Christchurch Fund Manager Sentenced For Fraud
A Christchurch fund manager who defrauded investors and caused the loss of more than $80 million has been sentenced to eight years six months imprisonment with a minimum non-parole period of four years three months on charges brought by the Serious Fraud Office.
Kelly Simon Tonkin (52) was sentenced today in the Christchurch District Court having pleaded guilty to representative charges of ‘False accounting’, ‘False statement by promoter’ and a charge of ‘Forgery’ relating to the Penrich Global Macro Fund.
The Penrich fund, a Cayman Islands registered company set up in September 2004 by Mr Tonkin, invested in a range of financial instruments including foreign exchange derivatives and fixed income futures. Mr Tonkin controlled the fund through directorships and shareholdings. He was responsible for making the fund’s investment decisions and reporting its performance to investors.
By September 2012 the fund had been performing poorly. In an effort to retain investors’ confidence and secure new investments, Mr Tonkin began entering falsely inflated values into the fund administrator’s reporting spreadsheet each month. This meant investors and financial advisors received false statements showing that their investments were appreciating and believed the fund was performing well.
Over the next seven-and-a-half years, Mr Tonkin continued to accept new investments while hiding the fund’s increasing losses. Relying on the false figures, he secured around $101 million from investors during this time. In 2018 when an investor tried to gain more information about the fund’s performance, Mr Tonkin forged audited financial statements.
When a diligent employee discovered Mr Tonkin’s offending in February 2020, the fund had a reported value of approximately $137 million, but a true value of around $20 million dollars.
In total, the more than 150 victims of Mr Tonkin’s actions lost over $80 million.
The Director of the SFO, Julie Read, said, “This case was significant for both the scale of the fraud and the number of victims who were impacted by Mr Tonkin’s offending.
“When it became clear his fund was not performing well, Mr Tonkin not only concealed this from investors and his company but sought further investments based on his fraudulent accounts. He used these funds to attempt to trade his way out of his losses, but in doing so dug himself and his investors into deeper financial trouble.
“It is important that investors are able to trust the advice and information provided by those managing their money. Actions such as Mr Tonkin’s undermine this trust and threaten the integrity of financial markets.
“With Mr Tonkin’s offending picked up by a vigilant employee, this is also a timely reminder of the importance of being alert to any discrepancies in financial reporting.”