'Mr Invincible' sentenced after record-breaking fraud

Stephen Versalko lived the high life for nine years. Photo / Bradley Ambrose

The investment adviser who stole $17.7 million from his wealthy ASB clients called himself "Mr Invincible" when investigators caught up with him.

Stephen Gerard Versalko was sentenced to six years in prison after admitting the case which goes down in history as New Zealand's largest employee theft.

It can also be revealed for the first time that Versalko spent $3.4m of the stolen money on two prostitutes.

He also bought two million-dollar properties, spent over $300,000 on wine, $3.4m on two prostitutes and bought them $800,000 in gifts, according to the prosecution.

Versalko was sentenced in the District Court in Auckland today after pleading guilty to three charges brought by the Serious Fraud Office.

Versalko's lawyer, Stuart Grieve, QC, told the court that his client had no previous convictions, pleaded at the earliest opportunity and co-operated with the SFO investigation.

But SFO prosecutor Patrick McCann said Versalko tried to mislead the SFO investigation.

"He deceived the SFO in the identities of the two ladies, gifting them money and describing them initially as ASB clients who had fallen on hard times and who were in dire straits," Mr McCann said.

He said the women had to be identified by the SFO investigators to make sure they were not ASB customers or members of the Versalko family.

Mr Grieve, QC, said the court should also consider that one of the prostitutes had blackmailed Versalko and his family for $1.2m.

He argued Versalko had no previous convictions and had shown remorse by helping ASB recover over $4m by selling his properties.

Mr Grieve said Versalko had also been up-front with the bank about the size of the fraud.

Earlier, Mr McCann outlined the summary of facts that saw Versalko sell investment opportunities to 26 wealthy ASB customers. Versalko promised high interest rates with tax benefits and used a ghost fund to pay out some of the clients and avoid detection.

He said Versalko's first victim was a long-term client based overseas who had a $400,000 term-deposit with the bank.

Mr McCann said Versalko convinced the client to re-invest the money and then sent fake statements of the account, printed on the ASB letterhead. Versalko ended up stealing over $500,000 of the man's money.

Mr McCann said Versalko targeted elderly people who were usually based outside New Zealand and did not have electronic access to their accounts.

He said Versalko's deception was only found out when one of his clients saw a documentary on New York fraudster Bernie Madoff whose elaborate Ponzi scheme defrauded billions of dollars out of fellow financial experts, friends and members of Europe's royal elite.

The woman recognised some details of Madoff's scheme in how she was treated by Versalko and called the bank. Mr McCann said the woman was told that there was no record of her $3 million investment with the bank.

He said ASB will now have to pay $15.5m back to investors and a further $1m to honour Versalko's promised interest payments.

In his sentencing, Judge Chris Field said the starting point for Versalko's offending was 10 years, six months. However, he took into account the early guilty plea and the assistance Versalko had given to the investigation.

ASB Bank has reimbursed all the customers caught-up in Versalko's fraud.

A statement from the bank this afternoon said within hours of Versalko's fraud being confirmed, he had been dismissed and the SFO was notified.

"ASB has introduced additional processes and practices to further strengthen our security and protect our customers so that this situation does not happen again," the statement said.