Former
Forsyth Barr sharebroker Duncan Priest extracted out of Ross Asset Management’s
liquidation nearly seven million listed company shares representing holdings in
fifteen different companies, reducing further the paltry three cents in the
dollar defrauded investors were expecting to receive out of the Ponzi scheme
operated by now-convicted fraudster David Ross.
While at Forsyth Barr, Mr Priest
channelled personal transactions through Ross Asset Management disguising his
own trading and his family shareholdings by having Ross Asset hold shares as a
bare trustee on his behalf.
Ross conned investors with promises to
generate high returns on their behalf.
While investors received regular investment updates signalling healthy
growth in their portfolios, these reports were works of fiction. Client money was stolen. When the Ponzi scheme collapsed,
investigating accountants found Ross Asset held assets totalling only $10.2
million, including some $59,000 in cash, with investors reported portfolios
supposedly valued at $449.6 million.
They are left as unsecured creditors of Ross Asset.
Mr Priest told the High Court he was not
a Ross Asset client. He did not leave
money with Ross for discretionary investment.
He made his own investment decisions.
His buy and sell orders were actioned through Ross Asset and purchases
were held by Ross Asset on trust for him and his family.
Evidence was given of Mr Priest getting
wind of troubles at Ross Management just weeks before it went into receivership
and then liquidation. He tracked Ross
down and had him sign share transfer documents which took 5.5 million shares
held in four companies out of Ross Asset control across to an independent
custodial trustee. Mr Priest described these
shares as being the most valuable and readily transferable of his share portfolio
held by Ross Asset. Their value was not
disclosed by Justice Clifford.
The High Court was asked to rule on
ownership of the 5.5 million shares transferred out prior to liquidation
together with a further 1.2 million shares held in eleven different companies
still recorded in Ross Asset’s books as being held on behalf of Mr Priest and
his family.
Justice Clifford ruled the Priests’
shares were held by Ross Asset as bare trustee.
It held legal title, but Mr Priest and his family were the true owners. Mr Priest had paid for the specific shares in
question. He was entitled to keep
ownership of those shares transferred to another custodial trustee prior to
liquidation and was also entitled to recover legal title to the 1.2 million
shares still held by Ross Asset. The
court was told Ross left untouched shares he held on behalf of Mr Priest, with
one exception; between July 2011 and May 2012, Ross sold about $500,000 worth
of Diligent Board Member Services shares without Mr Priest’s authority and
without accounting for the proceeds. Mr
Priest stands as an unsecured creditor for this loss.
Priest
v. Ross Asset Management – High Court (5.08.16)
16.120