Media Release
13 June 2013
Charges laid today against David Ross

Charges have today been laid in the Wellington District Court against David Robert Gilmour Ross (63). The charges laid by the Serious Fraud Office (SFO) allege he operated a $400 million Ponzi scheme. They follow a joint agency investigation between SFO and the Financial Markets Authority (FMA).

The Wellington financial adviser faces four Crimes Act charges of false accounting and one charge of theft by person in special relationship.

The joint investigation into Ross Asset Management (RAM) and related entities commenced in November last year after complaints were received regarding the delayed or non-payment of funds to investors. Following enquiries FMA undertook in October 2012, FMA took immediate action to preserve investors’ funds by obtaining asset preservation orders and orders appointing receivers and managers to the Ross Group of entities. These orders were obtained under the Financial Advisers Act and remain in place. Initial inquiries by receivers showed investments of only $10.2 million actually existed.

In response to the potential loss, large number of victims, concerns of the receivers, complexity of the case and the significant public interest, both FMA and SFO commenced the joint investigation.

The charges laid by SFO allege that Mr Ross conducted a Ponzi scheme which he disguised by falsely reporting clients’ investments. They allege that 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 by more than $380 million.

More than 1,200 RAM client accounts have been affected by Mr Ross’ scheme.

SFO’s Acting Chief Executive, Simon McArley said, “The allegations made amount to serious criminal matters. However the saddest fact of all of this is the position that Mr Ross’ clients find themselves in. The joint activity between SFO and FMA demonstrates that we can work effectively together to both address the serious criminal offending and protect as far as possible the interests of the victims of that offending.”

FMA Head of Enforcement Belinda Moffat said, “FMA will now complete its investigation into conduct by Mr Ross under the Financial Advisers Act. We will also shortly release best practice guidance for financial advisers providing discretionary investment management services to ensure our expectations are well understood by advisers, as well as guidance for investors considering using such services.”

SFO and FMA acknowledge the assistance provided to them by the receivers of the Ross Group of entities and their advisers as well as the many investors who have provided information.

ENDS