Multi-million dollar hole in FMA-investigated firm PTT

The family behind a string of companies that received $4.44 million from investors and which the Financial Markets Authority has “real concerns” about will receive nearly $5000 a week for living expenses.

But a judge has found a third luxury vehicle, an Audi Q7 which requires $320 a week in finance payments, should be sold, on top of the sale of a 2014 Mercedes Benz and 2005 Bentley.

Last month, PwC was appointed as receivers and managers of PTT Ltd, also known as Prosper Through Trading, as well as six associated entities on a limited basis, including Steven and Lisa Robertson.

The FMA says it has concerns PTT’s client funds may be at risk and the company “may be operating in breach of financial market legislation.”

Details of the first receivers report, as well as the allegations, were heard before Justice Anne Hinton in the High Court at Auckland earlier this month but a confidentiality order meant specific monetary details could not be reported.

These have, however, lapsed, following the release of Justice Hinton’s judgment today.

It reveals the PTT Group is estimated to have generated about $4.44 million in third party deposits but the cash assets of the group are now just $51,000.

The receivers estimate about $1.87 million was generated in product sales but $2.57 million came from other sources, including loans from clients, PTT share sales to clients, and money accepted for investment.

“The business purpose for the loans and share purchases remains opaque,” the judgment says.

“The PTT Group made no actual investments on clients’ behalf.”

Justice Hinton says receivers have identified a $1.25 million house as the most significant remaining asset, owned by a trust of which Mr Robertson is the sole trustee, as well as $111,000 in the bank account of Ms Robertson.

Four cars, jewellery, watches and household effects are also worth about $66,000, and there is a bank account in Australia with an unknown balance.

“Given the respondent companies received deposits between 2013 and 2015 alone of over $4.4 million, the net worth of all respondents of approximately $1.6 million appears very low and falls below the sum of $2.57 million identified as having been received in the form of third party deposits, excluding revenue from product sales,” Justice Hinton says.

‘The least amount necessary’
Earlier this month, Nathan Gedye, QC, told Justice Hinton the family wants its budget amended, a one-off sum paid for rates and arrears, the return of personal items and passports, the payment of legal fees, and the revocation and retirement of the receivers.

A fortnight earlier, Ms Robertson successfully argued for the return of a cellphone and a $92,000 wedding ring.

Mr Gedye argued his clients do not admit liability or wrongdoing and disputes aspects of the receivers’ report and, while they accept the asset preservation orders, the receivers are “unjustified overkill.”

“They literally have nothing, not a cent, outside what the court will let them have.

“Every matchstick, every dollar, is frozen.”

But Dale La Hood, representing the FMA, said the matter is still at an early stage and there is a “certain air of unreality” about how reasonable the expenses sought are.

It is absolutely necessary for receivers to continue, he says, before a proper application to liquidate the companies is made.

“It is a properly brought and quite concerning investigation under way.”

The family was receiving $1000 a week for living expenses, as well as weekly mortgage payments of $1765 but it can now be revealed they wanted this increased to $5000.

This includes private school fees of $700 a week for their two children, as well as $320 a week to finance a $40,000 Audi vehicle.

Mr Robertson had already agreed to sell a Mercedes Benz and a Bentley, both estimated to be worth $85,000 each but with significant finance still attached to both.

Justice Hinton, however, found the Audi finance costs and the private school fees to be “extraordinary” expenses.

She says the Audi should be sold, which will provide more than enough money to buy a replacement car.

The school fees, however, were allowed until at least the end of the school year, because Justice Hinton says it would be unfair to do otherwise.

“Barring some unforeseen development, they are unlikely to continue beyond that time.”

Justice Hinton allowed the expenses to rise from $1000 to $3000 a week, as well as allowing the mortgage payments to continue, until December 11.

She also released $30,000 of the $57,000 sought for legal expenses but declined to return their passports, saying it is important they do not spend “what many would consider to be a substantial after-tax sum each week” on travel.

A real question mark
Steven and Lisa Robertson married in 2009, and she carried out general office work for him until early 2013.

But, as Mr Robertson was the main driver of the business, she sought release from interim preservation orders.

The FMA, however, says it is possible she may have been involved in “the contraventions of the relevant acts,” because she may hold money or have received the benefit of money belonging to clients.

The receivers have so far been unable to ascertain why she received payments and holds $111,000.

“There seems to be a real question mark over these funds,” Justice Hinton says.

Furthermore, the family trust which owns the home has had mortgage payments partly funded by withdrawals from the respondent corporate entities.

The applications to remove both parties from the preservation orders were dismissed.

PwC’s receivership, which has so far incurred costs of $115,000, was also allowed to continue.

Ponzi?
Justice Hinton’s judgment also provides previously unreleased details about the FMA’s action against PTT.

It says the FMA received a complaint in which it was alleged Mr Robertson was running a ponzi scheme through PTT and other entities.

The FMA therefore applied to appoint receivers on the grounds assets may belong to members of the public who paid money into the scheme and because funds may be being used fraudulently without the clients’ knowledge or consent.

Upon investigation the FMA then found a large amount of what appears to be client funds deposited into various bank accounts, including personal ones.

“The analysis also showed significant amounts of personal spending from the accounts.

“The investigation is still at an early stage and is ongoing.

“However, the FMA claims to have reasonable grounds to suspect that the respondents have breached provisions of financial markets legislation.”

Read the judgment here.

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