Broker fights to keep investments excluded

  • 19/10/2015
Broker fights to keep investments excluded

By Suze Metherell

Duncan Priest, a Wellington broker, wants investments he made through Ross Asset Management to be excluded from the liquidator's distributions to investors hit by New Zealand's largest fraud.

Appearing in the High Court at Wellington before Justice Denis Clifford, counsel David Chisholm QC sought to remove PwC liquidator John Fisk's claim from a large parcel of shares, saying Priest's investments were never part of the Ponzi scheme.

Wellington-based Ross built up a private investment service by word of mouth, producing regular reports for shareholders indicating healthy but fictitious returns.

Between June 2000 and September 2012, Ross reported false profits of $351 million from fictitious securities trading as part of a fraud that was the largest single such crime committed by an individual in New Zealand.

He is currently serving a 10-year, 10-month jail term, which carries a minimum non-parole period of five years and five months.

However, Priest used RAM as a nominee to manage share transactions and had full control over buy and sell orders for the shares and was not part of Ross's Ponzi scheme, Chisholm said.

Complicating matters, Ross used the same ANZ Bank current account for all transactions, meaning Priest's investments flowed through the same account as Ross's other investors.

Justice Clifford said effectively the Ponzi scheme had "muddied the waters" in terms of the cash passing through the account, and therefore the argument could be made that everything should be evenly distributed to investors.

In June, liquidator Fisk won the right to claw-back cash from investors who were paid fictitious gains, although an investor's principal could be viewed separately.

Defrauded RAM investors expect to receive 3 cents in every dollar invested.

Fisk is seeking to claw back some of the $100 million to $115 million that was lost in the fraudulent scheme for some 1200 investors.

The hearing before Justice Clifford is continuing.

NZN