Liquidators closed the books on the long-running Ross Asset Management (RAM) ponzi scheme at the end of last year with investors receiving just under 20 cents in the dollar and professional fees amounting to more than $6 million.
According to the final RAM report published late in December, the complex wind-up saw a total investor pay-out of just over $24 million of the more than $32 million recovered by the PwC liquidators.
Some RAM investors also received further reparations in a confidential settlement with ANZ in 2021 regarding the bank’s alleged role in sustaining the Ross ponzi operation.
Almost $26 million of the retrieved RAM assets came by way of ‘clawbacks’ from 206 investors who had previously received payments above their original capital inputs.
But the fractious recovery effort by the PwC team, headed by John Fisk, triggered multiple court cases, incurring legal costs of about $3.8 million: liquidator fees totaled $2.4 million in the final accounts.
PwC began the liquidation process in December 2012 after a joint investigation by the Financial Markets Authority (FMA) and the Serious Fraud Office launched in October of the same year.
RAM head, David Ross, was sentenced to a jail term of almost 11 years in November 2013 after being found guilty of running a ponzi scheme for at least 12 years. Ross founded the Wellington-based RAM in 1989.
While RAM had purported assets of close to $400 million as at October 2012, the 1,200 or so investors in the fictitious scheme were facing a collective real loss of some $115 million.
Ross entered bankruptcy in 2015 with the RAM liquidators securing about $2 million from the sale of family property and reparations.
He was released from prison in February 2020.
The Ross debacle also sparked new regulations requiring financial advisers to use independent custody arrangements for discretionary investment management services (or DIMS).
Post the 2013 Ross trial, the-then FMA chief, Sean Hughes, said: “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.”
However, the new regulations are not foolproof: Dunedin financial adviser, Barry Kloogh, copped an almost nine-year jail sentence in July 2020 for running a ponzi scheme that siphoned $15 million off clients; in December 2021, Kelly Tonkin, was sent to prison for eight-and-a-half years for defrauding investors of $80 million via the wholesale Penrich Capital fund.
While PwC has signed-off RAM duties, the Ross saga isn’t quite over.
“At the conclusion of liquidation there remained approximately $210,642.48 of unclaimed distributions comprised of 40 investors,” the final PwC report says. “These monies have been paid to the government unclaimed monies account.”
Investors can search an IRD database to make a claim on the last drops of the Ross liquidation.