Where David Ross said the money went

Most of Ross Asset Management’s funds were invested offshore, the company claimed before it was revealed the accounts were largely fictitious.  

Ross Group owner David Ross was charged today by the Serious Fraud Office, which alleges he ran a $400 million Ponzi scheme.

The group's database purports to show investments worth $454 million, of which $152.4 million is said to be held in Australian investments, another $136.1 million in Canada, some $156.4 million in the US, $3.8 million in New Zealand and $943,332 elsewhere.

Of this, some $437.6 million was held by a Ross Group subsidiary, Bevis Marks.

However, Receivers John Fisk and David Bridgman of PwC could find only $11 million. They also reported nearly $30 million had been withdrawn from the business in management fees since 2000.

Meanwhile, funds withdrawn by investors had exceeded funds contributed by $60 million in the last five years.

The receivers first raised the possibility of a giant Ponzi scheme after discovering the massive discrepancy between reported balances and the assets they could actually find.

PWC were later appointed liquidators of RAM and several related companies. They have raised the possibility of asset clawbacks from investors who have received payouts, although this option is fraught with difficulty.

‘Honesty and integrity’

Before his assets were frozen, his companies placed into liquidation and his authorised financial adviser (AFA) licence removed, Mr Ross was telling new investors he was obliged to place their interests first and “act with integrity”.

The comments were made in his secondary disclosure statement, which advisers must produce for clients during the advice process.

In the statement, Mr Ross says he graduated from Victoria University in 1977 with a BCA majoring in accounting and is currently a member of the Financial Services Institute of Australasia as a senior associate and of the Institute of Financial Professionals New Zealand.

He assured clients he would provide them with discretionary investment management services and financial advice in relation only to:

• Domestic shares.
• International shares.
• Fixed interest products.
• Cash products.

Mr Ross says he was an employee, shareholder and director of RAM and received remuneration from the company. He also made it clear he managed portfolios for himself and certain members of his family.

He also made it clear while managing a portfolio, RAM may:

• Effect transactions with you or on your behalf where it, or one of its associated persons or agents, has a material interest in the transaction or where the transaction may give rise to a conflict of interest.
• Purchase or sell for its other clients or for RAM’s own account any of the products in your portfolio.
• Have banking relationships with companies whose securities are held, purchased or sold for your portfolio.

Generally, he would charge fees of 1.5% per annum for portfolios with a market value less than $100,000 and 1% for portfolios with a market value of more than $100,000.