Guilty plea over New Zealand's biggest Ponzi scheme

A New Zealand fund manager pleaded guilty on Thursday to masterminding the country's largest "Ponzi" scheme, which defrauded more than 1,200 investors of NZ$380 million ($300 million).

The Serious Fraud Office (SFO) said Wellington-based David Ross, 63, admitted four counts of false accounting and one of theft over his running of Ross Asset Management, which collapsed last November.

"While a guilty plea does not address the significant losses incurred by a large number of victims, it will bring some relief to those victims," SFO acting chief executive Simon McArley said in a statement.

The SFO launched a joint investigation with the Financial Markets Authority late last year after receiving complaints from investors that they were unable to access their funds.

The probe found that Ross had siphoned hundreds of millions of dollars of clients' money through a fictitious broker and his investment fund was worth only NZ$10.2 million.

Ross was remanded in custody to reappear on October 24, when a sentencing date will be set.

A Ponzi scheme, similar to a pyramid scheme, is a fraudulent investment operation that pays out returns to existing investors with money put in by new clients, and is liable to collapse when injections of fresh funds dry up.

The SFO said the Ross case was the largest such scheme ever encountered in New Zealand.