Liquidators' reports reveal scale of Arena Capital/Blackfort FX ponzi fraud

Documents from the receivers and liquidators of Arena Capital, whose director Jimmie McNicholl has been charged with running a ponzi scheme, show it received more than $9 million from clients even though no forex trading was undertaken.

In their first report as receivers of Arena Capital on July 24, 2015, KordaMentha state that clients placed money with the company on the understanding they would profit from trading in the foreign exchange markets. They note: "We are advised that many clients were provided with statements which purported to report the client had earned profits. Our investigations so far suggest that the profits reported were fictitious."

Arena, which traded as BlackfortFX, had approximately 1100 clients and there was a shortfall of $7 million in capital contributions owed to clients. It had $728,000 in its bank account when it was frozen by the authorities and four vehicles, including three luxury vehicles, were seized.

While Jimmie McNicholl is named as the sole director, a Lance Ryan is also described as having a "key involvement" in the business.

McNicholl appeared in the Christchurch District Court on Thursday facing one charge under the Crimes Act of 'obtaining by deception" while the Serious Fraud Office said another person charged is yet to appear. Both defendants will appear in the Christchurch District Court on November 7.

In its next report, in November 2015, KordaMentha estimated that Arena owed $6.96 million to 925 clients. It said 96 individuals had received more money from Arena than they had invested, and owed $2.48 million which the liquidators were seeking repayment of. It also noted that Arena paid commission to individuals who introduced clients to Arena, and it was seeking the repayment of this money.

In a recent update in August, the liquidator said a total $650,000 had been recovered. Negotiations are continuing and the liquidators said: "We intend to take legal action against debtor clients who are not engaging constructively in settlement discussions."

KordaMentha said it has also recovered $1.18 million from the sale of a section in Coatesville, Auckland and recovered a Christchurch section bought in May 2015 with $253,000 of Arena's money.

It had settled a claim against the director of Arena and a party associated with him but did not give further details.

(BusinessDesk)