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SOCIETY FOR PROMOTION OF COMMUNITY STANDARDS INC.

Liquidators seek to bankrupt fraudster David Ross

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Fraudster DAVID Robert Gilmour ROSS took $3.5 million from his company before it went broke and liquidators want it back.

Part of the cash will come from Ross’s share of household goods from his Lower Hutt mansion, due to be auctioned.

Liquidators will seek to bankrupt Ross, following the settlement of a $3.5m debt he and his wife owed his company, Ross Asset Management.

In November, Ross was jailed for 10 years and 10 months for operating a fraudulent scheme in which private investors lost about $115m.

Ross Asset Management (Ram) fleeced at least 700 investors through portfolios in which they thought they had more than $380m.

For full story on by Hamish McNicol published 15/05/14 go to:

http://www.stuff.co.nz/business/money/10045559/Liquidators-seek-to-bankrupt-fraudster-Ross

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

Guilty plea to country’s largest fraud

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A man has pleaded guilty to $115 million fraud – the single largest fraud in New Zealand history.

The former manager of Ross Asset Management David Robert Gilmour Ross, 63, has pleaded guilty to five Serious Fraud Office charges.

They were false accounting and fraud and three from the Financial Markets Authority of providing a financial service when he was not registered to do so, made false or misleading statements to get authorisation as a financial adviser and supplying information to the authority that he knew to be false or misleading.

He has been remanded in custody until October for a date to be set for sentencing.

Ross lured new investors to his Ross Asset Management fund with promises of returns of up to 30 per cent.

His lawyer Gary Turkington did not apply for bail before Wellington District Court judge Geoff Ellis.

SFO prosecutor Kristy McDonald asked the judge to order a reparation report.

The SFO charges alleged Ross ran a Ponzi scheme, which he disguised by falsely reporting clients’ investments.

Large portions of client portfolios were shown as invested through a non-existent broker ‘Bevis Marks’, resulting in a $380 million overstatement of investment positions.

More than 1200 RAM (Ross Asset Management) client accounts had been affected by the scheme.

For full story go to

Dominion Post 29 August 2013.

http://www.stuff.co.nz/dominion-post/news/9101568/Guilty-plea-to-countrys-largest-fraud

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

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

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The Securities Commission appears to have been warned about suspected Ponzi scheme operator David Ross three years ago, but took no action. [David Ross was sole director of failed Ross Asset Management Ltd]

An email obtained through the Official Information Act shows Securities Commissioner Annabel Cotton was told of concerns about Ross in September 2009.

At the time, Ms Cotton had a special role as commissioner for financial advisers, responsible for developing a code of conduct for the financial advisory industry.

The email reads:

“Has anyone every [sic] looked into the activities of David Ross funds management? He doesn’t ad [sic] up to me and I could explain why verbally if you wished.”

The name of the sender was redacted from the OIA document, although it is understood the sender was a professional investor.

Ms Cotton said she had forwarded the email from her personal address to her Securities Commission address so that she could discuss it with commission staff when she was next in the office, “and to the best of my knowledge that’s what I would have done”.

“What happened from there I don’t know. I would have left it with a senior staff to work things from there and decide what to do.”

The Dominion Post has learnt of another individual who claimed he contacted Ms Cotton verbally about Ross, before September 2009.

The person, who asked not to be named, said he was told the commission was too busy to look into his concerns.

“I remember Annabel’s words exactly,” he said. “[She said] ‘I hope you’re not right’.”

Ms Cotton, who owns investor relations consultancy Merlin, said she had no recollection of the conversation.

The Financial Markets Authority, successor to the Securities Commission, licensed Ross as an authorised financial adviser in July last year.

Ross’s Wellington offices were raided by the FMA on October 31 after it received client complaints on October 25.

Receivers appointed to Ross companies by the High Court have found assets totalling $11.5 million, a significant shortfall on client accounts purporting to be worth $449.6m.

The Serious Fraud Office is investigating.

Source:

http://www.stuff.co.nz/business/money/8072464/Commissioner-told-of-Ponzi-scheme-concerns

The Dominion Post, Thursday, December 13, 2012, p. A3

Further Reading:

Ross Asset Investors may face ‘gruesome legal fight’

The National Business Review, Tuesday 4 December, 2012

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