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SOCIETY FOR PROMOTION OF COMMUNITY STANDARDS INC.

NZ’s single biggest fraudster struck off NZ Institute of Accountants Register

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NEW ZEALAND’S single biggest fraudster is no longer a member of the New Zealand Institute of Chartered Accountants, which found it “difficult to imagine more serious offending” than his.

David Robert Gilmour Ross, whose company Ross Asset Management, fleeced at least 700 investors, was jailed last November for 10 years and 10 months for running a fraudulent scheme in which investors lost about $115 million.

At a NZICA disciplinary tribunal hearing last week he was charged with being convicted of offences punishable by imprisonment or fine that reflected on his fitness to practice accountancy and brought the profession into disrepute.

A decision released by the professional body yesterday ordered that Ross be removed from the institute’s register of members.

He was not represented and entered no plea at the hearing.

The tribunal found “it difficult to imagine more serious professional misconduct than this”, which was reflected in Ross’ sentence, it said.

Ross had admitted running a Ponzi scheme that he disguised by falsely reporting clients’ investments.

Despite the severity of the charges, the tribunal ordered no monetary penalty as it would dilute funds available to investors.

Ross was ordered to pay full costs of $7200 to the institute for the expense of the hearing.

It also ordered full publicity and said Ross had 14 days to appeal against the decision

Source: Accountants turf out disgraced Ross

Reported by Hamish McNicol

The Dominion Post. Friday 25 April 2014. P. B7.

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Background to story see earlier postings by SPCS:

INTERIM SUSPENSION OF DAVID ROSS’ MEMBERSHIP OF NZICA ANNOUNCED 16 January 2013

Wellington’s David Ross, at the centre of the collapse of a suspected Ponzi scheme involving about $450 million, was stripped of his membership of the Institute of Chartered Accountants (ICA), but it was only an “interim suspension”. David Robert Gilmour Ross lost his institute membership after a hearing held in secret in the middle of December 2013. The “interim suspension” was announced by the ICA disciplinary tribunal on 16 January 2013.

Published 17/01/13

David Ross stripped of Institute of Accountants (ICA) membership

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Published 17/11/12

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

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Published 13/12/12

Securities Commissioner told of Ross Asset Management Ponzi scheme concerns but took no action

Full marks to Fairfax Media ! – On-line Dave Henderson v. liquidator story headline amended

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Fairfax Media have amended their on-line story on the liquidator appointed by the IRD and the twice bankrupt property developer David Ian Henderson and given appropriate prominence to the correction. The false headline "Liquidator fined for ' buffoon' comment" [emphasis added] has now been amended to "Liquidator to pay for 'buffoon' comment [Emphasis added]. Fairfax now affirms that The Disciplinary Tribunal of the New Zealand Institute of Chartered Accountants (NZICA) did NOT impose a fine on liquidator Robert Bruce Walker after ruling that he had breached professional standards (recognised by the NZICA Professional Conduct Committee (PCC) to have been at the lower end of 'offending'). Walker strongly denied the charges before the Tribunal, via his lawyer, and was required in its ruling, as Fairfax now helpfully point out - to pay "costs", and this is NOT a "fine".  

It is gratifying to see that some parts of the community have a sense of decency, evidenced by Fairfax Media making the online change (update) to the story promptly, correcting the error - which if had not done, could have opened it up to potential defamation. It is a shame that this prompt and principled response is not always the case among other institutions, and persons responsible for online stories. Among the latter, ethical qualities and standards are often sadly, even shockingly lacking.

Certain so-called "administrators" and "owners" of scurrilous websites who maliciously propagate defamatory falsehoods, knowingly, need to 'lift their game', to put it mildly, and recognise that once a falsehood has been formally notified to them, its defamatory nature identified by a complainant, and a formal request made for its removal, it must be removed. If it is not, this opens thoseresponsible for the website to potential defamation proceedings from the complainant. Courting defamation proceedings by, for example, accusing a person on-line of being a serial tax evader, and/or of parading fake degrees on a CV etc., and/or holding directorships of fictional companies or organisations etc, without providing any evidence; is the mark of a true coward, and a moral bankrupt. [Read more...]

Dave Henderson properties – Liquidator NOT “fined” for buffoon comment or any breach of “professional standards”

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Professional Standards – What are they? Key players: David Ian Henderson (bankrupt Christchurch Property Developer) and his business associate Ian Bruce Hyndman and their hired licenced private investigator, Wayne Idour; Robert Bruce Walker (the appointed liquidator of Henderson’s failed companies), Hamish McNicol , Fairfax Media reporter, and the New Zealand Institute of Chartered Accountants’ Disciplinary Tribuna and Professional Conduct Committee.

A Fairfax Media report by Hamish McNicol, published at 15:25 on Thursday 17 April 2014, was headlined “Liquidator fined for buffoon comment” [Emphasis added]. It commenced:

A liquidator who referred to South Island property developer Dave Henderson as a “little b*****d” and a “buffoon” in a telephone conversation has been found guilty and ordered to pay costs of $18,165. [Emphasis added]

Liquidator fined for ‘buffoon’ comment | Stuff.co.nz

www.stuff.co.nz/business/industries/…/Liquidator–fined-for-buffoon–comm…
5 days ago – A liquidator who referred to South Island property developer Dave Henderson as a “little b*****d” and a “buffoon” in a telephone conversation
 Timaru Herald – ?Apr 16, 2014?
A liquidator who referred to South Island property developer Dave Henderson as a “little b*****d” and a “buffoon” in a telephone conversation has been found guilty and fined. Robert Walker had also detailed his personal battle with Henderson in official …

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This Stuff News headline is not only wrong, it is defamatory. The online editor later changed the headline to

“Liquidator to pay for ‘buffoon’ comment” [Emphasis added].

