costs have been paid from Mr Ross's share, which includes the receiver's costs, fees and disbursements, the balance is payable to Ram," Fisk said.

The $3.5m debt probably accumulated over time at Ram, rather than being a lump withdrawal towards the end of the company, he said.

Investigations had been made about the possibility of recovering tax paid by Ram and Ross personally, but there was no viable basis on which to do so.

Fisk also said the liquidators were disputing Ross's fees for his legal representation, which were higher than they would like. "It is possible that this may require a review of the fees by a person appointed by the Law Society."

Ross is appealing against his minimum non-parole sentence of five years and five months, in a hearing scheduled for next month.

Clawback claims against three "test case" investors who withdrew $3.8m in fictitious profits had not been settled, and would be going to court.

Fisk said defences were raised by all three parties and affidavits were now being prepared in support of the claims. The identities of the investors could not yet be made public, he said.

If the actions were successful, he would use the precedent to possibly chase about two dozen investors who made withdrawals during the two years before the scheme's collapse, for nearly $25m.

The Dominion Post