Ross Asset Management

[Anna Naum]

Having watched this situation open over the last 10 days, it still amazes me how little press time it has received. Has NZ become so used to corruption and money that it is no longer main stream news?

[Anna Naum]

www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10848011

[Anna Naum]

NBR have been covering Ross Asset Mgmt very well, I thought. It's just that much of their website is subscriber only access.

Agree Sparky, albeit they did not pick the story up until it was a few days old (Wellington Inc was buzzing with rumours)

I was really pointing the finger at the mainstream papers rather than the pay per view like NBR.

After all as a % of funds this suspected ponzi scheme makes Bernie look like an amateur and yet you have to look hard to find it in any of the major papers.

[macduffy]

I'm not sure that it's fair to criticise the media too much before publication of the PwC report a few days ago. Do we really expect them to repeat Wellington Inc's - or anyone else's - rumours? Or would we rather have some factual reporting? Fairly comprehensive coverage in today's DomPost, FWIW.

[Anna Naum]

I'm not sure that it's fair to criticise the media too much before publication of the PwC report a few days ago. Do we really expect them to repeat Wellington Inc's - or anyone else's - rumours? Or would we rather have some factual reporting? Fairly comprehensive coverage in today's DomPost, FWIW.

PWC report was out a couple of days ago, maybe it sums up print media nowadays, little value add at the time, more of a thought piece after the fact.

When the rumours started a simple call to the FMA would have started a good story, after all FMA do not usually knock down doors for a lost 50c! A call to any connected broker would have led to some access or direction as to who might have $$$ with RAM and David was always keen to tell anyone who wanted to listen that he had $500m under management (or more).

Ask the Toronto Exchange why he was rumoured to have been banned from trading....

[Balance]

Reading the coverage in the NBR, especially the initial reports, take note of the comments from some of the investors in RAM and how much faith they had in him.

It is no wonder that it came as a bolt of lighting out of the clear blue sky :

http://www.nbr.co.nz/article/fma-probes-asset-management-firmca-131740

"FMA looks like it has done the normal shoot, ready, now aim ! Anyone who knows Rossy knows he is probably on a plane somewhere between two investment conferences. There isn't a more thorough and investigative fund manager in the country."

"I have been a client of David Ross for 18 years and spent many hours with him discussing investments and find him to be very istute and as honest as the day is long. I just ask people to give him the time to explain the facts of this case."

"Probably nothing to worry about. Just a computer glitch in the program which transfers money from new investors accounts into existing investors quarterly accounts. These sort of minor malfunctions happen all the time, rest easy."

Etc Etc ...

[Balance]

And this is the shocker comment of them all from an Auckland CA. I assume CA means Chartered Accountant?

Imagine putting up to 10% of your clients' money with David Ross! Given that he only deals in $500,000, this CA better be ready for some lawsuits from the high net worth clients.

"I have dealt with David Ross & Ross Asset Management for 15 years for a client. He has provided amazing returns over that time. On occasion it took a month or so to have requested reductions paid out but they all have been paid. We always considered that this was a good investment option for up to 10% of my client's funds. At this point the original investment plus some profits have been fully repaid but there is still a significant sum owing. The September quarterly report was received on 26th October, in reasonable time in my view. I have heard that David is not well & this could be at least part of the problem."

[troyvdh]

.....and yet folk who choose to buy a house to let out are being continually lambasted by the likes of Mr Hickey-Morgan,Treasury,Reserve bank .......et al....words fail me....

[Balance]

.....and yet folk who choose to buy a house to let out are being continually lambasted by the likes of Mr Hickey-Morgan,Treasury,Reserve bank .......et al....words fail me....

They are idiots - the likes of Hickey etc.

Where is the protection accorded to the folks when you consider how the investment landscape of NZ is littered with investment disasters/crashes for the average person out there :

1987 stock market,

1990s property syndications,

1990s Asian financial crisis,

2000s dotcom,

1990s mezzanine finance,

2000s GFC,

2000s finance companies,

2000s coastal property,

ponzi schemes NZ style as in David Ross, Bradleys,

etc.

Let them come up first with a proper regulatory and enforcement framework and then, by all means harangue the folks about investing in properties.

BTW - I share their view that most New Zealanders are world class king size idiots when it comes to investing in properties. They typically buy towards the top of the cycles and use debt on a grand scale.

They also follow the most popular cocktail circuit trend out there and that's why there are so many who are nursing the hundreds of millions of dollars of bad investments in coastal properties.

Remember what the real estate agents were going around telling people about coastal properties? They don't build any more land out there and seaside, lakeside and river views are limited! Prices can only go up!

[Balance]

Have a read of this :

"But the real problem for KDC is that its plans suffered from the collapse of the coastal property market. It installed a wastewater network to support a property boom which never came. It borrowed money, just like all those real-estate investment companies did that went bust."

Even councils with all their highly paid consultants fell into the trap of believing the real estate hype about coastal property boom going on and on.

Maybe, councils are your best contrarian indicator of where the property market is going next?

Meanwhile, RAM investors can bluntly only blame themselves as they were blinded by David Ross's amazing returns and greed took over as their driving rationale for investing with him.

[Toulouse - Luzern]

Good thread and comments.

The question for me is how many more are there like this are out there, to be discovered?

"No auditor required."

Yeah right.

[Balance]

Even councils with all their highly paid consultants fell into the trap of believing the real estate hype about coastal property boom going on and on.

That's classic. New Zealand has a longer coastline than the continental USA. Yet we only have 4.5 million people. Even if no more coastal land is ever made, given its length, just how much coast line can 4.5 million people possibly take?

According to the real estate white shoes salespeople, coastal properties could only ever go up.

Sadly, many families (who would otherwise be mortgage free by now) were seduced into leveraging up to buy that coastal property they thought would be a sure winner - buy, watch the value go up and enjoy in the meantime. Easy!

Now they are cutting back on everything as they cannot afford to have the banks foreclose on their coastal property which they now cannot sell as values are 33% to 60% below where they were 5 years ago.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10691974

I think that the billions of dollars effectively lost in coastal real estate are actually worse than what the David Ross's of NZ have lost for investors. But nobody is going to jail anytime soon in this case!

[troyvdh]

...Balance....I think you contradicted yourself.....I do not believe that most NZ ers are "world class size idiots"....

...I should have been somewhat clearer...Im not talking about buying /selling in cycles...or at/in coctail parties....nor Coastal properties...forgive me...

