Nearly 200 investors who got about $30 million of "fictitious profits" from David Ross' ponzi scheme could now 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 this afternoon's decision, in which Wellington lawyer Hamish McIntosh is ordered to repay $454,000.
McIntosh last week lost a Court of Appeal fight to keep his name secret.
Described by Justice Alan Mackenzie today 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 Wellington High Court 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 today ordered to pay back the $454,000 of "fictitious profits".
As a defence to the claim, McIntosh had argued that his positioned 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' business - Ross Asset Management - collapsed in November 2012, around the time it was raided by the Financial Markets Authority.
It was later revealed that 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 in his decision today.
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 who have received payments from RAM in the period leading up to the company's liquidation".
One of the liquidators, John Fisk, said around 193 investors may now face claims for recovery of $30 million of "fictitious profits".
These investors are all believed to have got out more than they put into the business.
McIntosh did not return messages yesterday.
Any money that liquidators claw back improves the return for about 1200 investors, who lost $100-$115 million in Ross' fraudulent scheme.