A foreign exchange broker who defrauded his clients of more than $7 million has been sentenced to six years and three months’ imprisonment with a minimum period of imprisonment of two years and 11 months.
The Serious Fraud Office (SFO) says Kelvin Clive Wood (70) was sentenced at the Auckland District Court on representative charges of ‘Obtaining by deception’ and ‘Theft by person in a special relationship’ brought by the SFO.
The SFO says Mr Wood created a 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 Mr Wood’s clients were aware that their funds were being used to repay other investors.
More than $7 million of investment principal belonging to 18 investors was lost by the defendant over an eight-year period. The defendant 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 SFO Acting Director Rajesh Chhana.
“His breach of that trust is reflected in the sentence imposed. The prosecution of such matters holds to account those who fail to conduct business in accordance with the expectations of a reputable market."
The Financial Markets Authority referred the case to the SFO to investigate in May 2017.
Kelvin Wood facilitated foreign exchange and trading services through two companies – Forex (NZ) Ltd and Forex NZ 2000 Limited.
Mr Wood’s clients placed money with him through his companies for the purpose of fixed interest term deposits, the purchase of foreign currency, general investment and foreign exchange trading purposes. Clients invested on the basis that their principal was not at risk.