Liquidators for Ross Asset Management file proceedings against investors

Between June 2000 and September 2012, David Ross reported false profits of $351 million from fictitious securities trading as part of a fraud. Picture / Mark Mitchell

The liquidators for Ross Asset Management have filed legal proceedings against 10 former investors as it gets closer to paying jilted investors in the country's biggest ever Ponzi scheme.

In their latest report on the Ross group, PwC's John Fisk and David Bridgman said 158 investors in the scheme have settled with the liquidators, totalling $17.5 million, and leaving 43 outstanding claims. Of those outstanding, the report says the liquidators have filed proceedings against 10 former investors and are still in negotiations with the rest.

Fisk and Bridgman offered to settle with 160 investors for a total $21.6m after a Supreme Court ruling in May let Wellington lawyer Hamish McIntosh keep the principal he invested in Ross Asset Management, but return the fake profits. Prior to the ruling, 54 investors reached settlements totalling $9.7m.

Wellington-based David 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 $351m from fictitious securities trading as part of a fraud that was the largest such crime committed by an individual in New Zealand.

In reality, about $100m to $115m of investor funds were frittered away in the Ponzi scheme, and the liquidators sought to claw back funds paid out to investors in the lead-up to the collapse, going all the way to the Supreme Court, so as to equally share the money for the 1,200 or so investors out of pocket.

The liquidators applied to the High Court last month for directions on the model for distributions and a hearing is expected in the second quarter of this year.

The latest round of litigation will keep the liquidation operating, and the report said it's still not possible to determine when it will be wrapped up.

As at December 15, the liquidators held cash totalling $16.7m, including a $212,000 final distribution from the Official Assignee relating to Ross's bankruptcy. That's after legal fees of $2.6m and liquidators' fees of $1.6m.