Fraudster economist ripped off 170 people
Rich-listers among victims of one of NZ’s biggest investment rorts
A Christchurch-based economist has been convicted of ripping off at least
170 people — including several-rich listers — in one of the country’s biggest investment frauds.
Kelly Simon Tonkin is now facing a decade in prison for his offending, labelled extensive and complex, and may also have to front up to many of the people he defrauded.
In May the Serious Fraud Office filed five charges in the Christchurch District Court against Tonkin, 52.
Yesterday, in his first in-person appearance in court, he admitted one charge of false accounting, two of making false statements to cause losses or induce new investors, and one of forging a fake audit letter.
A fifth charge, of false accounting, was withdrawn by the SFO and the details of two charges were amended slightly.
The agreed summary of facts — which outlines the entirety of Tonkin’s offending — is still being finalised by the SFO and his lawyer, Elizabeth Bulger, and will be provided to the court and the Weekend Herald closer to his sentencing in September.
The SFO says investors in Tonkin’s Penrich Global Macro Fund were told the scheme was worth $137.2 million in February last year, but actually had a value of only $20.7m.
In May the Herald revealed that Penrich collapsed suddenly in March
2020 and liquidators were appointed to its branches in London, the Cayman Islands and Christchurch.
They told investors a “significant discrepancy” had been uncovered. The SFO began investigating and charges followed.
The Herald then reported that the false accounting charges relate to Tonkin’s alleged inclusion of false asset values and hidden cells in the fund’s “Monthly Value” spreadsheets for nearly a decade, from September 2012 until the fund’s sudden freezing in February 2020.
Charging sheets allege several international clients stopped receiving monthly investors’ statements around this time, suggesting they withdrew their investments.
According to charging documents, on December 18, 2017, Tonkin manufactured financial statements that gave a false picture of the fund’s position in 2016.
“The defendant falsely stated the total assets, total liabilities and the net assets of the Penrich Global Macro Fund,” the SFO alleges in its charge of forgery.
“The defendant forged a BDO Cayman Islands auditor’s report and attached it to the financial statements.”
The charges of false statements relate to Tonkin’s representations to investors, both in including the allegedly fraudulent inflated value in their monthly account balances, as well as in monthly updates on his trading activity, which the SFO alleges far understated the level of risk and losses he was incurring.
Until the collapse of Penrich, Tonkin was well-known and respected in financial circles.
He grew up in Christchurch and graduated from Canterbury University with an honours degree in economics, before working at Treasury, then Banker’s Trust, where he made media appearances giving economic and financial commentary.
He moved to London in 1999, working at ill-fated investment bank Lehman Brothers, before starting Penrich in 2004 and returning to New Zealand a decade later where he became a fixture in Canterbury football and Cashmere school boards.
Family members, including Tonkin’s elderly father, supported him in court yesterday as he entered his guilty pleas and was convicted.
Judge Tony Couch said the summary of facts was expected to be “quite lengthy” because of the “substantial” offending and the complexities of the case. The sentencing judge would need “significant” time to prepare and might need to call on finance experts.
Judge Couch set aside half a day for sentencing on September 16, saying it was going to take “a considerable amount of time”.
The SFO said there was “in a range of 170” victims. Although it was unlikely all would want to be heard at sentencing, some wanted to confront the man who defrauded them.
The victims’ names cannot be published because of an interim suppression order. Judge Couch said that order would likely be made permanent when Tonkin was sentenced.
The Weekend Herald contacted Tonkin’s lawyer requesting comment on his conviction and upcoming sentencing.
“Neither I nor Mr Tonkin will be making any statement about his court proceedings now, or after sentencing,” Bulger said.
During the SFO investigation, before Tonkin was charged, the Weekend Herald visited him at his Christchurch home, interrupting him wearing slippers while watching daytime television. He declined to answer detailed questions at the time.
“I really don’t want to get myself into trouble — even more trouble — if I’ve signed something saying I won’t talk,” he said.
In a later phone call, Tonkin said he was unable to even afford a lawyer to act in his defence, and declined to blame anyone else at Penrich — which was directed by a suite of investment bankers with big-name resumes — for the offending he has now been convicted of.
“There is no one else, there’s just me,” he said.