Versalko's $18m fraud revealed in a day

Convicted fraudster Stephen Versalko duped ASB Bank customers into parting with $18 million by writing dodgy statements that didn't even carry the bank's logo.

Newly released court papers also show the former investment manager was exposed just a day after the bank started investigating signs something was amiss.

The revelations come as the ASB broke its silence over the case with fresh assurances over security and the accusation Versalko was an "unscrupulous criminal".

"He preyed on ASB customers with whom he had built up trusted relationships over many years, stealing their funds in order to maintain a lifestyle he could not afford," a statement said.

"He was calculating and unprincipled in his offending. Mr Versalko took deliberate advantage of his strong personal relationships with customers and colleagues, corruptly using his detailed knowledge of the bank's systems, together with his in-depth understanding of the processes around making transactions."

In March, Versalko was sent to prison for six years for taking money from 26 clients, spending millions on prostitutes, overseas travel and wine.

Throughout his offending he hid his criminal behaviour from his wife and three children.

In an affidavit, fraud investigator Paul Newman said the ASB was alerted to the fraud on August 24 when a female customer rang to check on a $3m bank bond investment.

Newman said there was no record of bonds being issued. When shown a statement proving the investment - purportedly from the bank - Newman said he knew it was a "fraudulent document".

Tell-tale signs included the lack of an ASB letterhead, the lack of a signature from a bank officer and wording not used by the bank.

The court file contained a copy of the letter, which carried Versalko's name as the investment adviser and promised the customer a return of 7.03 per cent. It also carried the sign-off "One Step Ahead", one of the bank's slogans.

Newman said the bank tracked the customer's money and found Versalko had shifted the cash into several accounts, including one with another New Zealand bank.

They included a slush fund created in a false name using a passport number he had invented. The ASB computer system required the number to establish an account.

The ASB investigation team found the passport number was false after the Department of Internal Affairs sent it the personal details and a photo of the genuine holder.

It also found that the mailing address for the fake account matched the Post Office box Versalko used for his own banking, and that he was the only ASB employee to access the account.

Newman checked other transfers to what it called "ghost accounts" and found other dodgy transfers, including one to a Thai bank.

All the information was found in one day and was enough to confront Versalko with and get court orders freezing assets and restricting him to spending $250 a week.

After one day's inquiry, bank staff identified $5m as stolen. That grew to $13m a few days later and $17.7m by the time Versalko pleaded guilty.

By then, the ASB had seized money from the sale of his Remuera home and Coromandel holiday house. It is still suing Versalko for the $14m the bank has yet to recover.

The ASB statement said the bank's security had been subjected to an internal review which had gone through an independent "quality assurance evaluation". New steps were in place to stop the fraud being repeated.

Passport Office handed over secret files

An inquiry has been launched into a privacy breach by the Passport Office after it gave ASB fraud investigators personal information that should have been kept secret.

A child's passport number and photo was among information sent to ASB investigators Kris Ko and Paul Newman for their inquiry into rogue investment manager Stephen Versalko.

Court documents show one investigator asked the Department of Internal Affairs (DIA) - which manages the Passport Office - to check a name, passport number and to provide travel details.

DIA investigator Ian Tingey supplied personal details and a photo of the child who held the passport number. He then sent details of other passport holders who had nothing to do with Versalko's fraud.

DIA spokesman Allen Walley said the ASB should never have been given the information.

The bank should have been told the passport number did not match and advised to contact police. Tingey believed he was acting in the passport holder's "best interests" when he sent the child's information to the bank, said Walley.