The Serious Fraud Office (SFO) says "serial fraudster" Lance Jack Ryan has been sentenced to seven years and six months jail after pleading guilty to a series of charges.
Ryan used the foreign exchange platform BlackfortFX as a façade to entice over 900 mostly Christchurch investors to pump about $8.3 million into a Ponzi scheme, the SFO says.
Jimmie McNicholl, the public face of BlackfortFX and its sole shareholder and director, was sentenced to 11 months of home detention and $50,000 reparation. McNicholl pleaded guilty to obtaining registration as a financial services provider by deception.
The SFO says BlackfortFX did not actually conduct any forex trading, or any other form of investment activity.
Here's the SFO's press release.
A serial fraudster who persuaded Cantabrians to invest more than $8 million in a fake foreign exchange brokerage has been jailed for seven years and six months, with a minimum non-parole period of three years and nine months, for charges brought by the Serious Fraud Office.
Lance Jack Ryan (44) was sentenced at the Christchurch District Court. He had pleaded guilty earlier to charges of ‘Obtaining by deception’, ‘False accounting’, ‘Forgery’, ‘Reproducing a document with intent to deceive’ and ‘Theft by person in special relationship’.
Mr Ryan, also known as Lance Jared Thompson, used the forex platform BlackfortFX as a façade to encourage more than 900 investors, who were mostly from the Christchurch region, to put about $8.3 million in the Ponzi scheme. Mr Ryan has a number of previous dishonesty convictions including ‘misleading a social welfare officer’ and ‘taking or using a document for pecuniary advantage’, together with other Insolvency Act and Companies Act offences.
Jimmie Kevin McNicholl (56) who was the public face of BlackfortFX, as well as its sole shareholder and director, was sentenced to 11 months of home detention and $50,000 reparation. Mr McNicholl pleaded guilty in May to obtaining the registration as a financial services provider by deception.
BlackfortFX did not conduct any forex trading, or any other form of investment activity.
SFO Director, Julie Read said, “The sentence imposed on Mr Ryan reflects the very serious nature of his offending. He cynically manipulated vulnerable and trusting investors, many of whom have suffered considerable stress in additional to financial loss. Some of the lost money was payouts from the Earthquake Commission. Mr Ryan also deceived the Financial Markets Authority and the Companies Office. The prosecution of such matters is an important aspect of protecting New Zealand’s reputation as a safe place to invest and do business.”
The SFO acknowledges the assistance of the Financial Markets Authority in the investigation which brought about the prosecution of Mr Ryan and Mr McNicholl.
BACKGROUND INFORMATION
Arena Capital Limited (Arena), which traded as BlackfortFX, was registered on the Financial Service Providers Register and purported to offer foreign exchange services to clients. The Financial Markets Authority (FMA) obtained asset preservation orders over the assets of Arena and associated persons in May 2015. The FMA also referred the matter to the Serious Fraud Office.
Arena was placed into liquidation at the Christchurch High Court on 24 July 2015.
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.
Section 256 Forgery
(1) Every one is liable to imprisonment for a term not exceeding 10 years who makes a false document with the intention of using it to obtain any property, privilege, service, pecuniary advantage, benefit, or valuable consideration.
(2) Every one is liable to imprisonment for a term not exceeding 3 years who makes a false document, knowing it to be false, with the intent that it in any way be used or acted upon, whether in New Zealand or elsewhere, as genuine.
(3) Forgery is complete as soon as the document is made with the intent described in subsection (1) or with the knowledge and intent described in subsection (2).
(4) Forgery is complete even though the false document may be incomplete, or may not purport to be such a document as would be binding or sufficient in law, if it is so made and is such as to indicate that it was intended to be acted upon as genuine.
(5) Every person is liable to imprisonment for a term not exceeding 3 years who, without reasonable excuse, sells, transfers, or otherwise makes available any false document knowing it to be false and to have been made with the intention that it be used or acted on (in New Zealand or elsewhere) as genuine.
Section 258 Altering, concealing, destroying, or reproducing documents with intent to deceive
(1) Every one is liable to imprisonment for a term not exceeding 10 years who, with intent to obtain by deception any property, privilege, service, pecuniary advantage, benefit, or valuable consideration, or to cause loss to any other person,—
(a) alters, conceals, or destroys any document, or causes any document to be altered, concealed, or destroyed; or
(b) makes a document or causes a document to be made that is, in whole or in part, a reproduction of any other document.
(2) An offence against subsection (1) is complete as soon as the alteration or document is made with the intent referred to in that subsection, although the offender may not have intended that any particular person should—
(a) use or act upon the document altered or made; or
(b) act on the basis of the absence of the document concealed or destroyed; or
(c) be induced to do or refrain from doing anything.
