Nearly 200 investors who got about $30 million of "fictitious profits" from David Ross' Ponzi scheme could face claims from liquidators following their success in a test case.
The liquidators are reviewing the position of 193 of Ross' investors in light of yesterday's decision, in which Wellington lawyer Hamish McIntosh was ordered to repay $454,000.
McIntosh last week lost a Court of Appeal fight to keep his name secret.
Described by Justice Alan Mackenzie yesterday 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 Ross' since-collapsed business went to the High Court at Wellington in March to recover the funds.
While Justice Mackenzie ruled McIntosh had a defence to the liquidators' claim for the $500,000 original investment, the Wellingtonian was yesterday ordered to pay back the $454,000 of "fictitious profits".
As a defence to the claim, McIntosh had argued that his position had changed and he had embarked on a residential property development since receiving the payment.
There was no suggestion McIntosh had any reason to suspect when he got the money back in 2011 that Ross was running a Ponzi scheme.
But the judge said by the time McIntosh had entered into the building contract in July 2013 he was well aware the profit paid to him was fictitious.
Ross Asset Management collapsed in November 2012, around the time it was raided by the Financial Markets Authority. It was later revealed Ross was running a Ponzi scheme and he was jailed for 10 years and 10 months.
"I do not consider that, following the first public revelation of RAM's position, a reasonable person in the respondent's position could have held a reasonable belief that the payments were valid and would not be set aside," Justice Mackenzie said.
RAM's liquidators said they intend to push forward with the remaining two test cases due to go to court later this year. They are also reviewing the position of a number of other investors.
One of the liquidators, John Fisk, said around 193 investors may now face claims for recovery of $30 million of "fictitious profits".
McIntosh did not return messages yesterday.
Who is Hamish McIntosh?
• A Wellington lawyer.
• The director of Woodward Street Chambers.
• A former partner of big name law firm Russell McVeagh.
• Admitted to the bars of New Zealand, England and Wales, and Hong Kong.