Ponzi schemer must pay $7m

A Christchurch man awaiting sentence for running a Ponzi scheme that took $17.5 million from his victims has been ordered to pay his old company $7m.

Liquidators of Paul Clifford Hibbs’ investment company Hansa took him to the High Court in August, claiming the company’s debts were entirely his fault.

Damien Grant and Steven Khov estimated the company owed at least $7,062,598 because Hibbs had breached several director duties under the Companies Act. These included incurring debt when the company could not pay it back and carrying out business in a manner that ‘‘created a substantial risk of serious loss to its creditors’’.

In his High Court decision in August, Justice David Gendall said it seemed the debts Hansa incurred were ‘‘orchestrated entirely by Mr Hibbs’’. ‘‘I am satisfied that Mr Hibbs began breaching his duties as a director from as early as 4 November 2008, being the date the first investment was made by the current creditors.’’

The decision said investment continued until the day of the company’s liquidation in November 2016 and Hibbs was liable for all debt incurred in this time.

Hibbs did not file a defence. Justice Gendall ordered him to pay the liquidators the estimated debt amount, as well as $396,000 liquidation fees.

Hibbs is in jail awaiting sentence after last week pleading guilty in the Christchurch District Court to the Serious Fraud Office’s charges related to running the Ponzi scheme.

The scheme saw Hibbs – the company’s sole director – pocketing clients’ funds instead of investing their money and using fresh investors’ money to pay withdrawals to existing investors.

The prosecution said Hibbs had taken money from 16 clients. Many were elderly and he had known some for up to 20 years.

Hibbs’ sentencing is scheduled for February 7.