Jimmie McNicholl and Lance Ryan admit roles in $8m Ponzi fraud

Jimmie McNicholl and Lance Ryan have admitted their roles in an $8m Ponzi scheme.

Two fraudsters have admitted their roles in an $8.3 million Ponzi scheme that sucked in 900 investors and paid for their jet-set lifestyles, million-dollar homes and flash cars.

Jimmie Kevin McNicholl, 56, director of Arena Capital Limited, which traded as BlackfortFX, pleaded guilty to fraud at Christchurch District Court this morning in relation to the sophisticated scheme masked as a foreign exchange brokerage.

Arena Capital used the illegally obtained financial services provider registration to give the impression that BlackfortFX was a legitimate Forex trading platform, but no trading was ever undertaken.

About 900 people, including friends and family, invested about $8.3m into what was in fact Ponzi scheme.

The Serious Fraud Office (SFO) has also charged 44-year-old Lance Jack Ryan, also known as Lance Jared Thompson, with fraud in relation to the matter.

Ryan has maintained a plea of not guilty in respect to obtaining registration of BlackfortFX as a financial service provider by deception, but has pleaded guilty to charges of false accounting, forgery, reproducing documents with intent to deceive and theft by person in special relationship.

McNicholl and Ryan will be sentenced on June 20.

The SFO's summary of facts states that Ryan approached McNicholl in January 2014 with the idea of a "straight through processing" foreign exchange (Forex) opportunity under the name BlackfortFX.

Ryan's original plan was to sell Forex training packages for approximately $5000 linked to an employment opportunity at BlackfortFX.

Within a month, Ryan and McNicholl were "actively engaged" in its development and promotion, the summary says, with records showing they each had a 50 per cent share interest in BlackfortFX.

But when the company applied for registration as a financial services provider, the Financial Markets Authority (FMA) had concerns over Ryan's involvement.

However, McNicholl wrote back to declare that Ryan "is not and shall not be involved" with BlackfortFX.

The SFO says that, from the very beginning, the investors' money was pooled.

Between May 27, 2014, and May 15, 2015, approximately $8.3m was paid into the company bank account.

"Neither McNicholl nor Ryan transferred or paid any of the funds received from investors toward any legitimate Forex trading platform," the SFO says.

"Both McNicholl and Ryan knew that every request by an investor to withdraw money from their respective investment accounts with BlackfortFX was being paid from the collective pool of investors' funds held in the bank account."

The SFO found that Ryan personally took out at least $1.39m while McNicholl personally got no less than $709,000 of the "specifically identifiable investors' funds".

There were also "large amounts of money" spent on other personal items, including horses, motor vehicles, medical costs and travel.

McNicholl used $350,000 for a deposit on a $3.5m Christchurch property and bought a $111,000 BMW car.

Ryan used $1m as a settlement payment for a property in Helensville, 40kms northwest of Auckland in May 2015.

BlackfortFX was placed into liquidation on July 24, 2015.