Kurt Bayer

Kurt Bayer is an APNZ reporter based in Christchurch.

Kiwi investors ripped-off by UK ponzi scheme

New Zealand investors were sucked into what has been described as Britain's biggest ever Ponzi scheme. Photo / Kenny Rodger
New Zealand investors were sucked into what has been described as Britain's biggest ever Ponzi scheme. Photo / Kenny Rodger

Kiwi investors have been ripped off by a man dubbed 'Britain's Bernie Madoff'.

Career conman Kautilya Pruthi has been jailed for 14 years for a $220 million fraud.

Pruthi funded a lavish lifestyle of sportscars, private jets, and sprawling mansions by scamming hundreds of investors with promises of lucrative returns.

Premier League footballers, top cricketers, TV personalities, and even the parents of disabled children all fell victim to the "professional fraudster" whose promises of monthly 20 per cent investment returns spread all over the world, according to the Daily Mail newspaper.

New Zealand investors were sucked into what has been described as Britain's biggest ever Ponzi scheme.

Pruthi, 41, was jailed for 14 years and six months yesterday (Thursday UK Time) for the worldwide web of betrayal that sucked in former English Test cricketer Darren Gough and entertainer Jerome Flynn for around $2m each.

Sending the Indian-born swindler to jail, Judge Michael Gledhill QC told him: "You are an extremely intelligent, articulate, sophisticated and plausible liar. In short, a professional fraudster.

"You set up and masterminded what may well be the largest and longest running Ponzi fraud to come before the courts in this country."

Fraud risk management expert Stephen Bell of KPMG said from Auckland that the case should act as a warning for investors.

"If it's too good to be true, it absolutely is," he said.

"New Zealand investors should be very sceptical of large monthly returns. They simply do not exist for your average investor."

Mr Bell was also "disappointed" by the 14-year jail term.

"It sends a message that crime does pay.

"He has duped people out of their life savings, and ruined lives. He should be serving a life sentence."

Pruthi, who faces deportation back to India at the conclusion of his lengthy jail term, attracted investors from New Zealand, Australia, Singapore and Hong Kong, with returns of up to 20 per cent a month in an unregulated investment scheme, said the paper.

Money was invested in short-term loans to "distressed" companies, and while small sums were paid back to show some returns, Pruthi pocketed the rest.

Pruthi, who claimed to be one of the richest men in London, personally received between $19m and $73m.

During the three years that he ran his scheme, under the trading name Business Consulting International, Pruthi spent millions on rent for spectacular mansions, a private jet, a motor racing company, and a fleet of sports cars including two Ferraris, a Lamborghini, and "several" Bentleys, reported the Daily Mail.

He was caught after clients suspected they were being duped, and called in police in November 2008.

When fraud squad detectives searched Pruthi's bank accounts in Dubai, the Cayman Islands and Thailand, they discovered only NZ$4m was left to reimburse his 800 victims, some of which had gone bankrupt, lost their homes or committed suicide, the British tabloid said.

One victim, a 48-year-old woman, lost $96,000 in savings for the long-term care of her teenage son who suffers from cerebral palsy.

- APNZ

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