...what I was referring to was purchase a property...average ordinary place ....flat/house ...what ever......hold forever.....nothing flash....quite dull really...almost boring in fact...

...Ive done alright...nothing flash....quite dull really....over the past 35 years......

....PS...your place/house...been in it for a while...5..10..15 years.....value gone up.....perhaps....

[Balance]

...Balance....I think you contradicted yourself.....I do not believe that most NZ ers are "world class size idiots"....

...I should have been somewhat clearer...Im not talking about buying /selling in cycles...or at/in coctail parties....nor Coastal properties...forgive me...

...what I was referring to was purchase a property...average ordinary place ....flat/house ...what ever......hold forever.....nothing flash....quite dull really...almost boring in fact...

...Ive done alright...nothing flash....quite dull really....over the past 35 years......

....PS...your place/house...been in it for a while...5..10..15 years.....value gone up.....perhaps....

No problem with buying and investing in the family home and a rental property or two.

I am referring specifically to coastal properties being promoted and 'invested' as cannot lose investments until 5 years ago.

[troyvdh]

...dear Balance again you contradict yourself....first you agree with Hickey/Morgan/Treasury et al...about property investors being what ever.....your argument then centered around "cycle property market purchases and coastal property purchases....which is not really addressing investment strategies...then you state "no problem with buying in the family home or a rental or two"......

....dear Sir what are you actually saying......

[Balance]

Confusion only in your head, Troyvdh.

[Stranger_Danger]

Pretty much.

[macduffy]

Nothing much to do with this particular thread, but how many (now) hindsight experts were warning that coastal properties were going to be subject to climate change induced erosion at the time of the "hard sell promotion" of this type of property? As opposed, for instance, to those who now decry what appears, to me at least, to be just another example of an investment bubble that got out of hand?

[Balance]

Nothing much to do with this particular thread, but how many (now) hindsight experts were warning that coastal properties were going to be subject to climate change induced erosion at the time of the "hard sell promotion" of this type of property? As opposed, for instance, to those who now decry what appears, to me at least, to be just another example of an investment bubble that got out of hand?

Erosion, you mean as is happening already with some coastal areas :

http://www.stuff.co.nz/dominion-post/news/kapiti/7555304/Kapiti-erosion-risk-may-devalue-1800-homes

[Under Surveillance]

Meanwhile, RAM investors can bluntly only blame themselves as they were blinded by David Ross's amazing returns and greed took over as their driving rationale for investing with him.

Isn't it amazing that with all the publicity about Bernie Madoff's exploits none of the 900 or whatever Ross investors were awake to the similarities between the Madoff and Ross circumstances and energetic enough to seek intervention.

Also it is incredible that even when Alan Hubbard was exposed as rather less than the paragon of virtue and community benevolence that the marchers in Timaru asserted he was, common features with David Ross's setup didn't upset the complacency amongst Ross's acolytes.

However, the shortcomings of the Ross investors seem to be mirrored by shareholders in some companies on the NZSE. These shareholders seem unable to see the obvious even when it is laid bare before them in company reports, forecasts, etc. They are prepared endlessly to give credit where it is not due, and to believe a constantly-reshuffled deck of the same feeble excuses again and again without loss of faith. Anyone in doubt should look at the RAK thread.

[Anna Naum]

Isn't it amazing that with all the publicity about Bernie Madoff's exploits none of the 900 or whatever Ross investors were awake to the similarities between the Madoff and Ross circumstances and energetic enough to seek intervention.

Also it is incredible that even when Alan Hubbard was exposed as rather less than the paragon of virtue and community benevolence that the marchers in Timaru asserted he was, common features with David Ross's setup didn't upset the complacency amongst Ross's acolytes.

However, the shortcomings of the Ross investors seem to be mirrored by shareholders in some companies on the NZSE. These shareholders seem unable to see the obvious even when it is laid bare before them in company reports, forecasts, etc. They are prepared endlessly to give credit where it is not due, and to believe a constantly-reshuffled deck of the same feeble excuses again and again without loss of faith. Anyone in doubt should look at the RAK thread.

Fear and Greed, is what it is about. Fear now that $$$ may be lost....greed when other similar funds were blowing up that the investors did not want to give up the wonderful returns they were experiencing. After all with a lot of these investors having had money with RAM for 10+ years they must have felt confident that he was indeed the financial genius that many people suggested he was.

Still think the FMA has a ot to answer here, they set the framework to play by and have again been found wanting.

[macduffy]

Erosion, you mean as is happening already with some coastal areas :

http://www.stuff.co.nz/dominion-post/news/kapiti/7555304/Kapiti-erosion-risk-may-devalue-1800-homes

Exactly.

My point, though, is who was warning that these properties' values were getting out of hand and that they risked future erosion of their land and land values?

All hindsight stuff now!

And nothing to do with RAM!

;)

[Xerof]

The properties along the coast at Raumati South and even some that were in the lee of Kapiti Island were being physically eroded in the eary 1970's. I witnessed it as a resident of that area.

It must be a generational cycle of blue eyed ignorance to facts that would be apparent on every LIM report for every property along the coastline, that sees new owners ignore these facts, or not bother to do the research.

history does repeat

sorry to hijack RAM thread, again

[Balance]

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

SFO to investigate as "reasonable grounds" that serious fraud has been committed!

Kinda like the Police saying that there is reasonable ground to suspect murder after a body washes up on a beach with twenty bullet wounds and with all the fingers missing.

Bring back Adam Feeley!

He would have held a press conference and stated exactly what Mr David Ross is.

[Halebop]

...Kinda like the Police saying that there is reasonable ground to suspect murder after a body washes up on a beach with twenty bullet wounds and with all the fingers missing...

You mean it wasn't suicide?

[Xerof]

Sounds like a straightforward drowning to me.....:confused:

[cheksta]

I was an investor in RAM losing low six figures. Luckily I am young (late twenties) so I've still got plenty of time to rebuild.

But I just wanted to address all the posters calling RAM investors greedy and deserving of the loss. I can only speak for myself but I assume other investors would have a similar view. I was aware of the somewhat risky shares I was (allegedly) invested in (Canadian mining stocks). I was prepared to take a loss in the pursuit of a high return.

If my portfolio lost 50% overnight due to a poor trade by David Ross I would be angry and disappointed, sure. But I would accept it and move on, no problem. That is the inherent risk and it is accepted.

