Acting Business Editor for the NZ Herald

Investor, liquidators take Ross Ponzi case to Supreme Court

David Ross was sentenced in 2013 to 10 years, 10 months' jail for an elaborate Ponzi scheme spanning 12 years in which an estimated $115.5 million of investments was lost. Photo / Mark Mitchell
David Ross was sentenced in 2013 to 10 years, 10 months' jail for an elaborate Ponzi scheme spanning 12 years in which an estimated $115.5 million of investments was lost. Photo / Mark Mitchell

A test case that will decide how much the liquidators of David Ross' ponzi scheme can claw back from investors is heading to the Supreme Court.

Ross Asset Management's liquidators and Wellington lawyer Hamish McIntosh were both given leave this afternoon to appeal to the country's highest court.

The two sides will square off on July 27 in a one-day hearing.

McIntosh's appeal will fight an order that he repay $454,000 of "fictitious profits" he received from Ross Asset Management (RAM).

The liquidators' appeal will try also get back the $500,000 of capital that McIntosh put into RAM but got out before it collapsed along with that profit.

The case will impact how the liquidators, John Fisk and David Bridgman from PwC, deal with other investors.

If they win in the Supreme Court, they will target 382 other RAM investors who got paid out $78.4 million from the business.

If the situation remains as it is today, they will only try to recover $40.9 million of "fictitious profits" from 241 investors in the fraudulent business.

Described last year by a judge as an "innocent investor", McIntosh borrowed $500,000 from Westpac to put into the fraudster's business in 2007.

His investment had purportedly grown to $954,000 when he closed his portfolio four and a half years later and the liquidators of RAM's since-collapsed business went to the High Court at Wellington last March to recover the funds.

While the High Court ruled McIntosh had a defence to the claim for the $500,000 original investment, the Wellingtonian was last year ordered to pay back the $454,000 of "fictitious profits".

McIntosh appealed those orders, while the liquidators, Fisk and David Bridgman from PwC, challenged the point over the $500,000.

In a majority judgment released in March, Justices Christine French and Rhys Harrison dismissed both appeals.

Justice Forrest Miller, in a dissenting judgment, dismissed McIntosh's appeal but said he would have allowed the liquidators' appeal - effectively meaning the Wellington lawyer would have needed to pay back the full $954,000.

Ross Asset Management collapsed in November 2012 leaving some of 1200 clients $115 million out-of-pocket. It was later revealed that director David Ross was running a Ponzi scheme.

He was convicted of fraud and jailed for 10 years and 10 months.

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