(3) 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 knowing that—
(a) the document was altered, concealed, or made, in whole or in part, as a reproduction of another document; and
(b) the document was dealt with in the manner specified in paragraph (a) with intent to—
(i) obtain any property, privilege, service, pecuniary advantage, benefit, or valuable consideration; or
(ii) cause loss to any other person.
Section 260 False accounting
Every one is liable to imprisonment for a term not exceeding 10 years who, with intent to obtain by deception any property, privilege, service, pecuniary advantage, benefit, or valuable consideration, or to deceive or cause loss to any other person,—
(a) makes or causes to be made, or concurs in the making of, any false entry in any book or account or other document required or used for accounting purposes; or
(b) omits or causes to be omitted, or concurs in the omission of, any material particular from any such book or account or other document; or
(c) makes any transfer of any interest in a stock, debenture, or debt in the name of any person other than the owner of that interest.
And here's a statement from the FMA
The Financial Markets Authority acknowledges the sentencing today in the Serious Fraud Office’s criminal prosecution of Mr Jimmy McNicholl and Mr Lance Ryan, also known as Lance Jared Thompson. These individuals were prosecuted in relation to a Ponzi scheme in Christchurch that resulted in hundreds of people investing a total of $8.3m.
The FMA secured asset preservation orders in May 2015 after serious concerns were raised about the activities of Blackfort/Arena, and referred the investigation to the SFO.
Nick Kynoch, General Counsel at the FMA said, “Mr McNicholl and Mr Ryan have caused serious distress and harm to the investors in this fraudulent scheme. We are pleased that they have been successfully prosecuted and held to account for their actions, while acknowledging that hundreds of people remain out of pocket.
It is also significant that the SFO successfully brought criminal charges for deceiving the FMA. This reflects that there are serious repercussions for misleading the regulator.”
19 Comments
You could argue that every youngster shoehorned into a mortgage, every student forced into debt and every kiwisaver urged to kiwisave, are victims of a ponzi. Exponential growth vs finite planet - it's a sitter. Provable beyond all doubt.
Wonder who'll be prosecuted in those cases?
Don’t know if your property had been done over by EQC & Fletchers, that you could consider it a prime asset? Christchurch housing stock built pre the EQ’s is of highly questionable integrity even without going into the issues arising on large areas of land. Heaven forbid, but another series of large EQ’s would likely be the coup de grace for countless houses.
Foxglove I lived in Chch for 18 years, worked as an Architect during this time, lost my house completely to the EQ, dealt with EQC, AMI (southern Insurance) and then the Crown for my red-zoned land and I can tell you, you really don't know what you're talking about.
Very glad to learn of your outcome. Likewise we fought EQC & the our insurers all the way to the “court steps”where they capitulated.No desire to regurgitate all the unpleasantries but it was costly financially and emotionally to the point that our eventual vindication came with little sense of being victorious. Given your similar process you will understand most of that I would think. However my initial comment concerns the large number of houses that are now subject to some scrutiny as to cowboy “repairs.” These have been the subject of quite some publicity I believe. Two members of our wider family have houses that are now outside code and unsaleable. Beyond that I am aware of many others who have bought houses in the same category. But if you think that those afflicted as such are insignificant that is of course your prerogative.
Looking at the geological & liquefaction reports & building failure engineering reports no. The insurance cost increases alone would not polish that curd. But it matters far more where you have property, in any property investment, than the amount of it. Putting all your property investment eggs into one city in NZ is exceedingly risky (even NZ alone is risky in cases like a bubble). Especially because like Japan we straddle the ring of fire with intersections of multiple plates, and get the benefits of the polar & pacific storms so natural disasters & high insurance costs is a given. Not to mention the NZ housing market heavily depends on investors who are fair weather friends. Not to mention all the instances of property scams and fraud out there, along with fraudulent & poor building reports to assert the standard of property brought. Even house building company collapses happen far more often. It is part of why we find the term phoenix company so common. These people who were duped through trust and supposed document & data look and feel would be equally likely to be duped in similar circumstances in the housing market. After all it is the "trust" element that is core. Once you have their trust a good conman could sell them anything. Especially if the victims have limited access to legal & financial support. How does the phrase go, "I have a bridge to sell you" was in itself a property fraud. It did not matter the property used & that it existed at the time or the documents for ownership produced. It mattered that the classic conman had their trust.
