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Kloogh companies liquidated

Financial Advice New Zealand says Barry Kloogh's membership will be suspended until further information about the investigation into his businesses comes to light.

Tuesday, September 3rd 2019, 6:00AM 6 Comments

Barry Kloogh

Two of his companies were put into liquidation last week.

The Financial Markets Authority went to the High Court seeking to place Financial Planning Ltd and Impact Enterprises Ltd into liquidation. Interim liquidators had already been appointed.

The FMA argued that each company was insolvent and liquidation was justified on the grounds of evidence of fraudulent misuse of investors’ funds.

Liabilities for Financial Planning Ltd were calculated at $12 million and $500,000 for Impact Enterprises.

Kloogh’s offices were raided by the Serious Fraud Office in May.

Court documents show investors put nearly $16 million into his companies between 2012 and 2019 but authorities are still trying to locate $8.2 million in investments.

In a previous court judgment, Associate Judge Dale Lester said it appeared substantial amounts of money had been used for his own personal spending.

The judgment shows one client invested $101,000 with Kloogh, who spent $35,000 of the money on his credit card and personal debt, used a further $9,000 to pay other investors, and invested just $41,000.

The client went on to pay regular monthly amounts totalling just over $54,000 and deposited another lump sum of $37,000 in 2016.

Of that, $33,700 was paid to other investors and $2,000 used for credit card payments.

When the client asked for $100,000 back for house renovations, the money was drip-fed, withdrawn from other investors' accounts.

Lester said the evidence in relation to the misapplication of funds was comprehensive and compelling. “The scale of the missing client funds accrued, and the circumstances set out in the evidence in relation to Client A by way of an individual example create a compelling case for the appointment of interim liquidators.”

Financial Advice New Zealand chief executive Katrina Shanks said Kloogh had been a member. But when the association was made aware that the FMA had suspended his AFA authorisation, his membership was also put on hold.

She said it had tried to contact him but had received no response.

The association is now waiting for the FMA and SFO process to continue.

She said coverage of bad behaviour by advisers would impact the perception of the profession as a whole, but that was the case for any sector.

Financial Advice NZ remained focused on promoting consumer trust in quality advice.

 

 

Tags: court FMA fraud scam serious fraud office

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Comments from our readers

On 3 September 2019 at 10:10 am Ron Flood said:
Financial Advice New Zealand. It is time to grow a pair and expel this member. What are you waiting for? A court judgment has found he spent $35,000 of a client's funds on credit cards and personal debt.
The fact he hasn't responded to your requests to contact you is basically flicking you the bird.
If you keep sitting on your hands over this matter, many of us members will start to question if we actually belong to a professional body.
Cut him loose.
On 3 September 2019 at 5:05 pm Ron Flood said:
Thank you Katrina for contacting me and discussing the process you need to follow in this case. I understand that failure to follow this process, could expose the Association to an expensive legal challenge.
I would suggest that the Association look at strengthing their ability to expel members who seriously breach the code of ethics.
On 4 September 2019 at 12:06 pm Amused said:
"Associate Judge Dale Lester said the evidence in relation to the misapplication of funds was comprehensive and compelling..."

And the Association is worried about a legal challenge if it expels Barry Kloogh's membership now. What a joke!
On 5 September 2019 at 9:56 am all hat, no cattle said:
Any opportunity to put the boot eh chaps.
Even explaining the process is not enough. I note that you havent stated what the threshold should be - suspicion? Hearsay? Accusation?
When exactly should they move?
On 5 September 2019 at 1:02 pm Amused said:
@ all hat, no cattle

Kloogh has now had his authorisation cancelled by the FMA as of today. Good Returns are reporting Kloogh was notified of the FMA’s proposal to cancel his authorisation and he chose not to oppose it.

Perhaps you and the association can now be fully satisfied he should be expelled (sigh)



On 5 September 2019 at 2:25 pm comment1 said:
Surely now the FMA have terminated his AFA then that should see the process expedited.

Having had to deal customers who thought they had funds invested it was clear from the start that it was neither Suspicion, Hearsay or Accusation but the unfortunate reality that they had lost most if not all of their savings. Another step backwards for clients perception of the profession.

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