‘Ultra-ego’ broker jailed for $7m Ponzi scheme
An Auckland foreign exchange broker with an “ultra-ego” who once invested sums of up to $200 million has been jailed for running a Ponzi scheme which defrauded his clients of millions of dollars.
Kelvin Clive Wood was sentenced yesterday in the Auckland District Court by Judge Robert Ronayne on two representative charges of obtaining by deception and theft by a person in a special relationship.
The 70-year-old was jailed for six years and three months, while the judge also imposed a minimum period of imprisonment of two years and 11 months.
The Serious Fraud Office (SFO) prosecuted Wood for the Ponzi scheme he ran between 2010 to 2017 when his foreign exchange brokerage began to suffer net trading losses.
Wood used new investors’ funds to pay others their reported gains or to refund investment principal. None of Wood’s clients, however, were aware their funds were being used to repay other investors.
Forex NZ Ltd and Forex NZ 2000 Ltd were the trading names of Wood’s brokerage, which also had Wood’s son Adam Wood as a director and shareholder until 2015.
The court heard yesterday that some $22.5m was invested with Wood over about a sevenyear period, with more than $7m of investment principal belonging to at least 18 investors lost.
All of the investors’ identities were permanently suppressed by Judge Ronayne yesterday, but he said three victims have suffered losses above $1m — one losing $1.7m.
An elderly victim said her life savings had now vanished and recalled when Wood was confronted he made an offhand comment about being only concerned about facing a possible prison term.
“We have to face the rest of our retirement [with no] financial backup,” the woman said.
Judge Ronayne said from 2008 onwards, Wood knew he could not repay his investors and quickly became reliant on new funds to repay interest and debts.
Wood, who has been declared bankrupt, continued to falsely report trading profits throughout the scheme to prevent investors withdrawing their funds, Judge Ronayne said.
In 2017, Wood approached the Financial Markets Authority to admit his fraud.
The court also heard Wood had previously worked in the banking sector, where he described himself as “the youngest manager in ASB” earlier in his career.
He also said he developed an “ultra-ego” which he was unaware of prior to his arrest.