Investors who managed to withdraw funds in recent years from the Ross Asset Management group of companies, found to be a Ponzi scheme, have been put on notice that the liquidators may try to claw back the cash.
PwC's John Fisk and David Bridgman said they have a valid claim on any funds withdrawn from the investment scheme since December 2010 under the Companies Act on the basis investors would receive more than their entitlement under a liquidation.
The liquidators also believe they can make a claim on anyone who drew funds within the past six years under the Property Law Act on the basis they were part of David Ross's fraud. The managers weren't able to cut deals with three investors who withdrew some $3.8 million in the lead-up to Ross Asset Management's collapse in 2012, and expect to "imminently" file proceedings in the High Court, they said in their latest report.
"Subject to the outcome of the above proceedings, the liquidators intend making further demands on any investors who have received monies in the above circumstances," Fisk and Bridgman said in their report. Because a successful voidable transaction claim could potentially change an investor's net contribution position, they can't agree to final claims until all legal issues have been settled, they said.
Last month the Court of Appeal turned down a bid by Ross to reduce his 10-year, 10-month jail term, which carries a minimum non-parole period of five years and five months.
Wellington-based Ross built up a private investment service by word of mouth, producing regular reports for shareholders indicating healthy but fictitious returns. Between June 2000 and September 2012, Ross reported false profits of $351 million from fictitious securities trading as part of a fraud that was the largest single such crime committed by an individual in New Zealand.
Fisk and Bridgman are seeking to claw back some of the $100 million to $115 million that was lost in the fraudulent scheme for some 1,200 investors. As at June 16, they estimated the realisable value of shares held by Ross Asset Management entities to be about $5.4 million, with estimated total realisations available for investors and creditors of $3.98 million.
Ross Asset Management's assets were frozen and receivers appointed in 2012 by the Financial Markets Authority after the watchdog received complaints about delayed or non-payment of investor funds. Ross wasn't available in the early days of the investigation due to his hospitalisation under the Mental Health Act.
PwC's John Fisk and David Bridgman were appointed to preserve the assets of the Ross family and related trusts as part of the wider investigation into Ross Asset Management.