A man has pleaded guilty to $115 million fraud - the single largest fraud in New Zealand history.
The former manager of Ross Asset Management David Robert Gilmour Ross, 63, has pleaded guilty to five Serious Fraud Office charges.
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They were false accounting and fraud and three from the Financial Markets Authority of providing a financial service when he was not registered to do so, made false or misleading statements to get authorisation as a financial adviser and supplying information to the authority that he knew to be false or misleading.
He has been remanded in custody until October for a date to be set for sentencing.
Ross lured new investors to his Ross Asset Management fund with promises of returns of up to 30 per cent.
His lawyer Gary Turkington did not apply for bail before Wellington District Court judge Geoff Ellis.
SFO prosecutor Kristy McDonald asked the judge to order a reparation report.
The SFO charges alleged Ross ran a Ponzi scheme, which he disguised by falsely reporting clients’ investments.
Large portions of client portfolios were shown as invested through a non-existent broker ‘Bevis Marks’, resulting in a $380 million overstatement of investment positions.
More than 1200 RAM (Ross Asset Management) client accounts had been affected by the scheme.
"While a guilty plea does not address the significant losses incurred by a large number of victims, it will bring some relief to those victims. SFO and FMA have worked well together, applying their respective specialist skills in order to progress the investigation quickly and enable this timely outcome,'' SFO acting chief executive, Simon McArley said.
"The financial adviser regime relies on advisers providing truthful information when they apply for any licence and Mr Ross’ conduct has seriously undermined the integrity of that regime.
"We are committed to restoring investor confidence and will continue to respond immediately to investor complaints against market participants,'' FMA head of enforcement, Belinda Moffat said.
Outside court a Ross Asset Management investor said Ross being remanded in custody was "what little right is going on in this debacle".
Barry Prince, who in November joined the Ross liquidator's committee, said Ross deserved to be put away because of what he had done.
"We've got 600 people who have lost millions and an estimated 700 people who have made millions.
"What disgusts me is we've got people out there who are now sentenced to a life which is a lot worse than they'd ever expect in the past."
Prince said he expected Ross would get a minimal sentence.
Many investors were too shy to talk because of the media attention surrounding the case, he said.
Ross Asset Management investors group head Bruce Tichbon, who lost an undisclosed sum to Ross, said he believed Ross knew this day was coming and would have "taken care of himself."
A Fairfax story earlier this month discovered Ross held 200,000 shares in technology company Arria NLG, which were understood to be worth about US$200,000.
"A month ago they discover he's got a family trust that no-one knew about that's got a quarter of a million bucks of shares sitting in it," Tichbon said.
"The guy's probably sitting on a fortune; he's had 20 years to put his stash away."
Tichbon described Ross as a very intelligent man who would have set himself up knowing "this day was coming".
"They're telling us there's no more money except what's left visibly in his company.
"We don't expect our Government to make our investments riskless, we accept there was risk and we got burnt."
Ross has been remanded in custody to reappear on October 24 to set a sentencing date.
- © Fairfax NZ News
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