BUT that isn't what happened. My investment was stolen and paid out to previous investors (Ponzi). NOBODY factors THIS risk into an investment with a seemingly credible investment firm that has been around 20+ years.

Or perhaps some do and we all should?

Happy to answer any questions anybody might have about my investment and why I invested with RAM.

[Lizard]

I was an investor in RAM losing low six figures. Luckily I am young (late twenties) so I've still got plenty of time to rebuild.

But I just wanted to address all the posters calling RAM investors greedy and deserving of the loss. I can only speak for myself but I assume other investors would have a similar view. I was aware of the somewhat risky shares I was (allegedly) invested in (Canadian mining stocks). I was prepared to take a loss in the pursuit of a high return.

If my portfolio lost 50% overnight due to a poor trade by David Ross I would be angry and disappointed, sure. But I would accept it and move on, no problem. That is the inherent risk and it is accepted.

BUT that isn't what happened. My investment was stolen and paid out to previous investors (Ponzi). NOBODY factors THIS risk into an investment with a seemingly credible investment firm that has been around 20+ years.

Or perhaps some do and we all should?

Happy to answer any questions anybody might have about my investment and why I invested with RAM.

Hi Cheksta and thanks for being willing to share your situation and experience. Good on you for challenging the unsympathetic views of some posters. It must be a difficult and distressing situation for you at this time and it is truly appalling that such large scale fraud appears to have been carried out on many intelligent and well-intentioned savers/investors.

You raise an interesting point as to what factors we should expect ordinary people to take into account. I too have been thinking about this. The response to these types of situations tends to be an increase in provider regulation, yet regulation simply defines criminal behaviour and does not prevent it. Regulation also makes life more difficult for those who are honest and well-intentioned in their assistance of others (maybe a topic for another thread as to hurdles and resulting oddities).

We have general expectations that people should take reasonable precautions in regard to protecting themselves from other types of criminal activity - e.g. locking their house or car to prevent theft. We expect people to take some responsibility for their physical health and children are given instruction throughout their school years on health and nutrition issues. So yes, perhaps there is an onus on the investor to have a basic level of awareness of risks, inclusive of criminal risk in money handling - and perhaps our education system needs to make sure that is in place.

In regard to other investors, you say "perhaps some do" and yes they do.... I have an investment in a fund that has reported similarly high rates of return over the past few years (although has not been around for 20+ years). I invested 3% of funds in it, read the prospectus, checked for accounts filed on-line, checked auditor, checked directors, checked registry, trustee and custodian existed independently. Probably taking ALL of those precautions is extreme. But they are all precautions that should be considered.

Having said that, I think we all face uncertainty whenever our investments are held indirectly - I would find hard to know the risk of my broker cash management accounts and a few custodial investments should my broker fail financially. Sometimes it is difficult to challenge an advisor when arrangements suddenly change - none of us want to appear distrusting or paranoid.

When RAM first came to light, I was surprised to find so little on line - no web-site, no public accounts etc. Yet many intelligent investors have been convinced to invest their life savings with him, and had no suspicions. So, yes, I am curious as to how this happens. Sparky has asked most of the questions that spring to mind, but a few others that also cross my mind:

1. Were you ever suspicious or concerned about the absence of auditors/trustees/custodian or any other aspect?
2. What proportion of the money you lost would have come from the "fictional" returns rather than what you deposited with RAM?
3. How does a late-20 something end up with a six-figure investment portfolio :) (Need advice for my kids!)?

Thanks again for your willingness to share your experience.

[CJ]

Happy to answer any questions anybody might have about my investment and why I invested with RAM.

Thanks:

Did you ever think the returns were too good to be true?
Did the returns fluctuate, ie big down months as well as big up months which would be expected with a speculative portfolio?
Are you diversified into other investments or was this it?
How do you invest your other investments - directly or use other funds/managers?
How did you find out about RAM? Did they/do they still have money invested with RAM?

[cheksta]

I appreciate your openness about this - hopefully full transparency on this terrible saga will help others avoid the same fate.

I do have some questions:

1. Did RAM ever offer a prospectus or something similar that outlined the nature of the investments made and the parameters the funds would operate in?
No prospectus. I had an initial meeting with where he discussed his general investing strategy (namely overseas shares, in particular mining shares). I received and signed a 'Management Deed', prepared by a well regarded law firm. It's quite basic (15 pages) and states that RAM will invest in a portfolio of shares/investments on my behalf and provide periodic reporting of this portfolio etc.
2. Did you examine the structure of RAM, eg look at whether there was a trustee to manage the funds
No. Although I had no idea he had so much under management. My basic understanding was there were around 200 investors. Each would assign what level of risk they were willing to take on, low/medium/high (that's over-simplified, I believe there were several more 'brackets'). I choose the highest 'risk' bracket as I was young and could handle a loss.
3. Was there regular reporting from RAM on your account, eg monthly statements?
Every investor received a quarterly statement outlining what shares we were invested in and any capital movements in that period. Each statement came with a cover letter from David Ross outlining his view of the markets and his reasoning for investing in particular shares. For example, my last report was received 19th July for the quarter to 30th June. The cover letter speaks of a difficult quarter where the MSCI declined 5.81% and generalised statements about European financial weakness, China GDP growth and investor fear declining. (For the record my portfolio stated a return of 3.01% for the quarter, hardly an eye-popping 'red-flag' figure).
4. Did you go in and meet with David Ross and ask him how he would invest your money, or was there any kind of "investor presentations / investor seminars" where you and others could listen to the sales pitch on why you should invest with him?
Yes I met him initially one-on-one before investing. He told me how he would invest the funds and his reasoning. I was just getting into the markets on a personal level and I remember joking with him that we would compete to see who could get the best return in the next 12 months and the loser would have to buy the winner a bottle of whiskey. I did very well personally out of investing in fundamentals and stocks like FPA, MHI etc but we never did compare results. I spoke with him very rarely after the initial meeting.
5. Was there an opportunity to meet any other company directors or senior officers of RAM or ability to evaluate their track record?
I'm sure there was if I asked for it. I did not, never crossed my mind. But I believe this was very much a 'one-man-band'. The only 'track-record' I had was family friends who had invested in him, seemingly done well, taken their initial investment out and let the remaining investment 'ride'.

