Man allegedly deceived friends and associates in Ponzi

Published

Shane Richard Scott (60), has pleaded not guilty today to Crimes Act charges filed by the Serious Fraud Office (SFO). 

Mr Scott first appeared in the Auckland District Court on 17 January and was given interim name suppression which lapsed today.

Mr Scott faces four charges of ‘Obtaining by deception’, 23 charges of ‘Theft by person in special relationship’, one charge of ‘Using document with intent to defraud’ (for offending prior to 1 October 2003) and two charges of ‘Obtaining by false pretence’ (for offending prior to 1 October 2003).

The SFO alleges that Mr Scott was operating a Ponzi scheme, using money obtained from new investors to pay returns to previous investors. The SFO alleges there was no direct evidence of any legitimate investments in this case.

It is believed that Mr Scott had some investors who invested with him over a number of years and some who were relatively short term. The long term investors became involved with Mr Scott on the understanding that their money was being invested in brokering deals in Thailand, as well as some additional miscellaneous investments, including diamond trade, South African trade deals, and an investment in a chicken farm in New Caledonia. The short term investors became involved with Mr Scott from approximately 2008 onwards. Mr Scott received payments from them after promising high returns in relation to supposed property developments and non-existent exporting/importing deals. 

The total of Mr Scott’s offending is alleged to involve approximately $6 million.

SFO Director, Julie Read said, “People who are thinking about investing need to do their own due diligence and get appropriate professional advice before committing any money. This simple step might just save an investor or multiple investors from being deceived by false promises of high returns.”

Mr Scott was remanded on bail. A date for trial is yet to be set.

ENDS

For further media information

Andrea Linton
Serious Fraud Office
027 705 4550

Note to editors

Background to investigation

Mr Scott built up trust with some investors over a long period of time (over a decade for some), and as a result of Mr Scott’s alleged offending, they have lost significant amounts of money. Some of the short term investors received their money back from Mr Scott, but only after extended delays and excuses.

Crimes Act offences

Section 220 Theft by person in special relationship
(1) This section applies to any person who has received or is in possession of, or has control over, any property on terms or in circumstances that the person knows require the person—
(a) to account to any other person for the property, or for any proceeds arising from the property; or
(b) to deal with the property, or any proceeds arising from the property, in accordance with the requirements of any other person.

(2) Every one to whom subsection (1) applies commits theft who intentionally fails to account to the other person as so required or intentionally deals with the property, or any proceeds of the property, otherwise than in accordance with those requirements.

(3) This section applies whether or not the person was required to deliver over the identical property received or in the person’s possession or control.

(4) For the purposes of subsection (1), it is a question of law whether the circumstances required any person to account or to act in accordance with any requirements.

Section 240 Obtaining by deception or causing loss by deception
(1) Every one is guilty of obtaining by deception or causing loss by deception who, by any deception and without claim of right,-
(a) obtains ownership or possession of, or control over, any property, or any privilege, service, pecuniary advantage, benefit, or valuable consideration, directly or indirectly; or
(b) in incurring any debt or liability, obtains credit; or
(c) induces or causes any other person to deliver over, execute, make, accept, endorse, destroy, or alter any document or thing capable of being used to derive a pecuniary advantage; or
(d) causes loss to any other person.

(1A) Every person is liable to imprisonment for a term not exceeding 3 years who, without reasonable excuse, sells, transfers, or otherwise makes available any document or thing capable of being used to derive a pecuniary advantage knowing that, by deception and without claim of right, the document or thing was, or was caused to be, delivered, executed, made, accepted, endorsed, or altered.

(2) In this section, deception means-
(a) a false representation, whether oral, documentary, or by conduct, where the person making the representation intends to deceive any other person and-
(i) knows that it is false in a material particular; or
(ii) is reckless as to whether it is false in a material particular; or
(b) an omission to disclose a material particular, with intent to deceive any person, in circumstances where there is a duty to disclose it; or
(c) a fraudulent device, trick, or stratagem used with intent to deceive any person.

Charges for offending prior to 1 October 2003

Section 229A Taking or dealing with certain documents with intent to defraud
Every one is liable to imprisonment for a term not exceeding 7 years who, with intent to defraud, -
(a) Takes or obtains any document that is capable of being used to obtain any privilege, benefit, pecuniary advantage, or valuable consideration; or
(b) Uses or attempts to use any such document for the purpose of obtaining, for himself or for any other person, any privilege, benefit, pecuniary advantage, or valuable consideration.

Section 246 Obtaining by false pretence
(1) Every one is liable to imprisonment for a term not exceeding 7 years who, with intent to defraud or cause loss to any person by any false pretence, causes or induces any person to execute, make, accept, endorse, or destroy the whole or any part of any valuable security, or to write, impress, or affix any name or seal on any document in order that it may afterwards be made or converted into or used or dealt with as valuable security.

(2) Every one who, with intent to defraud by any false pretence, either directly or through the medium of any contract obtained by false pretence, obtains possession of or title to anything capable of being stolen, or procures anything capable of being stolen to be delivered to any person other than himself, is liable –
(a) To imprisonment for a term not exceeding 7 years if the value of the thing so obtained or procured exceeds the sum of [$300]:
(b) To imprisonment for a term not exceeding one year if the value of the thing so obtained or procured exceeds the sum of [$100] and does not exceed the sum of [$300]:
(c) To imprisonment for a term not exceeding 3 months if the value of the thing so obtained or procured does not exceed the sum of [$100].

About the SFO

The SFO was established in 1990 under the Serious Fraud Office Act in response to the collapse of financial markets in New Zealand at that time.

The SFO's role is the detection, investigation and prosecution of serious or complex financial crime. The SFO's focus is on investigating and prosecuting criminal cases that will have a real effect on:

  • business and investor confidence in our financial markets and economy
  • public confidence in our justice system and public service
  • New Zealand's international business reputation.

The SFO operates three operational teams; the Evaluation and Intelligence team along with two investigative teams.

The SFO operates under two sets of investigative powers.

Part 1 of the SFO Act provides that it may act where the Director "has reason to suspect that an investigation into the affairs of any person may disclose serious or complex fraud."

Part 2 of the SFO Act provides the SFO with more extensive powers where: "...the Director has reasonable grounds to believe that an offence involving serious or complex fraud may have been committed..."

In considering whether a matter involves serious or complex fraud, the Director may, among other things, have regard to:

  • the suspected nature and consequences of the fraud and/or;
  • the suspected scale of the fraud and/or;
  • the legal, factual and evidential complexity of the matter and/or;
  • any relevant public interest considerations.

The SFO's Annual Report 2016 sets out its achievements for the past year, while the Statement of Intent 2014-2018 sets out the SFO's strategic goals and performance standards. Both are available online at www.sfo.govt.nz