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21 Feb 2018 21:50
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  •   Home > News > Law and Order

    Man jailed over $5.4m Ponzi scheme

    A man who ran a $5.4 million Ponzi scheme that sucked in friends and investors has been jailed for more than four years.


    A man who admitted to running a $5.4 million Ponzi scheme that sucked in friends and associates has been jailed for four years and eight months.

    Shane Richard Scott told investors he was investing in diamonds, South African trade deals and a chicken farm in New Caledonia - but there was no evidence any of the plans were legitimate, the Serious Fraud Office says.

    On Friday, he was handed the prison sentence in the High Court at Auckland, having in September pleaded guilty to 27 deception and fraud charges.

    The SFO said Scott was operating a Ponzi scheme, using money obtained from new investors to pay returns to previous investors.

    "Inevitably, the scheme falls over when the new investors' money is insufficient to pay out 'investments' that have fallen due," SFO director Julie Read said.

    The watchdog said Scott attracted long term investors by claiming he was investing in Thailand, the diamond trade, South Africa and New Caledonia.

    From 2008 onwards he also accepted payments from short-term investors after promising high returns from property developments and non-existent exporting and importing deals, it said.

    Friends and close associates were among those duped, Ms Read said, but a few simple checks and advice from the SFO, Financial Markets Authority and Commerce Commission could have saved their money.

    "We do want to reiterate the importance of checking that investment information is legitimate, whether you are investing with friends, associates or strangers," she said.


    NZN




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