Seventeen
investors innocently paying $249,000 into a Ponzi scheme being run by Arena
Capital after a Financial Markets Authority freezing order came into effect
will get their money back in full.
Controlled by Christchurch resident
Jimmie Kevin McNicholl, Arena Capital Ltd was supposedly running a foreign
exchange trading business. It never
traded foreign exchange nor carried out any other investment activity with
client money. It lied to clients, reporting
fictitious profits on client trading accounts.
The Financial Markets Authority swooped
in May 2015, freezing all the company’s assets including its bank account. Twelve days later, receivers were appointed after
a media release announced the asset freeze.
In the interim, seventeen investors paid money into Arena’s bank account
including eleven who had previously dealt with Arena either by paying money to
the company for investment or having earlier been paid out supposed “profits”
on foreign exchange trades.
The High Court was asked to rule on the
status of these post-asset freeze investors.
Justice Mander ruled the $249,000 paid into Arena’s bank account after
the account was frozen is subject to a statutory trust created by securities
legislation. Each deposit can be
identified and traced into the frozen bank account. The funds are to be returned in full. Evidence was given that about $1.02 million
is available for Arena’s creditors: $728,690 in the company bank account and
other assets with an estimated value of some $300,000.
Graham
v. Arena Capital Ltd – High Court (17.02.16)
16.030