I'm sure it wasn't as simple as handing over money to a single person you had hardly known to manage your funds without any paperwork and without any known safeguards like trustees or legally binding documents like a prospectus.
Well there was the Management Deed, Disclosure Statement (this states explicitly that client portfolios are not audited), Secondary Disclosure Statement and of course the quarterly reports.



Like I said, I never for a second thought this man was a flat out crook. It boggles my mind that he kept up all these lies and 'fake' quarterly statements and cover letters. As far as I knew I deposited funds with Authorised Financial Advisor who then used these funds to invest in shares on my behalf. I received a statement of these shares initially and every quarter and they checked out online with regards to price movements etc.

[cheksta]

Hi Cheksta and thanks for being willing to share your situation and experience. Good on you for challenging the unsympathetic views of some posters. It must be a difficult and distressing situation for you at this time and it is truly appalling that such large scale fraud appears to have been carried out on many intelligent and well-intentioned savers/investors.

You raise an interesting point as to what factors we should expect ordinary people to take into account. I too have been thinking about this. The response to these types of situations tends to be an increase in provider regulation, yet regulation simply defines criminal behaviour and does not prevent it. Regulation also makes life more difficult for those who are honest and well-intentioned in their assistance of others (maybe a topic for another thread as to hurdles and resulting oddities).

We have general expectations that people should take reasonable precautions in regard to protecting themselves from other types of criminal activity - e.g. locking their house or car to prevent theft. We expect people to take some responsibility for their physical health and children are given instruction throughout their school years on health and nutrition issues. So yes, perhaps there is an onus on the investor to have a basic level of awareness of risks, inclusive of criminal risk in money handling - and perhaps our education system needs to make sure that is in place.

In regard to other investors, you say "perhaps some do" and yes they do.... I have an investment in a fund that has reported similarly high rates of return over the past few years (although has not been around for 20+ years). I invested 3% of funds in it, read the prospectus, checked for accounts filed on-line, checked auditor, checked directors, checked registry, trustee and custodian existed independently. Probably taking ALL of those precautions is extreme. But they are all precautions that should be considered.

Having said that, I think we all face uncertainty whenever our investments are held indirectly - I would find hard to know the risk of my broker cash management accounts and a few custodial investments should my broker fail financially. Sometimes it is difficult to challenge an advisor when arrangements suddenly change - none of us want to appear distrusting or paranoid.

When RAM first came to light, I was surprised to find so little on line - no web-site, no public accounts etc. Yet many intelligent investors have been convinced to invest their life savings with him, and had no suspicions. So, yes, I am curious as to how this happens. Sparky has asked most of the questions that spring to mind, but a few others that also cross my mind:

1. Were you ever suspicious or concerned about the absence of auditors/trustees/custodian or any other aspect?
No, it didn't cross my mind unfortunately.
2. What proportion of the money you lost would have come from the "fictional" returns rather than what you deposited with RAM?
Roughly 50%. I was able to make some withdrawals along the way to fund several business ventures of mine.
3. How does a late-20 something end up with a six-figure investment portfolio :) (Need advice for my kids!)?
Working very hard :)

Thanks again for your willingness to share your experience.

No problem :)

[cheksta]

Thanks:

Did you ever think the returns were too good to be true?
Not at all. Although they were good returns they were never what I would call 'unbelievable'. He was averaging a return in the late teens for me, something around 18% pa I believe. Keep in mind I invested right after the GFC so shares were recovering well at this time.
Did the returns fluctuate, ie big down months as well as big up months which would be expected with a speculative portfolio?
Yes they did fluctuate, and there were down quarters. Although the fluctuations were not dramatic. 5-10% upward, 5-10% downward. I don't believe he ever placed a large percentage of my portfolio in very small mining shares. These had a small weighting. The largest positions were in very large mining companies such as New Gold Inc in Canada which has a market cap of over 4.5b.

Are you diversified into other investments or was this it?
Somewhat diversified, but mainly into my own businesses.
How do you invest your other investments - directly or use other funds/managers?
Directly.
How did you find out about RAM? Did they/do they still have money invested with RAM?
From family friends who had done well and been able to withdraw most of their initial investment. They all still have funds invested with RAM.


.............

[Dubdee]

This is remarkably similar to Hubbard Management Funds except there Hubbard did have assets. I was just that they never quite squared with the sum of the assets due to clients.

Based on the High courts decsion on Hubbard Management funds, investors can whistle goobye to their returns as court ruling implies returns are subordinated to introduced capital. A nonsense in my view. Anyone who has taken out what they put in wont get a cracker even assuming any biscuits can be found.

[macduffy]

I appreciate the frankness of cheksta in disclosing his position and discussing his predicament. And, as always, Lizard's contribution is right on the mark.

We musn't forget that the principal player here had a long track record in Wellington investment circles and a sound reputation as an analyst/ fund manager. It shouldn't surprise that many financially literate people entrusted their investments to him, on whatever basis.

[CJ]

I appreciate the frankness of cheksta in disclosing his position and discussing his predicament. And, as always, Lizard's contribution is right on the mark.Agree. Thanks

It doesn't look like a black and white Ponzi scheme from the outside based on your comments. He was obviously well liked for other rich investors.

My main learning is not to trust an investment manager unless they use a trust account with someone I trust(eg Guardian trust).

[macduffy]

"Chalkie's" column today makes some good points.

http://www.stuff.co.nz/business/opinion-analysis/7976267/One-loophole-closes-as-another-one-opens

[percy]

I appreciate the frankness of cheksta in disclosing his position and discussing his predicament. And, as always, Lizard's contribution is right on the mark.

We musn't forget that the principal player here had a long track record in Wellington investment circles and a sound reputation as an analyst/ fund manager. It shouldn't surprise that many financially literate people entrusted their investments to him, on whatever basis.

A very good post macduffy.

[Balance]

I appreciate the frankness of cheksta in disclosing his position and discussing his predicament. And, as always, Lizard's contribution is right on the mark.

We musn't forget that the principal player here had a long track record in Wellington investment circles and a sound reputation as an analyst/ fund manager. It shouldn't surprise that many financially literate people entrusted their investments to him, on whatever basis.

What investors have to watch out for as well are those who change their business profile and client base after blowing their previous clients up on bad investments.

That certainly was the case with many of the directors of some of the finance companies - e.g.. Rod Petricevic (EuroNational, then Bridgecorp), Roger Moses (Reeves Moses C mortgages, then Nathan Finance), Michael Reeves (Lombard Finance, Reeves Moses C Mortgages) etc.

