A New Zealand fund manager was charged with masterminding a $320 million Ponzi scheme which, if true, would rank as the largest Ponzi scheme in New Zealand's history. David Ross, 63, was charged with four counts of false accounting and one theft charge relating to his investment firm, Ross Asset Management, which drew scrutiny last year after payments were delayed to investors. Each false accounting charges carries a maximum sentence of ten years, while the fraud charge carries a maximum seven-year term.
According to authorities, Ross Asset Management ("RAM") and numerous associates entities solicited investors with the promise of guaranteed and lucrative returns - including returns of nearly 40% in some years. Investors received regular returns, and Ross was generally perceived as an astute investor. However, in late 2012, many investors began complaining about delays in scheduled payments, and in November 2012, authorities from New Zealand's Financial Markets Authority raided RAM's offices. A Receiver was appointed to sort out RAM's finances, and a preliminary report issued shortly after his appointment showed that RAM had roughly $10 million of investments - approximately 2% of the $449 million reported to investors.
The Receiver, John Fisk, identified investments of nearly $450 million held on behalf of more than 900 investors holding 1720 individual accounts. Since 2000, Fisk estimated, RAM took in over $300 million, keeping nearly $30 million kept as management fees while $290 million was withdrawn or paid to investors. Additionally, since 2007, fund outflows have exceeded incoming funds - the lifeblood of a Ponzi scheme - by at least $60 million.
Ross was hospitalized in November for treatment under New Zealand's Mental Health Act, and remains free on bail with a court-imposed allowance of $1,000 per week.