Abanker of Indian origin and spouse also accused of connivance
A Registered Financial Adviser(RFA) of Indian origin may face serious charges of fraud, deception, and deceit if various law enforcing authorities examine the complaints of victims who have been seeking justice for more than 16 months.
The RFA, whose details are with us but cannot be made public at this stage, is alleged to have ‘systematically defrauded his clients, duping them into ‘make look-good’ investments, arranging loans far in excess of the properties or businesses and finally leaving them in the lurch.’ Two victims have given us documents while the third provided us oral information of the way in which he has been duped.
The total loss suffered by these three victims is estimated at more than $2.7 million, which with interest, stress and other factors added, would exceed $3 million.
All of them are mum and dad investors, who the Financial Markets Authority (FMA) has pledged to protect against rogues and unscrupulous advisers.
Plea to authorities
The victims have sought the help of Indian Newslink to file complaints against the man and his wife to the Police, FMA, Inland Revenue Department (IRD), the Commerce Commission (CC) and the Serious Fraud Office (SFO), for ‘the allegations warrant the intervention of these authorities if we are to believe that New Zealand is a country of fairness and justice.”
The victims have also alleged that a Banker, also of Indian origin, is involved and “may have compromised the interests of his Bank in negotiating loans or advances to the RFA because his wife was a Director or shareholder of one of the companies.”
During several interview sessions that this Reporter undertook over the past three months, the victims provided extensive documentation that showed the extent to which they believe they have been ‘robbed’ by the RFA.
“I am behind schedule in repayment of loans and interest and I have received warning notices. I am extremely nervous and scared. Can such a man go unpunished? I have tried all means to bring him to justice,” ‘Victim A’ said.
The other man, fighting back his tears said, “I wanted to commit suicide but decided that it would mean this man will go scot free. I want him to serve his time for his crimes,” he said.
All three men have demanded that the RFA returns their money with interest along with a written apology for what they called, ‘various and serious misdeeds.’
Victim A: Multiple Allegations
According to the victims, all agreements that they signed with the RFA and/or his wife, follow a highly complex process of investments in his name and that of his wife, starting and closing companies and transfer and sale of properties. They allege that the RFA has cheated his own clients on deposit ratios with banks and accused him of other irregularities.
Victim A said that he met the RFA in 2013.
“Two years later, this man and his wife (his business partner) compelled me to invest in an ongoing commercial activity. I was not comfortable with the project but decided to go ahead because I thought that a ‘RFA has to be an honest person.’ I was asked to sign a Sale & Purchase Agreement, with a sale price of more than $500,000, stating that it would generate about $145,000 annually as return on investment. He then sold the company, purchased another retail company and asked me to invest $100,000,” he said.
Over the next two years, leading up to November 2017, the RFA and his wife pressurised him to purchase another business for $595,000.
“I did not have sufficient funds and therefore the couple suggested taking another investor to fund the project. That is ‘Victim B.’ Even at this stage, I had no reason to doubt the ulterior motives of the Adviser,” Victim A said.
Victim B: Scheme to cheat
According to Victim B, the RFA asked him to invest in a property development along with three other investors, all of them his clients. The company was formed but the RFA and his wife placed all shares in their name, under the pretext of obtaining a bank loan easily.
“He and his wife wanted 30% cash equity and the four of us paid about $71,000 each. The property was purchased for $945,000 with our contribution of about $284,000. It was purchased through a company floated by the RFA with him as a Director. We kept paying the mortgage and other expenses demanded by him. In August last year, we discovered that the bank loan was 90% on a deposit of just 10% and the couple took away about $184,000 for their personal use. We were paying bank mortgage at 90% instead of 70%,” he said.
Victim B said that the Property was transferred to another person at 30% equity and sold just two months ago.
“Two more persons joined our growing group of victims,” he said.
Next Issue: How the Registered Financial Adviser breached various laws, compromised the interests of his clients and the next possible steps for the law enforcing authorities.
The Financial Markets Conduct Act
The FMC Act prohibits (a) misleading or deceptive conduct (b) false or misleading representations (c) unsubstantiated representations (d) offers of financial products in the course of unsolicited meetings.
The Act also provides for registration of activities for services provided. For instance, A RFA cannot perform the duties of an Authorised Financial Adviser.