I can think of a certain gentleman (AFA) in the Wellington region who blew up many investors/clients by putting a lot of their money in the finance companies but now, targets a different client base and pretend he has nothing to do with finance companies! In fact, he holds himself out as a champion for those who lost money in finance companies!

[QOH]

So where is this guy now ?
Does anyone believe he is in hospital or has he done a runner

[Under Surveillance]

So where is this guy now ?
Does anyone believe he is in hospital or has he done a runner

The word is that he is in hospital for a protracted course of enemas.

[Balance]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10849083

"Everyone swore by him"

Sigh ..I guess everyone is now swearing at him?

Why does a small country like NZ breed such world class con artists like David Ross, Rod Petricevic, Allan Hubbard etc?

[Balance]

I wish I knew the answer to that, Balance, but there's clearly an issue here that needs to be addressed. Whether or not we have a greater percentage of white collar criminals per head of population than other countries or not I don't know, but that's immaterial really, because it's in NZ that we live and are most at risk. I sometimes wonder if some New Zealanders suffer from a bit of 'small man syndrome', and have this strong need to drive around in a figurative 'big flash car' to compensate for it. The problems start when they can't afford the car, and will get it (or keep it) by hook or by crook. Crook being the operative word.

I think you are on to it, David B although one would have thought that the average New Zealander has a bit more education and nous than to blindly trust these con-artists.

BTW, David Ross's Ponzi scheme as a %tage of GDP and %tage of the savings pool out there, is manifestly bigger than Madoff.

[Silverlight]

I think you are on to it, David B although one would have thought that the average New Zealander has a bit more education and nous than to blindly trust these con-artists.

BTW, David Ross's Ponzi scheme as a %tage of GDP and %tage of the savings pool out there, is manifestly bigger than Madoff.

BTW... it's actually smaller, Madoff was 0.43% of GDP, Ross is 0.39% of GDP.

[Balance]

BTW... it's actually smaller, Madoff was 0.43% of GDP, Ross is 0.39% of GDP.

Thanks for correction - cheers!

[BIRMANBOY]

Our con (and misguided) individuals are scaled to country size..but Bernie Madoff would probably be annoyed if you called them "worldclass". They do their best with whats available so do deserve some media coverage.

[Balance]

Yeah that's troubling, isn't it. One thing I have seen quite a lot in the papers over the years is that New Zealanders often score quite low on financial literacy tests, typically much lower than individuals from other countries. This may make them more vulnerable (and easier for that matter) to being taken for a ride by flash talking con-artists. I have often thought that basic finance (including budgeting, investing, diversification, retirement incomes, ponzi schemes, fraud etc) should be taught at school as a core compulsory subject, because its a basic skill that people need in order to live a life free of many of the troubles that people find themselves falling in to. But I guess teachers would rather teach Treaty grievances and women's studies, environmentalism, ocean ecology, and the history of South Africa than how to keep your money safe..................

The pittance paid to teachers - no wonder they are all closet socialists and vote Labour at every opportunity!

[CJ]

compulsory treatment under the Mental Health Act in hospital for the past three weeks. Stress got to him? or laying the foundations for his defense.

[peat]

Compulsory Mental Health Act treatment sounds like it could be preventing suicide?

[Balance]

Compulsory Mental Health Act treatment sounds like it could be preventing suicide?

Imagine the stress, nightmares and sleepless nights he would have been having leading to the collapse of RAM - pretending all was fine, keeping up pretenses and lying through his teeth to his clients that they were in good hands, scrambling around realizing money to pay those who were persistent and threatening to call in the SFO etc etc.

Then, there's his staff. What did they know and did they participate in the cover-up?

Bad and sad situation for all concerned.

[Balance]

Receivers met with David Ross now that he is mentally capable of assisting them.

There is little or no more assets to be found - so maximum is $11m which will be considerably less after realization, fees etc.

Considering that Mr Ross was reporting that he was managing $449m to his investors, it is in effect an admission that he had been running a ponzi scheme.

The guy is a scumbag and not deserving of any pity whatsoever.

SFO needs to go after his collection of cars, arts and properties.

[karen1]

An interesting piece from Brian Gaynor


hhttp://www.milfordasset.com/david-ross-the-investment-management-sector/?utm_medium=email&utm_campaign=Milford+Blog+Release&utm_content=Milford+Blog+Release+CID_8e1a1911247d0 8866f37456576b71e1e&utm_source=Email%20marketing%20software&utm_term=Click%20here%20to%20read%20more

[janner]

Can't disagree. It is a real shame that, apparently, around 8 years is the maximum for this kind of fraud. I saw on the NBR website that if he pleads guilty straight away they will discount his sentence by a third, and if he behaves nicely in prison, he might be out in 2 years.

A thought goes through my mind..

Is the person on a Benefit more guilty of a crime by extracting monies from me as I earn it..

Or ..

Is the Charlatan more guilty of a crime by extracting monies from me as I try to save what pitence that is left after living expenses ??


Disc. No involvement in the upkeep of Charlatans so far !!.. ( CEO & Directors stipends excluded )..

[Fred114]

An interesting piece from Brian Gaynor


www.milfordasset.com/david-ross-the-investment-management-sector/?utm_medium=email&utm_campaign=Milford+Blog+Release&utm_content=Milford+Blog+Release+CID_8e1a1911247d0 8866f37456576b71e1e&utm_source=Email%20marketing%20software&utm_term=Click%20here%20to%20read%20more (hhttp://www.milfordasset.com/david-ross-the-investment-management-sector/?utm_medium=email&utm_campaign=Milford+Blog+Release&utm_content=Milford+Blog+Release+CID_8e1a1911247d0 8866f37456576b71e1e&utm_source=Email%20marketing%20software&utm_term=Click%20here%20to%20read%20more)

http://www.milfordasset.com/david-ross-the-investment-management-sector/

[karen1]

oops! Thanks Fred.

[Balance]

A thought goes through my mind..

Is the person on a Benefit more guilty of a crime by extracting monies from me as I earn it..

Or ..

Is the Charlatan more guilty of a crime by extracting monies from me as I try to save what pitence that is left after living expenses ??


Disc. No involvement in the upkeep of Charlatans so far !!.. ( CEO & Directors stipends excluded )..

