Fraudster David Ross made more than 100,000 bogus trades for unwitting investors scammed in a multimillion pond Ponzi fraud.
Ross scammed around 700 clients out of millions over 12 years.
His elaborate scam centred on a fake investment trader called Bevis Marks.
Now, he is facing bankruptcy after spending a good slice of his ill-gotten gains on a luxury champagne lifestyle.
Ross was sentenced to 10 years 10 months in jail for what the record books proclaim as the single largest fraud in history in New Zealand.
Many of his victims were wealthy expats fooled into believing his financial skills would make them easy money. But his lies and web of deceit hid the real truth.
Electronic trail
Detectives looking into the case realised Ross had run a Ponzi scheme – and left an electronic trail of every false transaction on the firm’s computers.
Ross admitted five specimen charges of theft and false accounting.
The court heard that tens of thousands of fictitious financial trades were run through the Bevis Marks computer system to give clients the impression that the firm was managing millions of pounds of assets for hundreds of clients.
The aim was to encourage more clients to hand over more cash.
These false transactions were reported to clients as profits of £165 million, when the company was holding £22 million in invested cash.
No money
Ross paid investors leaving his firm with cash raised from other investors.
Eventually regulators and clients became suspicious of the firm. At a meeting with fraud investigators who pointed out that according to company records Bevis Marks should be holding £235 million on account for investors, Ross admitted the money did not exist.
Total investor losses add up to nearly £75 million, for which they are unlikely to receive any compensation.
A Ponzi scheme is a fraud that involves paying investors false profits from funds scammed from new investors.
The Ponzi fund is arranged in such a way to show high returns or profits to discourage current investors from cashing in their assets, which have been spent or stolen.
Inevitably, Ponzi schemes collapse because they need cash flow from new investors, and eventually the pool of victims diminishes and the scheme implodes.
The fraud is named after Charles Ponzi, who ran the first reported fraud of this kind in the US in the 1920s.
