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SOCIETY FOR PROMOTION OF COMMUNITY STANDARDS INC.

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Ross Asset Management case – involving a suspected Ponzi scheme – raises audit question

November 17, 2012 by SPCS Leave a Comment

Ross Asset Management may have breached the Securities Act by misrepresenting to its clients the kind of services it was offering, allowing it to escape audits.

The Shareholders’ Association has called for a swift law change to ensure all companies taking money from the public are subject to strong oversight.

Fears are building that Ross Asset Management may have been a Ponzi scheme, after the first receivers’ report showed that of the $449 million its 900 clients believed were being managed for them, only $10m had been confirmed as existing.

Despite the Government making a series of law changes designed to improve investor confidence after a series of finance company collapses, Ross Asset was never audited. It did not need to be because it claimed to simply be offering investment advice, rather than its own investment products.

Sue Brown, head of primary regulation at the Financial Markets Authority, said Ross Asset’s founder and sole director, David Ross, appeared to have presented to clients that he offered a service, promising to invest money in specific assets, held on their behalf.

Accordingly each investor would be presented with an investment statement showing a portfolio of assets.

“What seems to have been happening behind the scenes is that the money was simply being aggregated into one pool, and so it became a scheme,” Ms Brown said.”It may be an illegal Securities Act issue, [what was] going on behind the scenes.”

The receivers’ report on Ross Asset, made public on Thursday, said it appeared that investment statements sent to clients were inflated and may have been fictitious.

Mr Ross is  in hospital and has been unable to instruct his lawyers or assist with the FMA’s investigation.

He ran the company from its offices on The Terrace with little more than administrative support.

NZSA chairman John Hawkins said the apparent loophole of oversight Ross had exposed required swift change. “That is absolutely staggering, outrageous and needs to be addressed, and rapidly. If you’re taking investment funds . . . then it’s absolutely essential that there is independent oversight of what’s happening, whether it is via a trustee, auditors, or ideally, a combination of the two.”

John Fisk, a partner at PwC who is charged with clarifying the situation at Ross, said it had been “noted” that the company never appeared to be audited, but it did not appear to have been, of itself, illegal.

“There was no legal requirement for him to be audited, but when I look at it, you’ve got supposedly $450 million under his control.

 

“If I was an investor, I’d want it audited,” Mr Fisk said.

The finance industry is concerned that Ross’s collapse may prompt a collapse in investor confidence in financial advisers.

Lyn McMorran, executive director of the Financial Services Federation, said she hoped the Financial Markets Conduct Act, currently progressing through Parliament, would improve oversight of the sector.

“This is yet another situation where everyone in the investment markets is tarred with the same brush, where legitimate operators who are regularly audited are seen as being the same as this guy, who was just a cowboy.”

Source: Ross Asset case raise audit question by Hamish Rutherford 17/11/12

http://www.stuff.co.nz/business/money/7962474/Ross-Asset-case-raises-audit-question

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Filed Under: Crime, Enforcement

Chris Kahui Should Be Charged For Negligent Parenting says registered charity Family First New Zealand

October 22, 2012 by SPCS Leave a Comment

Family First New Zealand [a registered charity – CC10094 – with the Charities Commission] believes that Chris Kahui should be charged for ‘negligent parenting’ and is questioning why the police are not willing to pursue a prosecution. Its Media Release issued 21 October 2012 states:

“It is quite clear from the Coroner’s report that the actions, or more correctly, the inaction of Chris Kahui had an adverse effect on the timing of urgent treatment which the babies needed,” says Bob McCoskrie, National Director of Family First NZ. “The Coroner’s report says that medical evidence shows the babies could have been saved if taken to hospital earlier.”

“We would argue that the police should be seeking to charge Mr Kahui under s152 crimes act – a parent failing to provide necessaries and protect from injury.”

“There were a number of actions which a reasonable parent would have taken in the circumstances. The family were advising Chris to take the babies to hospital because of their presenting conditions and Chris’s sister was heading there anyway – but he refused. The Coroner found he hid the details of how unresponsive the twins had been and their feeding patterns and wellbeing when their mother returned home.”

“And when the doctor told the parents to urgently take the children to hospital, Mr Kahui deserted his partner and went home and played playstation while his children were fighting for their lives,” says Mr McCoskrie.

“It seems clear that Chris Kahui failed as a caregiver on decisions which were life and death decisions, and he should be held accountable for them.”

