Nelson man guilty in $60m scam
Nelson businessman David Hobbs masterminded a Ponzi scheme network that fleeced Australian investors of more than NZ$60 million, the New South Wales Supreme Court has found.
But in Nelson last night Mr Hobbs continued to maintain he was innocent of the allegations made against him by the Australian Securities and Investment Commission (ASIC).
ASIC is working on a statement about the judgment but the Australian Financial Review reported yesterday that the corporate regulator would be seeking hefty fines and disqualification orders for Mr Hobbs and the other operators of the global network, which hoodwinked 700 investors in self-managed super schemes.
The court found that the schemes were run through myriad countries, including New Zealand, the United States, Hong Kong, Vanuatu, the Bahamas, Anguilla, and the Caicos Islands, and were principally operated by Mr Hobbs.
The overall plan was "a deliberate [but unsuccessful] attempt to remove the investments from regulatory overview or supervision", Judge Julie Ward said.
Two of the schemes, the Integrity Plus Unit Trust and the Super Save Superannuation Trust, which took the lion's share of $32m, specifically targeted investors for superannuation, and have had HLB Mann Judd partner Barry Taylor appointed as a liquidator.
"It is fairly breathtaking," Mr Taylor told the AFR.
"Those two schemes never generated any profits, all of the returns paid on a monthly or quarterly basis were paid from the funds which were invested by incoming investors," Mr Taylor said.
Mr Hobbs was listed as first defendant in the long running action. His wife Jacqueline was eighth defendant, with the 13 others comprising seven companies and five individuals.
In a judgment running to nearly 2600 clauses, Judge Ward said investments in most of the individual schemes were typically made in the name of international business corporations registered in offshore jurisdictions.
Mr Hobbs had himself described them in a seminar as "privacy havens", and they were referred to in a Master Fund power point presentation as "privacy heavens", including Anguilla, Vanuatu and the British Virgin Islands.
ASIC said Mr Hobbs recruited executives from among his friends and family to the Future Trading Corporation, incorporated in Vanuatu, for which he was international sales manager. With little or no formal financial training or qualifications, they marketed various funds to investors in Australia and New Zealand.
Some of the booklets they provided for a fee were "not particularly sophisticated", written by Mr and Mrs Hobbs and printed by Mr Hobbs' sister and her husband, Ngaire and Craig Dent, and sent to FTC subscribers from their home in Queensland.
The judge found that Mr Hobbs had promoted a financial product without the required licence and had been proven to have acted in contravention of a series of sections of the Corporations Act and the ASIC Act. Mrs Hobbs had contravened one section of the Corporations Act. She would next hear submissions from the defendants on the contraventions, and on penalty, the judge said.
Mr Hobbs told the Nelson Mail the court had allowed 3 weeks to prepare further submissions. He and all the other defendants would be doing so.
The prosecution's success was due to the skill of its barristers and now he and the other accused could have one more say.
"It's our chance to go back now and object to what the judge has said."
He said he didn't even know of the existence of some of the companies named in the hearing.
"The ones that I did know of, I had nothing to do with.
"They were owned and operated by their own operators."
On being found to have operated without a financial services licence, he said: "I wasn't operating. I wasn't offering financial products. You have to offer financial products to be operating without a licence."
The case had its beginnings in 2007 when ASIC froze eight offshore trading accounts and later secured the payment of A$20m (NZ$25m) into court.
Mr Hobbs, who has had business premises in the Stoke industrial area and in recent years sold Holden cars through a Nelson dealership, has maintained his innocence from the beginning.
The trial ran from July 4 to September 12.
- © Fairfax NZ News
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