Property you have control of!!!! What rubbish as always The Boy. Capital Gains Tax. Ring fencing of Losses. Restrictions on overseas buyers. Interest rates and inflation. Kiwi build. Reductions in immigration numbers. China restricting money leaving its shores. In Christchurch earthquakes and your terrible weather. No asset is under our control and in some ways property is worse than other categories as it is expensive and harder to move on than some other asset classes. At least in Christchurch you have cheap housing which is getting cheaper.
Gordon, Capital Gains Tax will be grandfathered!
We don’t have losses, we pay tax on every property!
Overseas buyers don’t affect us one iota, as we don’t sell! Why on earth would we?
Interest rates are just fine and aren’t going anywhere! Inflation is a positive for housing!
KkwiBuild is a non event as we all know now!
Immigration, I know there are plenty of people coming into Chch from Auckland now !
China can do what they like, how does it affect investors who are positively geared?
Earthquakes are not a problem now as we are safer than ever and everything is well and truely insured barring 2 that we bought for less than land value and will get insurance for easily.
Weather not a problem for us. Get up when we want Gordon if it is cold, and can go overseas whenever we want.
Challenge to you still there for you Gordon, but as we all know, you haven’t got the guts to take me up on it, have you Gordon?
Speckles, totally agree with you re the home detention.
The fellah took millions off people by fraud so how is being financially looked after by the NZ Tax payer and able to live in a house a punishment?
It is all about Labour’s policy of reducing the prison population.
Who says that crime doesn’t pay if these limp wrested judges are going to give crims a slap with a wet bus ticket!
Although the free rent and food in jail itself is still preferable to today's housing options and food costs. They even get meat for prison dinners! Those on sickness, disability or pension benefits don't even get things that good with dedicated housing and food. You really have to admit the sentence length in any location was never going to be comparable to the lost time, money, housing & even health of victims. At best taking someone and housing them is a temporary punishment that is not ever going to make up for a death, a rape, drug trafficking, or a significant theft & corporate fraud.
Hence they can and do focus somewhat on recovery of proceedings but as the more wealthy criminals know hiding behind a network of companies and trusts with family and friends involved can still leave you with some proceeds hidden. At least they got a $1.4mil house and a 200k car, but 33c in the dollar is awfully small. Not as bad as the crime Allan Hubbard et al got away with which the NZ govt had to bail out over a billion.
If anything instead of subsidies to large international businesses like the film industry why not have funds to allow adequate restitution to the victims of certain crimes. After all the NZ govt certainly would benefit more, so would the public. You cannot state for the crime of death via criminally dangerous driving that 5K or less and a little home detention & community service is worth a life lost. It often does not even cover funeral costs. We do not even ensure those with fines pay before they skip the country.
Might as well look at sentencing as a whole as going nowhere to help the victims outside of limiting their contact with the criminals and limiting the criminals contact with potential victims. Which in the age of the internet is always going to be limited in effectiveness anyway. In the case of financial crime limiting contact may not be that important. Fool them once shame on the criminal, fool them again after going through the rigmarole of a court case so the criminal is "punished" and that would have to be an exceptional case of memory loss.
I find this seriously sad that the victims have suffered so much their health and even lifespan is cut down by these criminals and of all financial crimes affect so many families at once. A person who perpetrates many dairy robberies in Auckland would have over a hundred times less victims, with less stolen then these two and yet financial crimes often get off with shorter sentences and a comfortable lifestyle ahead of them. A bankruptcy and then back onto the next scheme. There really is a different standard for the amount of the crime, e.g. mass drug trafficking in millions gets home detention, growing weed for personal use can get you jail. No consideration of the damage or the comparative costs to the public. Widespread fraud is just a small payment to return back to a comfortable home lifestyle, an early retirement. Might as well tell those waiting for state housing to start some ponzi schemes, it is not likely to end up a worse result if they are already at the point of being unable to get a decent wage & needing emergency housing and food parcels. Jail often is preferable... ever wonder why communities with more poverty & housing difficulty experience more crime.
Except if it’s mass drug trafficking of Meth. That’s more severe than killing someone by pouring petrol on them and setting them alight it seems. This country is so messed in the head.
A man who disguised methamphetamine as dishwashing liquid, then tried to smuggle it into the country before being caught by a joint police and Customs sting has been jailed for 14 years.
https://i.stuff.co.nz/national/crime/102581103/man-jailed-for-importing…
Shay Barry Webster, 26, was jailed for five years and three months after pleading guilty to the manslaughter of Terry Smith.
Webster poured petrol on Mr Smith and set him alight on Anzac Day in 2013, Court News reports.
https://www.newshub.co.nz/home/new-zealand/2018/07/convicted-killer-sha…
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