Financial adviser David Ross, who 'overstated' client funds by $380 million gets 10 years and 10 months imprisonment

Financial adviser David Ross, who 'overstated' client funds by $380 million gets 10 years and 10 months imprisonment

Wellington financial adviser turned Ponzi-scheme operator David Robert Gilmour Ross (63) has been sentenced in the Welllington District Court to 10 years and 10 months.

He was ordered to do a minimum non-parole period of half of the sentence, while an order was also made regarding reparation. This is to be sorted out by receivers of Ross's business.

Ross pleaded guilty in August to charges laid by the Serious Fraud Office (SFO) and the Financial Markets Authority (FMA).

A joint agency investigation between SFO and FMA into Ross Asset Management (RAM), and related entities, saw SFO charge Ross on 13 June. See here for articles on RAM.

Ross had pleaded guilty to four Crimes Act charges of false accounting and one charge of theft by person in special relationship laid by the SFO.

He pleaded guilty to three FMA charges of providing a financial service when he was not registered for that service, knowingly making a false declaration to FMA for the purposes of obtaining authorisation as an Authorised Financial Adviser (AFA) and producing documents to FMA which he knew to be false or misleading.

The investigation into David Ross, Ross Asset Management (RAM) and related entities began in October last year when FMA received complaints from investors who had been unable to withdraw their funds. A joint investigation with the SFO subsequently commenced.

Ross has admitted running a Ponzi scheme, which he disguised by falsely reporting clients’ investments.

Large portions of client portfolios shown as invested through a broker ‘Bevis Marks’ were fictitious and never existed, resulting in an overstatement of investment positions at September 2012 of more than $385 million.

Between June 2000 and September 2012 Ross reported false profits of $351 million from purported trading of the fictitious securities. The overall loss to investors is in excess of $115 million.

SFO Director, Julie Read said more than 1200 client accounts were affected by Ross’s scheme so his offending "has had a devastating impact on many lives".

"The financial losses are not only significant to those individuals but they will have a flow on effect as those investors’ dealings in the New Zealand economy are impacted. It is important the SFO remains vigilant in fighting financial crime so we don’t see a repetition of this sort of scheme."

FMA chief executive Sean Hughes, said he had the utmost sympathy for investors who had trusted their finances with David Ross and that the law had been changed as a result.

"From next year financial advisers who manage a client’s portfolio under an investment authority will no longer be able to hold that money or property themselves.

"This change will better protect the security of investors’ money and FMA’s risk-based monitoring of AFAs will assist in ensuring that they are meeting their new obligations,” said Mr Hughes.

Hughes and Read acknowledged that the joint agency approach to the RAM investigation had "produced a prompt and effective outcome".

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

14 Comments

Comment Filter

Highlight new comments in the last hr(s).

Seriously...ROSS.
I thought his name originally was Brown in UK, then Greenspan, when he evaded capture and fled to the USA to go on to bigger things.
Then he changed it  to Bernanke, now he has changed his name and gender to Yellen to escape prison.
Must be another Alter Ego, or even a spaced warped continummmmmmmmm.
Ya gotta laugh.
Small fry, big pond and getting bigger, these ponzi exponents.
Now that must be the Friday Funny of all times.
They is locking up the wrong criminals. They bailed out the wrong culprits.
Ross was just a bit player, in the over all scheme/scam  of things.
Follow the money I say. 
Any true detective, justice system, crime writer,  knows that.
 

 ...more than 1200 client accounts were affected by Ross’s scheme so his offending "has had a devastating impact on many lives".

And Ross gets 5 years in the country club.. Justice? I thought Bernie Madoff's 150 years was about right.
 

Alan Hubbard would have faced charges of false accounting had he lived.

where did the money go?

Long gone
 
Do you really want to know ?
 
Check out his off-shore share-broking conduit "Bevis Marks"
 
An outfit registered in a small mediterranean island
 
Trace the origins of the name of "Bevis Marks" - the answers are there
 

surely there is an official line on where the money went ? I infer you are implying some Jewish affilation he had..... not sure I want to go with that.
 
I guess what I want to know is whether it is possible he will come out of jail in five years and be able to dig up the loot. To me there is no atonement and no clemency (such as has been given) if the money is not located or at least accounted for.

Bevis Marks is not a common name. In fact it is rare. Yes, it does have connotations. Ross branched out as an independent in the 1980's, then there was a name change in the early 1990's to that "unusual name" which is impossible to be a purely accidental choice. That implies a pipeline, a conduit, of money raising, possibly money laundering. Until he got tripped up by the GFC and went rogue. He has lost $100 million. How would you go trying to surreptitiously spend that amount of money in 10 years. Lot of hard work. His total personal wealth is less than $10 million. No, the money has been funnelled overseas. Then the tide went out in 2008-9. Ask yourself, why has he remained so silent? Highly improbable you will ever get any answers, or find the money.

I so love the irony surrounding these cases and prosecutions...........i mean............when will ANYONE in power recognise that our ENTIRE montary system IS A PONZI SCHEME?
lol

If they understand the peak oil / energy problem and I think they do, they do.
regards

..

the monetary system is a completely different discussion
 

Different discussion.....yes, hence I remarked about the irony! Same fundumental component though peat. Recognise it for what it really is

And in the same week, the Sodomite in Northland gets 5 years and out in less than 3! That's modern Kiwi Justice?
Ergophobia

Interesting article in the Melbourne Age this morning regarding the so called mining magnate Nathan Tinkler.
No wonder the worlds financial system is kaput.