A foreign exchange broker has pleaded guilty to running a Ponzi scheme to defraud his clients of more than $7 million.
Kelvin Clive Wood (69) has pleaded guilty at the Auckland District Court to representative charges of ‘Obtaining by deception’ and ‘Theft by person in a special relationship’ brought by the Serious Fraud Office (SFO).
He created the Ponzi scheme after his foreign exchange brokerage began to suffer net trading losses. He used new investors’ funds to pay other investors their reported gains or to refund investment principal. None of Wood’s clients were aware that their funds were being used to repay other investors.
The SFO says more than $7 million of investment principal belonging to 18 investors was lost by the defendant in eight years.
Wood knowingly reported fictitious profits and false or inaccurate foreign currency trades to investors.
“Mr Wood earned the trust of a group of investors through his personal and professional association with them,” says the Director of the Serious Fraud Office Julie Read.
“He misappropriated their funds and falsely reported trading profits so they would not seek to withdraw their funds."
Wood has been remanded on bail to reappear for sentencing at the Auckland District Court on 24 July.
The Financial Markets Authority referred the case to the SFO to investigate in May 2017.