The liquidators of convicted fraudster David Ross's Ponzi scheme have begun a clawback test case against three investors to try to get some of the millions of dollars back.
Ross Asset Management director David Ross pleaded guilty in Wellington District Court on Thursday to charges laid against him for a Ponzi scheme, in which returns to investors come from their own money or other investor's money.
David Ross. Photo: RNZ
Ross falsely overstated the company's investments at about $400 million but the actual amount lost is $115 million of investors' money.
The scheme was frozen last year with 200 investors who'd made money and 600 who lost money.
Some of those losers estimate that another 500 people made money but got out before it was frozen.
PwC is pushing for a legal test case to try recover $3.8 million, which it plans to distribute equally between all investors if it wins.
The liquidator John Fisk, of PwC, says it's difficult because some people have spent the money believing it was legitimately theirs. But he says legal advice is that the case is strong.
He told Checkpoint PwC has written to three investors in particular, and will wait to hear back before taking legal proceedings.
He says it wants to establish the case in court, and if it is successful, that would set a precedent.
Mr Fisk says after that, PwC could take action against other investors.
Ross Asset Management Investors Group spokesperson Bruce Tichbon, who is a member of the Liquidation Committee, says PwC is pushing this as a test case under the Companies Act.
He says a court decision could go either way as the three investors may have a strong case that they had no idea about the Ponzi scheme.
Mr Tichbon says they may have been chosen on the basis that they were big winners before the company's collapse.
DLA Phillips Fox partner Iain Thain says investors may get away without paying money back if they prove they acted in good faith and did not realise Ross was operating a Ponzi scheme.
He says any money that could be clawed back would be paid out equally.
Long prison sentence wanted
Ross was remanded in custody and is will reappear in court on 24 October for a sentencing date to be set.
Investor Bev Nicholson hopes he will get a lengthy prison sentence.
She put money into the company in 2004 and doubled her money in five years on paper.
Ms Nicholson says she trusted Ross as he seemed legitimate but he did the opposite of Robin Hood, as he stole money from the poor.
