Ponzi scheme operator Lance Ryan gets seven years & six months jail for 'cynically manipulating vulnerable & trusting investors' plus deceiving the FMA & Companies Office

The Serious Fraud Office (SFO) says "serial fraudster" Lance Jack Ryan has been sentenced to seven years and six months jail after pleading guilty to a series of charges.

Ryan used the foreign exchange platform BlackfortFX as a façade to entice over 900 mostly Christchurch investors to pump about $8.3 million into a Ponzi scheme, the SFO says.

Jimmie McNicholl, the public face of BlackfortFX and its sole shareholder and director, was sentenced to 11 months of home detention and $50,000 reparation. McNicholl pleaded guilty to obtaining registration as a financial services provider by deception.

The SFO says BlackfortFX did not actually conduct any forex trading, or any other form of investment activity.

Here's the SFO's press release.

A serial fraudster who persuaded Cantabrians to invest more than $8 million in a fake foreign exchange brokerage has been jailed for seven years and six months, with a minimum non-parole period of three years and nine months, for charges brought by the Serious Fraud Office.

Lance Jack Ryan (44) was sentenced at the Christchurch District Court. He had pleaded guilty earlier to charges of ‘Obtaining by deception’, ‘False accounting’, ‘Forgery’, ‘Reproducing a document with intent to deceive’ and ‘Theft by person in special relationship’.

Mr Ryan, also known as Lance Jared Thompson, used the forex platform BlackfortFX as a façade to encourage more than 900 investors, who were mostly from the Christchurch region, to put about $8.3 million in the Ponzi scheme. Mr Ryan has a number of previous dishonesty convictions including ‘misleading a social welfare officer’ and ‘taking or using a document for pecuniary advantage’, together with other Insolvency Act and Companies Act offences.

Jimmie Kevin McNicholl (56) who was the public face of BlackfortFX, as well as its sole shareholder and director, was sentenced to 11 months of home detention and $50,000 reparation. Mr McNicholl pleaded guilty in May to obtaining the registration as a financial services provider by deception.

BlackfortFX did not conduct any forex trading, or any other form of investment activity.

SFO Director, Julie Read said, “The sentence imposed on Mr Ryan reflects the very serious nature of his offending. He cynically manipulated vulnerable and trusting investors, many of whom have suffered considerable stress in additional to financial loss. Some of the lost money was payouts from the Earthquake Commission. Mr Ryan also deceived the Financial Markets Authority and the Companies Office. The prosecution of such matters is an important aspect of protecting New Zealand’s reputation as a safe place to invest and do business.” 

The SFO acknowledges the assistance of the Financial Markets Authority in the investigation which brought about the prosecution of Mr Ryan and Mr McNicholl.

BACKGROUND INFORMATION

Arena Capital Limited (Arena), which traded as BlackfortFX, was registered on the Financial Service Providers Register and purported to offer foreign exchange services to clients. The Financial Markets Authority (FMA) obtained asset preservation orders over the assets of Arena and associated persons in May 2015. The FMA also referred the matter to the Serious Fraud Office.

Arena was placed into liquidation at the Christchurch High Court on 24 July 2015.

CRIMES ACT OFFENCES

Section 220 Theft by person in special relationship

(1) This section applies to any person who has received or is in possession of, or has control over, any property on terms or in circumstances that the person knows require the person—

(a) to account to any other person for the property, or for any proceeds arising from the property; or

(b) to deal with the property, or any proceeds arising from the property, in accordance with the requirements of any other person.

(2) Every one to whom subsection (1) applies commits theft who intentionally fails to account to the other person as so required or intentionally deals with the property, or any proceeds of the property, otherwise than in accordance with those requirements.

(3) This section applies whether or not the person was required to deliver over the identical property received or in the person’s possession or control.

(4) For the purposes of subsection (1), it is a question of law whether the circumstances required any person to account or to act in accordance with any requirements.

Section 240 Obtaining by deception or causing loss by deception

(1) Every one is guilty of obtaining by deception or causing loss by deception who, by any deception and without claim of right,—

(a) obtains ownership or possession of, or control over, any property, or any privilege, service, pecuniary advantage, benefit, or valuable consideration, directly or indirectly; or

(b) in incurring any debt or liability, obtains credit; or

(c) induces or causes any other person to deliver over, execute, make, accept, endorse, destroy, or alter any document or thing capable of being used to derive a pecuniary advantage; or

(d) causes loss to any other person.