"The true measure of any society is not how it treats its well off citizens, the rich and the famous.

It is certainly not about how it looks up to the so-called society socialites, 'role model' sports stars and tough ruthless politicians.

It is about how it treats its unfortunate citizens, who because of health, circumstance and/or age are in need of help."

I have absolutely no problem with the state giving assistance (be them benefits, free health care, free schooling etc) to the unfortunates but I guess like you, I object most strongly to the benefits system being so systematically looted via the civil servants through their gross mismanagement.

[Balance]

Meanwhile, the scumbag is disclosed as paying himself $4.4m a year for managing NZ's biggest ever detected ponzi scheme.

http://www.nbr.co.nz/article/investors-worst-fear-realised-ross-tells-receiver-cupboard-bare-bd-132842

There are many more questions to be answered - not least of which is how much and how involved his staff and family were in the gross deception over so many years.

[elZorro]

Meanwhile, the scumbag is disclosed as paying himself $4.4m a year for managing NZ's biggest ponzi scheme.

http://www.nbr.co.nz/article/investors-worst-fear-realised-ross-tells-receiver-cupboard-bare-bd-132842

There are many more questions to be answered - not least of which is how much and how involved his staff and family were in the gross deception over so many years.

A very good point Balance: and I liked the quote in the previous post. Here's a good time to point out that a bit more bureaucracy (the last thing the current govt wants) could have had a few people compiling a fitness report on all finance companies, brokers and advisers, and smacking it up on an open access website. What would the costs have been, compared to the benefits for average taxpayers? Now the govt is likely to have to refund income tax paid by victims of Mr Ross. That'll cost some boffin time too.

[Xerof]

I think every Ponzi scheme should be listed on the NZX....at the very least there should be a register of them......and whatsmore, every investor should have to pay capital gains tax on their profits.......

[Nigel]

On a related note, it's just been revealed that Henry Winkler (the guy who made a name for himself as the cool guy on Happy Days) has been arrested for running a Fonzi scheme.

[JPW]

The issue for me is more related to how this will impact other investor’s perceptions of financial advisers, the FMA/other regulatory bodies and the industry as a whole. This is the last thing we need considering a large majority of New Zealand's are already put off from investing in the share market, and dislike financial and insurance advisers. I don't think it's fair to bash to FMA, I believe they've done a great job thus far and also think it's important we back the regulators. It would not be possible to catch everyone doing the wrong thing by their clients but it is possible to learn from the ones that slipped through the cracks. Clearly Ross Asset Management slipped through the cracks and lost people a lot of money. There have been numerous points brought up as to why they slipped through, now the FMA needs to plug those gaps so we don’t see it happen again.

[pierre]

Heyyyyyy - that's cool Nigel!

[winner69]

Well I have a further question to ask in addition to all those above. How many other Ponzi schemes are currently out there operating in NZ, and what is the FMA (and investors) doing about uncovering them?

Govt spend on social welfare is one big Ponzi scheme

[Jay]

Agree S T C.
Just been "looking" at the Horse racing investing software - the guys voice is similar 30 Seconds walk away person - trying to disguise his voice i'd say
What you get is a very expensive laptop!

[CJ]

Agree S T C.
Just been "looking" at the Horse racing investing software - the guys voice is similar 30 Seconds walk away person - trying to disguise his voice i'd say
What you get is a very expensive laptop!My brother talked to one of these guys and sent me though the info he received. I read the info; my reply was as follows:


I was a bit dubious until I read their was Wizardry involved. Where do I sign up.

They seriously used the word 'wizardry' in their promo material on a horse betting software!!

[Stranger_Danger]

As a general rule, I find bad investments are the ones that have to be sold.

Good investments, on the other hand, have to be found, and then take some doing.

Some of the best public company investments I've made, nobody I know has heard of the company, sometimes the broker doesn't even have it loaded into their platform, people try and talk you out of it and, usually, half the shares you're trying to buy are being snapped up by insiders who are putting out either no or negative public information.

Conversely, when it is being talked about at a party, when management are overly promotional, when you seem to have no problem acquiring shares, when people talk about how things will ALWAYS go well, and harp on about managements track record, normally it is a bad investment.

As for private companies, even worse - the good ones simply don't need or want your money, whereas the "99%" will take it in a heartbeat.

[Balance]

Ross Asset Management is an alleged case of out and out fraud.

However, investors must also keep there eyes open for the mismanagement and the highly unethical near-fraud that is perpetrated by brokers on investors even with the safe guards of compliance officers, corporate trustees etc.

I am referring to bunny financial advisors who advised people to diversify into 5 different finance companies in the mid 2000s, like Bridgecorp, National Finance, Blue Chip, South Canterbury and F&P, meaning that vast tracts of people's capital were wiped out by companies that failed and paid back 2/10ths of the investment. In some cases this was incompetence, in other cases they were incentivised by commissions to ignore risk.

Others promoted property with inflated prices that included 2 years of guaranteed rent at an inflated price. Hey presto, after 2 years, rents collapsed as did the value of your unit.

We can pass scorn on those to fell for out and out scams like Ross Asset Management, but investors face perils everywhere - many of which can and should be examined more closely by the FMA and the media even if they are just highly unethical and dubious rather than fraudulent.


Don't rely on the FMA - they are so up themselves looking into the industry's backside that they cannot tell **** from clay.

Don't rely on the media - they are so easily seduced by those who wine and dine them, and pay big advertising bucks. That's why the finance companies got away so easily from bugger all scrutiny - the advertising bucks were just so good.

Above all, don't rely on the government - the multi-billion dollar bailout of the finance companies, especially Mr Allan Hubbard's SCF, puts the Maori treaty settlements in perspective.

Allan Hubbard and his bunch of clowns blew over $1 billion of taxpayers' money - hardly an outcry out there save for a few commentators and there's actually idiots out there who believe he was the victim of a conspiracy! Meanwhile, $1 billion has been paid out since treaty claims began and you would think the world has come to an end!

**********

And here's latest of how hopeless the government is at keeping an eye on things out there :

http://www.stuff.co.nz/business/industries/7994187/AMI-bailout-cost-doubles

$254m to bailout AMI Insurance - because the directors and management fell asleep at the wheels, and under-insure the company! Great, isn't it?