152 Duty of parent or guardian to provide necessaries and protect from injury

  • Every one who is a parent, or is a person in place of a parent, who has actual care or charge of a child under the age of 18 years is under a legal duty—
    • (a) to provide that child with necessaries; and
    • (b) to take reasonable steps to protect that child from injury.

    ____________

    • Source: Media Release 21 October 2012
    • http://familyfirst.org.nz/2012/10/chris-kahui-should-be-charged-for-negligent-parenting/

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Filed Under: Crime, Violence Tagged With: Chris Kahui, Coroner's Report, duty of parent or guardian, negligent parenting, s152 Crimes Act

White collar crime: Heavy sentences imposed on offenders convicted of premeditated fraud

October 19, 2012 by SPCS Leave a Comment

The offending of Jacqui Bradley, the former financial adviser jailed today for seven years and five months on fraud charges, was premeditated and left many elderly investors financially and emotionally ruined, the Auckland District Court heard.

[This fraud case has some similarities to the 2009 conviction of Michael Swann who was given a 9.5 year jail sentence relating to a huge fraud against the Otago District Health Board. See https://www.spcs.org.nz/tag/michael-swann/ ].

A jury last month found Bradley, aged 61, guilty of 75 charges of fraud after a five-week trial. Bradley ran the failed finance company B’On Financial Services with her late husband Mike until it collapsed in December 2009 owing 28 investors $15.5 million.

Judge Christopher Field, in sentencing today, said the extent of loss, harm and damage was “very significant indeed”…..

It’s the third prosecution involving an affinity fraud by financial advisers that the SFO has completed in the past three months with offending across all three cases totalling almost $21m.

In other recent white collar crime cases those found guilty received a range of sentences in line with that handed out to Jacqui Bradley today.

Former Capital + Merchant directors Wayne Douglas and Neal Nicholls were give 7 and a half years jail in July on various fraud counts involving about $28m of transactions after Justice Edwin Wylie said they were motivate by greed and self-interest. DataSouth director Gavin Bennett got 8 years jail in May for defrauding South Canterbury Finance while Bridgecorp director Rod Petricevic got almost 7 years in April for misleading investors and spending company money on a luxury yacht.

Former ASB bank employee Stephen Velsalko got six years jail time in a 2010 case involving $17m stolen from his employer while in 2009 Michael Swann was given 9.5 years relating to a huge fraud against the Otago District Health Board.

For more see: Bradley offending premeditated. Story by Nick Kraus

http://www.stuff.co.nz/business/money/7837957/Bradley-offending-premeditated

Further reading:

See: https://www.spcs.org.nz/2010/michael-swann-checketts-mckay-fraud-and-otago-dhbs-missing-6-million-report/

https://www.spcs.org.nz/2010/michael-swann-computer-south-ltd-and-checketts-mckay-law/

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Filed Under: Crime Tagged With: B'On Financial Services, Fraud, Jacqui Bradley, Michael Swann, Otago District Health Board, Serious Fraud Office, SFO, White-collar crime

Incredible failures allowed sexual predator to offend – Opinion: Dominion Post editorial

August 25, 2012 by SPCS Leave a Comment

JAMES PARKER should never have been let past the gates of a school, let alone into a classroom. He should never have been in a position where he could be alone with children, and he certainly should not have been allowed to invite them into his home for sleepovers.

Parker, who has been a teacher since 1999, this week pleaded guilty to 49 charges of indecent assault, performing an indecent act and unlawful sexual connection relating to the abuse of 12 pupils at Kaitaia’s Pamapuria School, where he was the deputy principal.

The abuse occurred despite police warning the school in a strongly worded letter in 2009 that he should not have pupils staying in his house overnight. That warning came after police investigated a complaint about him, but were unable to gather sufficient evidence to prosecute.

Incredibly, the school did nothing, and Parker was able to continue offending.

Even more incredible is the revelation that Parker was flagged as a potential predator in 1999, when he was still a student teacher at another school. Teachers Council director Peter Lind says the then Teachers Registration Board had contact from that school, which raised concerns about Parker’s “professional boundaries”.

The school did not want the concerns taken any further, and a few months later made an application for him to progress from provisional to full registration.

The litany of failures that allowed him to worm his way into a position where he could groom and abuse victims will deeply trouble all mums and dads.

Schools should be safe places for kids. When parents drop their kids at the gates or wave them goodbye as they head out the door, they should do so in the knowledge they are not being put in harm’s way.