Source: http://www.stuff.co.nz/business/industries/9954565/Liquidator-fined-for-buffoon-comment

Why the change and was the revised headline true or false? [Read more…]

David Ian Henderson – a two-time bankrupt accuses Liquidator of conduct breaches

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David (Dave) Ian Henderson, twice-bankrupt high-profile Christchurch property developer, and his business associate Ian Bruce Hyndman, appear to have been behind a Notice in the National Business Review (NBR) and one in the NZ Herald (22/05/13) that ran last year, apparently seeking “information” on chartered accountant Robert Bruce Walker, liquidator of Property Ventures Ltd (in receivership and liquidation), the parent company of interconnected companies owned or controlled by Henderson. Henderson was behind the failed $2 billion Five Mile town development at State Highway 6, Queenstown, near the Queenstown Events Centre, colloquially known as “Hendo’s Hole.

As sailors know, it is important at sea to avoid peeing to windward. The blow back can be very unpleasant. So can the result of trying to gather ‘dirt’ and throw it at a person and make it stick, when a very strong gale is opposing the thrower.

Dave Henderson who was bankrupted in 1996 and discharged in 1999, was then bankrupted again on November 29, 2010, the latter one of the largest bankruptcies in New Zealand’s history. By his own account he had gross personal debts of about $165m and $86m after the sale of secured assets. The debts come mainly from personal guarantees he had given on loans to his companies.

Bankruptcies are managed by a Crown authority called the Official Assignee (OA) and normally last for three years. Henderson remains an undischarged bankrupt because the OA filed a notice of objection to Mr Henderson’s discharge, pursuant to s 292 of the Insolvency Act 2006, on 28 November 2013. The OA “strongly suspects that Mr Henderson had entered into, carried on, or taken part in the management or control of businesses during his bankruptcy, contrary to s 149 of the Act. Mr Henderson strongly refutes the Assignee’s suspicions…” (quoted from High Court judgment dated 18 March 2014 – CIV-2010-409-000559 [2014] NZHC 499). [Read more…]

David Ross stripped of Institute of Accountants (ICA) membership

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Wellington’s David Ross, at the centre of the collapse of a suspected Ponzi scheme involving about $450 million, has been stripped of his membership of the Institute of Chartered Accountants (ICA), for now.

Under an “interim suspension”, David Robert Gilmour Ross lost his institute membership after a hearing held in secret in the middle of last month. The suspension was announced by the ICA disciplinary tribunal yesterday.

Financial Markets Authority (FMA) staff raided Ross’ offices on The Terrace late last year after investors complained they could not get their money.

Receivers have been able to locate only about $11m of the almost $450m some 900 investors believed was being managed on their behalf by Ross Asset Management Ltd (RAM) [Co. No  455971. Formerly called Quill Investments Ltd].

Last month the first disciplinary action was taken against Ross, with the FMA suspending his licence as an authorised financial adviser for six months as it continues to investigate possible Securities Act breaches.

After the FMA action, the ICA said matters identified by RAM’s receivers warranted a complaint to the professional conduct committee from the institute’s chief executive, which led to the interim suspension.

Ultimately, the institute’s disciplinary tribunal has the power to strike off Ross as a chartered accountant.

Bruce Tichbon, spokesman for the Ross Asset Management Investors Group, said they had expected the suspension.

Tichbon said knowing Ross was a chartered accountant had given him confidence in Ross.

“It gave him an aura of professional respectability,” he said.

Tichbon said other members of the investor group had asked him to pursue whether Ross’ status as an accountant required auditing by the institute.

“I have been informed there were certain burdens on the accounting professional bodies to test the veracity of his services and therefore there was likely to be some grounds for claim there,” Tichbon said, though he had not confirmed that.

The institute carries out a regular review of accountants who hold a certificate of public practice, but it would not comment directly on Ross’ professional conduct. Only members of the institute can call themselves chartered accountants, which means they have certain qualifications and experience.

Meanwhile, Tichbon said regulations relating to apparent Ponzi schemes seemed to be “virtually non-existent”.

“The lack of legal clarity is a serious and cruel issue,” he said, because there was no case law for apparent Ponzi schemes.

Hundreds of investors were left totally up in the air. There were no clear guidelines on how the case should be managed – for example, whether money could be clawed back from some investors who had earlier taken money out. Earlier reports from the receivers showed that since 2000 just over $303m had been invested through the firm, while $29.8m was taken out in fees, and investors withdrew $289m.

“People are really suffering terribly,” Tichbon said, with some investors suffering from depression.

“Instead of a [regulatory] ambulance at the bottom of the cliff, there is a cesspit of broken glass and alligators.”

Source:

Report by James Weir, Fairfax NZ News. 17/01/13

http://www.stuff.co.nz/business/money/8186916/Ross-stripped-of-ICA-membership

Earlier reports:

1. SFO begins probe into David Ross, asset management firm, 19/11/12

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10848504

2. Report by Jonathan Underhill, National Business Review. 04/12/12

http://www.nbr.co.nz/article/ross-asset-investors-face-gruesome-legal-fight-if-ponzi-scheme-shown-bd-133420

3. Report by Hamish Rutherford, Fairfax NZ News. 17/12/12

http://www.stuff.co.nz/business/industries/8090115/Ross-Asset-Management-liquidated