*********

Ad here's more :

Meanwhile, property syndicators are back - heads they win, tails you lose.

http://www.stuff.co.nz/business/industries/7994189/SPI-investors-kept-in-the-dark

Extract from NZ Herald :

"After the property syndication implosion of the 1990s, you would think that investors would have wise up by now? Remember the Hodges and Waltus? Money Managers and Urbus?

Those considering investing in the property syndicates enjoying something of a resurgence might like to cast their minds back to, or ask someone who remembers, what happened last time these structures became popular.

Perhaps the most prominent syndicates back in the 1990s were those in the Waltus Group, run by Lower Hutt father and son team John and Shayne Hodge.

Set up in 1985, by March 2000 Waltus managed 44 syndicates comprising 69 commercial, industrial and retail properties in New Zealand and Australia, which were syndicated to more than 12,500 retail investors.

The capital value of its New Zealand properties was $473 million and its Australia properties A$131 million ($166 million).

But a softening property market, along with falling capital values and shortening lease profiles, created problems for Waltus, and similar outfits including those run by Money Managers' Doug Somers Edgar.

Investors in one Auckland property, the former KPMG building in Princes St, had millions wiped from their portfolio when the cornerstone tenant moved out."

[winner69]

And Bal ......aucklanders flocking back to the coastal properties .....or being seduced back by the development/real estate industry

[Balance]

And Bal ......aucklanders flocking back to the coastal properties .....or being seduced back by the development/real estate industry

So they say! And the NZ Herald wined and dined bright eyed young reporters lapped it up.

http://www.nzherald.co.nz/property/news/article.cfm?c_id=8&objectid=10849610

They just forgot to write that there's more properties for sale in those areas than the whole of the Auckland city region!

Trademe figures :

North of Auckland - 6,458 properties
Coromadel - 2,296.

Auckland + North Shore + Manukau City - 6,673.

I wonder if all those eager Aucklanders would like to buy a certain property my mate has got in Leigh which has been on the market for over 2 years with no offer? 2003 value too!

[Winston001]

Somewhat appositely, I had just finished reading "Bernie Madoff:: The Wizard of Lies" when the Ross Asset Management story broke. Talk about history repeating itself, I felt a frisson of hairs on the back of the neck.

http://www.amazon.com/The-Wizard-Lies-Bernie-ebook/dp/B004OA6402

How for pity's sake can these frauds happen again and again and again?! To be sure, Ponzi schemes are rare in NZ although we can never be certain. They are indeed more frequent in the US despite that nation's much more experienced regulatory environment.

[Winston001]

I strongly recommend obtaining (or buying) the Wizard of Lies book from your library. It is very well written which is not a judgement I make lightly. The author clearly sets out Madoffs career which spanned 47 years (Bernie started in an honest way in 1960) before it collapsed which dispels the general belief that Ponzi schemes are short term.

Perhaps that needs expanding: anyone looking at fund manager performance is going to feel safe with a "genius" who has survived beyond 10 years because otherwise he'd have been uncovered in that time.

The proof of being a genius is that Bernie Madoff attracted very wealthy sophisticated Wall Street investors who knew far more about markets than the average person. Bernie even told people not to invest too much with him - which counter-intuitively drew even greater belief in him. Bernie never advertised. He turned away investors.

Sounds an awful lot like RAM doesn't it. Quiet, only recommended by those in the know, sole manager...

Anyway, there is an excellent discussion with Kathryn Ryan and Bruce Tichbon on National Radio which I commend: http://www.radionz.co.nz/national/programmes/ninetonoon/20121129

[Winston001]

What staggers me is how a lightweight compliance regime would have spotted these guys ... A quarterly submitted spreadsheet with holdings using shareholder numbers and/or fund holder numbers would have exposed these guy ever so quickly ... Or am I missing something?

Agreed and I can only answer for Madoff:

1. Bernie was extremely secretive effectively running a one man investment business. None of his investors had any idea how many others he had but they all thought they were in an exclusive club. Bernie also was almost invisible - a tiny investment advisor among Wall Street giants.

2. Madoff was successful from 1963 to the late 1980s when enlisted the help of his employee and friend Frank DiPascali to start paying out using incoming investment funds. From then on Frank and Bernie worked full time to create fictitious trades.

3. At the same time Madoff operated a separate legitimate and above board sharebroking firm.

4. Computerisation of financial markets took years to achieve and Madoff was an early adoptor which ironically gave him the nouse to game it.

5. The Securities and Exchange Commission was defanged in the Reagan years in the belief that red tape should be cut. Its budgets were reduced. Even after being warned in 2002 that Madoff's success was impossible, investigations faltered and other frauds took precedence. Plus...Bernie was a very adept liar.

Incidentally the total fraudulent funds he managed amounted to $68.5 billion. The actual cash invested was $20 billion. Of that so far as I know about $10 billion has been recovered by the administrator which is remarkable.

As for David Ross, he also was a very small operator and perhaps able to avoid regulators attention. Plus he would have been telling lies. If like Madoff he claimed to be buying hedge funds in France, Spain etc and doing contra trades with European banks - effectively being the counter-party on friendly hedges, then that would be very difficult to disprove.

[Balance]

As for David Ross, he also was a very small operator and perhaps able to avoid regulators attention. Plus he would have been telling lies. If like Madoff he claimed to be buying hedge funds in France, Spain etc and doing contra trades with European banks - effectively being the counter-party on friendly hedges, then that would be very difficult to disprove.

Looks like David Ross did avoid not only the scrutiny of the regulators, he also escaped any kind of action whatsoever even when the regulators were warned of his activities!

Plane Jane Diplock, ex-head of the Securities Commission has a lot to answer for - dumb #^&@#.

And not surprisingly, there's an ex-financial services player (now in PR), Annabel Cotton, who chose to ignore the warnings.

NZ is so well served, isn't it, by these legions of useless highly paid and well fed regulators who obviously were more concerned about their relationships with the private sector than they were about protecting investors.

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

"Securities Commissioner Annabel Cotton was told of concerns about Ross in September 2009. 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."

[CJ]

The person, who asked not to be named, said he was told the commission was too busy to look into his concerns."You misted the best part:

""I remember Annabel's words exactly," he said. "[She said] ‘I hope you're not right'.""

[Balance]

You misted the best part:

""I remember Annabel's words exactly," he said. "[She said] ‘I hope you're not right'.""

Sigh, now you have got me started!

Annabel Cotton - hardly surprising when you consider that she was an esteemed member of the Fisher Fund team.

