Investigation
costs following a pre-emptive freezing order triggered by suspected fraud will
come out of the Financial Markets Authority budget unless otherwise justified,
the High Court warned in the investigation of an alleged Ponzi fraud with
receivership costs incurred of $172,000 and counting. Government does not get a free ride having
suspected fraudsters automatically bear the cost of any investigation.
The Financial Markets Authority alleges
Steven Roberston is party to a Ponzi scheme missapplying some $9.8 million
received between 2009-2015. Much of the
money was used for personal expenditure, the Authority alleges. Companies Office records show Mr Robertson
working out of offices in Kumeu, West Auckland, offering expertise in foreign
exchange trading.
In August 2015, the Authority got a High
Court order freezing assets held by Mr Robertson, Mrs Lisa Robertson and
associated companies: PTT Ltd, Maxwell Foster Ltd, Gibson McLeod Ltd and Alba International
Ltd. PwC partners John Fisk and David
Bridgman were appointed receivers with permission to recover their fees out of
assets held by Mr Robertson and his companies.
The High Court was told receivers’ fees and
legal expenses for the first seven months ran to $172,000. Other receivership expenses and GST are still
to be added. Mr Robertson challenged the
receivers entitlement to take this money out of his assets, currently frozen
and under their control. He never had
any chance to argue against the receivership.
The court order was made without his knowledge. The first he knew of the freezing order was
when receivers walked in the door.
Justice Palmer said restraints imposed by
freezing orders are breath-taking. If
implementation of freezing orders were to be at no cost to the Financial
Markets Authority, they might be used excessively. Those facing a freezing order would bear the
costs, even when freezing orders turn out not to be clearly justified, he said.
Justice Palmer ruled the Financial
Markets Authority should bear the cost of court-appointed receivers taking
control of frozen assets with recovery of this cost dependent upon whether the
receivership proves to be justified and how much is available to repay any
defrauded investors.
Asset-freezing would be justified, he
said, if it prevented theft of investors’ money or assisted in the recovery of
funds missappropriated.
He removed the receivers’ previous
authorisation to deduct fees from assets frozen. The Financial Markets Authority was told to
make formal application to the High Court for any contribution from Mr
Robertson. The court was told 57 former
Robertson clients are claiming about two million dollars. The receivers said the combined assets of Mr
Robertson’s companies are about $50,000.
The only other meaningful asset is the equity in the Robertsons’ home,
held in a family trust.
Financial
Markets Authority v. PTT Ltd – High Court (14.04.16)
16.057