Trader charged with multi-million dollar fraud

Published

An Auckland man who operated a foreign exchange brokerage and trading business has been charged with fraud that saw his largest investors allegedly lose more than $1 million each.

Kelvin Clive Wood (69) entered no plea today 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.

The SFO alleges that the defendant operated a Ponzi scheme from January 2010 to May 2017 - using new investors’ funds to pay other investors their reported gains, or to refund their principal investment.

It alleges that 18 investors lost at least $7 million as a result of the defendant’s offending.

Mr Wood has been remanded on bail until his next appearance at the Auckland District Court on 13 November.

The Financial Markets Authority referred the case to the SFO to investigate in mid-2017.

ENDS

Issued by

Henry Acland
Serious Fraud Office
027 705 4550

Note to editors

Background to investigation

Kelvin Clive Wood (69) of Auckland facilitated foreign exchange and trading services through two companies – Forex (NZ) Limited 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.

Crimes Act offences

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.

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.

About the SFO

The Serious Fraud Office (SFO) was established in 1990 under the Serious Fraud Office Act.

The SFO is the lead law enforcement agency for investigating and prosecuting serious or complex financial crime, including bribery and corruption.

The presence of an agency dedicated to white collar crime is integral to New Zealand’s reputation for transparency, integrity, fair-mindedness and low levels of corruption.

This work contributes to a productive and prosperous New Zealand and the SFO’s collaborative efforts with international partners also reduce the serious harm that corrupt business practices do to the global economy.

The SFO has two operational teams: the Evaluation and Intelligence team and the Investigations team.

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 2017 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

The SFO Twitter feed is @SFO_NZ