Auckland broker jailed after defrauding clients of $7 million in Ponzi scheme

Source: 1News

A foreign exchange broker in Auckland who defrauded his clients of more than $7 million has been sentenced to six years and three months in prison, with a minimum period of imprisonment of two years and 11 months.

Gang members make up almost 40 percent of New Zealand's prison population.

Kelvin Clive Wood, 70, was sentenced today at the Auckland District Court on charges of obtaining by deception and theft by person in a special relationship, the Serious Fraud Office said in a statement.

The man created a Ponzi scheme after his foreign exchange brokerage began to suffer net trading losses, authorities said. He then used his new investors' funds to pay other investors their reported gains or to refund investment principal. None of Wood's clients were aware that their funds were being used to repay other investors.

More than $7 million belonging to 18 investors was lost by Wood over an eight-year period. The defendant knowingly reported fictitious profits and false or inaccurate foreign currency trades to investors.

"Mr Wood earned the trust of a group of investors through his personal and professional association with them," SFO acting director Rajesh Chhana said. "His breach of that trust is reflected in the sentence imposed today.

"The prosecution of such matters holds to account those who fail to conduct business in accordance with the expectations of a reputable market."

The Financial Markets Authority referred the case to the SFO for investigation in May 2017.