It is for those in positions of responsibility to ensure that is so. In Parker’s case, at least two schools failed to take action in the face of concerns that should have set alarm bells ringing.

Pamapuria’s board of trustees has resigned since Parker’s arrest, and a commissioner is now running the school. Police are continuing their investigations into Parker, and the school is also reviewing its policies and procedures.

A further investigation is warranted to determine how Parker came to be registered, why earlier unease about him was not acted upon and whether there are appropriate systems to vet teachers and act when concerns are raised.

In the meantime, Kataia community leader Ricky Houghton says great efforts are being made to support Parker’s victims and reassure them that what happened was not their fault.

That is to be commended. It is not Parker’s victims who are to blame, but those who failed to protect them.

Source:  Opinion:Editorial Incredible failures allowed sexual predator to offend

The Dominion Post, Saturday, August 25, 2012, p. C4.

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Filed Under: Crime Tagged With: full registration, James Parker, Kataia community, Pamapuria School, Peter Lind, provisional registration, sexual predator, Teachers Council director, Teachers Registration Board

Predator teacher ‘flagged’ in 1999 but gets OK from New Zealand Teachers’ Council

August 24, 2012 by SPCS Leave a Comment

A Northland deputy principal who has admitted sexually abusing pupils was flagged as a potential predator in 1999 as a student teacher but signed off as suitable anyway.

Despite a further warning in 2009 – that time by police – he was allowed to continue as a teacher for 11 years until his arrest last month.

Concerns about James Parker were first lodged with the Teachers’ Council when he was a provisional teacher, having newly started in the profession.

Parker pleaded guilty in Kaitaia District Court this week to 49 charges of indecent assault, performing an indecent act and of unlawful sexual connection.

The attacks, on boys aged under 16, occurred over nearly eight years at Pamapuria School.

Teachers’ Council director Peter Lind said concerns surrounding Parker’s ability to work around children began when he was teaching on a provisional licence at another school.

Concerns were lodged with the Teachers Registration Board, now known as the Teachers’ Council.

“We had contact in 1999 from the school and there were concerns raised about his professional boundaries,” he said.

“But the school did not want those concerns taken any further and his application to move from a provisional registration to a full registration was made by that school some months later.”

A decade later police received a complaint from a child via a parent and investigated Parker.

They could not gather enough evidence at the time to prosecute Parker and instead wrote to the school to alert the board of trustees about concerns.

However, the board did not act on the letter, did not advise the Education Review Office and did not advise the Teachers’ Council.

Mr Lind said because of the original 1999 contact, if concerns were raised again an alert status would have been activated on Parker.

“But the council itself received no further concerns about professional performance about this particular teacher.”

Pamapuria School principal Stephen Hovell has been stood down during the investigation and could not be contacted.

The Pamapuria board of trustees has resigned and a commissioner has been put in to run the school.

Detective Inspector Karyn Malthus said yesterday that children were interviewed in 2009 and the matter could not be substantiated.

“Police reject any suggestion that we were responsible for any inaction. We took all steps possible within the law to make the appropriate notifications,” she said.

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“Police did interview Parker and notified the school of their remaining concerns.

“We could not sustain any allegations and were therefore limited in what we could do.”

Ms Malthus said charges were laid when further evidence came to light recently.

That investigation continues despite Parker’s guilty plea on Wednesday.

Police were continuing to work with Child, Youth and Family and the Education Ministry in supporting the victims and their families, Ms Malthus said.

Parker’s fall from grace has come in the same week former ombudsman Mel Smith released a report into how sex offender Te Rito Henry Miki managed to evade detection and work as a teacher at six schools.

Mr Smith said what happened with Parker matched what he uncovered with Miki – there were several organisations and individuals that should have acted but who dropped the ball.

Mr Smith said the Government had accepted or partially accepted 36 of his 39 recommendations but had yet to put them into practice.

Even with his recommendations implemented, offences could still occur, he said. But the process would be sufficiently “tight” to ensure it was more likely that offending teachers would be detected early.

“You’ve got to remember that there are more than 70,000 registered teachers . . . and then there are all the other people involved in school, from caretakers through to contractors.”

Source: The Dominion Post, Friday, August 24, 2012, p. A4.

http://www.stuff.co.nz/national/crime/7538086/Predator-teacher-flagged-in-1999

Fairfax NZ News story.

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Filed Under: Crime, Sexual Dysfunction Tagged With: Peter Lind, provisional licence, provisional teacher, Teachers Registration Board, Teachers' Council

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