(1A)

Every person is liable to imprisonment for a term not exceeding 3 years who, without reasonable excuse, sells, transfers, or otherwise makes available any document or thing capable of being used to derive a pecuniary advantage knowing that, by deception and without claim of right, the document or thing was, or was caused to be, delivered, executed, made, accepted, endorsed, or altered.

(2) In this section, deception means—

(a) a false representation, whether oral, documentary, or by conduct, where the person making the representation intends to deceive any other person and—

  (i) knows that it is false in a material particular; or

  (ii) is reckless as to whether it is false in a material particular; or

(b) an omission to disclose a material particular, with intent to deceive any person, in circumstances where there is a duty to disclose it; or

(c) a fraudulent device, trick, or stratagem used with intent to deceive any person.

Section 256 Forgery

(1) Every one is liable to imprisonment for a term not exceeding 10 years who makes a false document with the intention of using it to obtain any property, privilege, service, pecuniary advantage, benefit, or valuable consideration.

(2) Every one is liable to imprisonment for a term not exceeding 3 years who makes a false document, knowing it to be false, with the intent that it in any way be used or acted upon, whether in New Zealand or elsewhere, as genuine.

(3) Forgery is complete as soon as the document is made with the intent described in subsection (1) or with the knowledge and intent described in subsection (2).

(4) Forgery is complete even though the false document may be incomplete, or may not purport to be such a document as would be binding or sufficient in law, if it is so made and is such as to indicate that it was intended to be acted upon as genuine.

(5) Every person is liable to imprisonment for a term not exceeding 3 years who, without reasonable excuse, sells, transfers, or otherwise makes available any false document knowing it to be false and to have been made with the intention that it be used or acted on (in New Zealand or elsewhere) as genuine.

Section 258 Altering, concealing, destroying, or reproducing documents with intent to deceive

(1) Every one is liable to imprisonment for a term not exceeding 10 years who, with intent to obtain by deception any property, privilege, service, pecuniary advantage, benefit, or valuable consideration, or to cause loss to any other person,—

(a) alters, conceals, or destroys any document, or causes any document to be altered, concealed, or destroyed; or

(b) makes a document or causes a document to be made that is, in whole or in part, a reproduction of any other document.

(2) An offence against subsection (1) is complete as soon as the alteration or document is made with the intent referred to in that subsection, although the offender may not have intended that any particular person should—

(a) use or act upon the document altered or made; or

(b) act on the basis of the absence of the document concealed or destroyed; or

(c) be induced to do or refrain from doing anything.

(3) Every person is liable to imprisonment for a term not exceeding 3 years who, without reasonable excuse, sells, transfers, or otherwise makes available any document knowing that—

(a) the document was altered, concealed, or made, in whole or in part, as a reproduction of another document; and

(b) the document was dealt with in the manner specified in paragraph (a) with intent to—

  (i) obtain any property, privilege, service, pecuniary advantage, benefit, or valuable consideration; or

  (ii) cause loss to any other person.

Section 260 False accounting

Every one is liable to imprisonment for a term not exceeding 10 years who, with intent to obtain by deception any property, privilege, service, pecuniary advantage, benefit, or valuable consideration, or to deceive or cause loss to any other person,—

(a) makes or causes to be made, or concurs in the making of, any false entry in any book or account or other document required or used for accounting purposes; or

(b) omits or causes to be omitted, or concurs in the omission of, any material particular from any such book or account or other document; or

(c) makes any transfer of any interest in a stock, debenture, or debt in the name of any person other than the owner of that interest.

And here's a statement from the FMA

The Financial Markets Authority acknowledges the sentencing today in the Serious Fraud Office’s criminal prosecution of Mr Jimmy McNicholl and Mr Lance Ryan, also known as Lance Jared Thompson. These individuals were prosecuted in relation to a Ponzi scheme in Christchurch that resulted in hundreds of people investing a total of $8.3m.

The FMA secured asset preservation orders in May 2015 after serious concerns were raised about the activities of Blackfort/Arena, and referred the investigation to the SFO.

Nick Kynoch, General Counsel at the FMA said, “Mr McNicholl and Mr Ryan have caused serious distress and harm to the investors in this fraudulent scheme. We are pleased that they have been successfully prosecuted and held to account for their actions, while acknowledging that hundreds of people remain out of pocket.

It is also significant that the SFO successfully brought criminal charges for deceiving the FMA. This reflects that there are serious repercussions for misleading the regulator.”