Clients stung in a ponzi scheme orchestrated by rogue financial adviser, Barry Kloogh, have seen an already miserly payout trimmed a little further in the wake of a court decision reported last week.
Kloogh’s wife, Svetlana Spectra, clawed back almost $41,000 from the $455,442 liquidators had squeezed from the fraudster’s remaining assets, an Otago Daily Times report says.
Spectra proved $35,000 of the frozen Kloogh money belonged to her as part of a joint property purchase, according to the High Court decision issued by Justice Dunningham, with almost $6,000 of interest added.
Kloogh skimmed off about $16 million from clients in a low-key ponzi dating back almost 30 years that ultimately saw hundreds of clients lose more than 97 per cent of their original investments.
Investors will receive about 2.5 cents in the dollar, a figure flagged in earlier liquidator reports of Kloogh-owned limited companies Financial Planning and Impact Enterprises.
“Although the return to investors is low, the investigation and legal action taken does mean that the funds held can be released to the victims and Kloogh has no claim on them in the future,” the official assignee told clients in a letter.
“We will now be collating and analysing the claims from investors.”
Kloogh is serving an almost nine-year jail term after a copping a guilty verdict in a 2020 trial. His crimes came to light following a tip-off to the Financial Markets Authority in 2019 with the Serious Fraud Office later launching an investigation.
The fraud was the biggest ponzi uncovered in NZ since David Ross drained investors of about $115 million in a long-running scheme first unveiled in 2012.
While the Ross resolution saw some investors forced to pay back realised gains into the creditor pool, the March 2023 Financial Planning Ltd liquidator’s report notes an investigation failed to uncover any similar inequities in the Kloogh case.
The report also says the disgraced financial adviser took a low-risk approach to ponzi management compared to the norm for such frauds.
“In contrast to a typical Ponzi scheme operation, Mr Kloogh did not entice new investors with promises and apparent making good on those promises, of extraordinary returns on investment,” the liquidator’s report says. “The fictitious investments were tracked to normal conservative market returns for those products he indicated investors were investing in.”
Furthermore, Kloogh lured most of his victims through personal connections, targeting those who wanted to make long-term investments.
“This is one of the reasons he was able to continue the Ponzi scheme for many years from the first seeds in the early 1990’s until 2019,” the report says.