Foreign exchange (forex) broker Kelvin Clive Wood, who scammed more than $7 million from his clients, has been sentenced to six years and three months’ imprisonment this Wednesday for running a Ponzi scheme in New Zealand.
In the Auckland District Court Wood was sentenced this morning by Judge Robert Ronayne on two representative charges of obtaining by deception and theft by a person in a special relationship.
As part of his sentence, Wood has received a minimum period of imprisonment of two years and 11 months. The charges were brought by the Serious Fraud Office (SFO) after the case was referred to the agency by the Financial Markets Authority (FMA) in May of 2017.
The 70-year-old man provided FX and other trading services through two companies – Forex (NZ) Limited and Forex NZ 2000 Limited. He created a Ponzi scheme after his FX brokerage started to suffer net trading losses which he ran from 2010 until 2017.
ACY Securities Supports ASIC’s Product Intervention OrderGo to article >>
According to the statement from the SFO, Wood used the funds of new investors to pay previous investors their reported returns or to refund investment principal, as is typical with a Ponzi scam. None of his clients was aware that their funds were being used to repay other investors.
Under the scam, Wood’s clients gave him money under the impression of investing in fixed interest term deposits, purchasing foreign currency and general investment and forex trading purposes.
Kelvin Wood took $7 million from 18 investors
Altogether, Wood managed to solicit more than $7 million from 18 investors over the eight-year period. To cover up his actions, he deliberately reported fictitious profits and either false or inaccurate foreign currency trades.
Commenting on the sentence, the Acting Director of the SFO, Rajesh Chhana, said: “Mr Wood earned the trust of a group of investors through his personal and professional association with them. His breach of that trust is reflected in the sentence imposed today. The prosecution of such matters holds to account those who fail to conduct business in accordance with the expectations of a reputable market.”