A self-taught broker who lost more than $2 million of investors' money has been fined $20,000 for running a business over the internet that was not registered and offered investments without a prospectus.
Michelle Jensen's case, and the amount of money she lost from primarily "innocent people", hasbeen described as an unprecedented prosecution under the Securities Act, the Dominion Post reported today.
But Jensen, a 31-year-old Martinborough artist with three young children, did not set out to commit fraud, Masterton District Court was told yesterday.
Jensen had pleaded guilty to five charges under the Securities Act, including not having a registered company, offering investments without a prospectus and failing to keep records.
In January 2005 she started Downline Solutions, an internet-based business offering investment services. Presenting herself as an experienced and genuine broker, Jensen sought out investors in worldwide chatrooms between January 1 and September 30, 2005.
Investors from Australia and the United States paid her $2.1 million toward Downline's investments.
Of those investments, $1.85 million related to one person, who is now under investigation in Australia. The other investors believed they had no chance of reimbursement so opted not to seek reparation.
Most of the money was lost in foreign exchange dealings, although Jensen did spend some on personal property investments, cars and "other lifestyle means".
In December 2006, she and her partner were declared bankrupt. She was allowed to keep a car and household chattels in a now-rented home for the sake of her children.
Crown lawyer Mark Anderson said that though a total fine of $90,000 was appropriate to send a message to others, Jensen could not pay.
Judge Bruce Davidson said those who invested in Downline Solutions were unprotected, ill-informed and misled.
"It was not fraud but you did breach the trust of these people who gave you their money because they were vulnerable and totally reliant on you." Judge Davidson said.
Though he understood that Jensen and her husband were bankrupt, there had to be a punishment. The $20,000 fine would survive her bankruptcy.