The motto of anyone connected with Fisher Funds seems to be : "If the fund makes money, we are clever. If the fund loses money, it's the market's fault!"

Likewise, the Securities Commission's motto seemed to be : "If the financial markets operate well, we are so good at doing our job. If things blow up, it's the market's fault."

Meanwhile, Plane Jane (appointed with gusto by that social-engineering vampire, Helen Clark) flew around the globe, spending millions of taxpayers' money telling everyone what a great sheila she was - under no illusions whatsoever that as a female under Helen, she can do no wrong.

[elZorro]

At least there is a concerted move to check other financial advisers that look like RAM, this should not be too expensive an operation, and long overdue.


http://tvnz.co.nz/business-news/financial-regulator-in-race-against-time-5292707

[elZorro]

http://www.stuff.co.nz/business/industries/9958230/Wife-gets-900k-from-mansion-sale

Half of the proceeds went to ripped-off investors, at least.

[Balance]

http://www.stuff.co.nz/business/industries/9958230/Wife-gets-900k-from-mansion-sale

Half of the proceeds went to ripped-off investors, at least.

Ripped-off? Greedy and naive may be apt description of many of them?

[skid]

That would be a pretty good reason to be more careful and less greedy,but Im not sure if it would qualify as a valid reason to rip people off.:(

[Balance]

That would be a pretty good reason to be more careful and less greedy,but Im not sure if it would qualify as a valid reason to rip people off.:(

People who are not greedy generally do not get ripped off.

Greed blinds them to what are obvious cons.

[couta1]

People who are not greedy generally do not get ripped off.

Greed blinds them to what are obvious cons.
Wouldn't totally agree with this,a lot of innocent and naive elderly were ripped off in the finance company collapse,people looking for a bit more than the banks could offer to give them a reasonable standard of living,they were trusting rather than greedy and with the likes of Richard Long telling them how trustworthy and reliable Hanover was the trap was set. Disc-Lost 50k in the finance company collapse to those A grade companies with Dorchester being the only one to give us back most of our money and have spoken with dozens of elderly that lost money and none of them were motivated by greed as I define it

[elZorro]

David Ross sucked in at least one cashed-up farmer, you'd think they would be fairly conservative. One of my family members lost money in a range of finance companies, after being recommended to a broker by another family member, an accountant no less. Everyone makes mistakes. Having these crooks out there with no immediate control, is the issue. Even as he was being put into receivership, David Ross found the time to scuttle down the road and 'invest' a few thou in Glass Earth Gold, late in 2012. Maybe he was being greedy just like normal, because it technically wasn't his money, and as you correctly pointed out, GEL was a bit of a poor investment.

[Balance]

Wouldn't totally agree with this,a lot of innocent and naive elderly were ripped off in the finance company collapse,people looking for a bit more than the banks could offer to give them a reasonable standard of living,they were trusting rather than greedy and with the likes of Richard Long telling them how trustworthy and reliable Hanover was the trap was set. Disc-Lost 50k in the finance company collapse to those A grade companies with Dorchester being the only one to give us back most of our money and have spoken with dozens of elderly that lost money and none of them were motivated by greed as I define it

I have some sympathy for the elderly but I have observed too many of them wanting 'free' advice and being unwilling to pay for good solid sound advice.

The growth and growth of finance companies were very much about 'advisors' charging nothing for their advice but receiving commissions from the finance companies.

So the elderly paid nothing (or so they thought) and wow, they were receiving a few %tage points above the banks - what a deal!

Greed and stingy - that's what led to the finance companies debacle.

Kinda like the super annuitants voting in National Super (free, see?) in 1976 - as greedy as they came - NZ is still paying and will pay forever.

[percy]

Don't know whether we are talking about the same cashed up farmer? ,but the one I heard about had $600,000 with Ross,and rang him and asked for it back as he wanted to buy a house.Ross told him he was better off leaving the money with him "earning" 10%,and borrowing the money from the bank at 6%.!!!!

[Balance]

Don't know whether we are talking about the same cashed up farmer? ,but the one I heard about had $600,000 with Ross,and rang him and asked for it back as he wanted to buy a house.Ross told him he was better off leaving the money with him "earning" 10%,and borrowing the money from the bank at 6%.!!!!

Pay tax on the 10%, and cannot deduct the 6% - what kind of a deal is that?

[percy]

Pay tax on the 10%, and cannot deduct the 6% - what kind of a deal is that?

Very poor.
In fact $600,000 lost via Ross, and would still be paying interest on the $600,000 borrowed.
Heard the story third hand, so can't guarantee the facts.!!!!

[Schrodinger]

Also the NZ Gov were shown up during this with their lack of oversight. Having such a large amount of funds sitting in Finance companies should have been noticed as these things are reported and tracked by the RB. At the very least they should have given warning about the imbalance. The result is the loss of billions and bad press for the finance sector in general. What most concerns me is that NZ Govts go to work after bad stuff happens constantly driving looking at the rear vision mirror. This attitude has cost us at least 3 decades of economic success and seem us slide to the bottom of the OECD. For this to happen to NZ is a disgrace. Current observations and examples of this behaviour can be seen in Tiwai Point and Solid Energy.

[elZorro]

At last, some action on RAM payments paid to the lucky few who were smart enough to know better than to stay invested.

http://www.goodreturns.co.nz/article/976503104/ram-investor-must-return-fictitious-profit.html?utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Wednesday+2 4+June+2015

[Sideshow Bob]

See was reported elsewhere Hamish McIntosh borrowed $500k from Westpac for the investment - maybe why they only ordered to pay back the profits! Must have thought was on to a good thing.....

[peat]

It would appear I am out on a limb here, but I have a real problem with this.
If I invest some money in a black box and I follow that investment and I have no idea about the mechanics of the investment and then at some point choose to withdraw that , what have I done wrong and why shouldn't I be able to keep my capital and earnings combined.
There is no intent no malice and (assuming no knowledge of Ponzi factor) no crime.
Think about similar scenarios in mutual funds etc... how would that pan out.

[Xerof]

We're on the same limb peat.......the only counter I come up with is that your assumption in brackets might be on shaky grounds. I haven't read the judgement...maybe I should

[peat]

https://twitter.com/nzstuff/status/614599040630525952

innocent investor

[tim23]

Greed - at least they let him keep the capital so not worst outcome