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Clawback 'not enough'

A potential $25 million clawback from investors who received money from Ross Asset Management before it collapsed is nowhere near enough, says a representative of those who lost money in the Ponzi scheme.

Monday, February 24th 2014, 11:33AM

by Susan Edmunds

RAM’s liquidator indicated in liquidation reports that plans to pursue claims against three investors who withdrew $3.8m in fictitious profits could be just the start.

It was suggested that there could be $20 million to $25 million clawed back from investors who received payouts in the two years before the scheme was uncovered.

In that period, it is believed that 200 investors made money and 600 lost.

David Ross pleaded guilty last year to fraud and was sentenced to 10 years and 10 months' in prison for stealing $115 million from 700 investors.

RAM’s liquidator said the situation was complicated because there was no legislation that directly dealt with Ponzi schemes.

Bruce Tichbon, of the RAM Investors Group, said the Bernie Madoff case in the United States was the gold standard that New Zealand should be trying to follow.

“In that case they’re going back six years and clawing back virtually all the money.”

But he said in New Zealand it was more usual for 5% to 10% of money to be returned to investors.

“We’re not going to get excited about a 15% return… there is legislation that can return much more money and extend the clawback to six or 12 years.”

Tichbon said the Companies Act was very weak in terms of recovery mechanisms, unless it could be proved that people knowingly received stolen funds.

It was frustrating to have the liquidator say now that there was a lack of legislation, he said.  “We’ve paid $1 million in fees and waited over a year. People are in despair, it’s been a bit difficult. We’re being messed about and are getting sick of it, we just want the stolen money returned.”

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