Investor let down by ‘backflip’
When Bruce Tichbon sold his family home and invested the $415,000 proceeds with Ross Asset Management, he did not expect it to be a long-term investment.
The money was to be reinvested in another property.
Then, in 2012, the Financial Markets Authority raided the Ross Asset Management offices and that plan fell apart.
Ross was revealed to be running the biggest Ponzi scheme New Zealand had ever seen, with investors losing about $115 million. Tichbon has so far received only 19.57 per cent of his initial investment back.
But what he has been most upset about has been the way unpicking Ross’ affairs has been handled. Ross was bad, he said, but the legal system was worse.
Some Ross investors received significant payouts before the collapse. Liquidators have taken some of them to court, to claw back some of the payouts.
Now Tichbon is angry new rules will reduce the rights of investors in his situation further.
The Government is introducing new laws to cover insolvency. It will reduce the period during which unrelated party creditors can be required to pay back amounts received from a business being liquidated, from two years to six months.
Commerce Minister Kris Faafoi acknowledged that would reduce the amount that could be clawed back from investors who successfully withdrew money from a Ponzi scheme.
Tichbon said small investors had been let down again.
‘‘Even though small investors in this country have lost billions to investment fraudsters over the past decade, the Government seems to be intent on making the situation worse.
‘‘The minister must explain why he was previously committed to reform of this country’s unjust Ponzi recovery law, or the lack of it . . . Then without notice has done a complete backflip.’’
Faafoi said in his Cabinet paper he had put this work on hold so it would not delay progress on the reforms that, taken together, would significantly improve insolvency law.
Damien Grant, of Waterstone Insolvency, said the reduction from two years to six months would mean the degree of recovery from a Ponzi scheme was incredibly small. ‘‘The degree of recovery from Ponzi schemes is always incredibly small.’’
He said Faafoi was not ‘‘putting a stake through the heart of this thing, simply saying not now’’. But Grant said Ponzi scheme law reform needed to happen. As it stood, it created an incentive for investors who discovered they were in one to withdraw their money immediately.