by Alan Thornhill
More than 200 investors, who lost $15.5 million, paid for the lavish lifestyle of a scammer, who operated a sophisticated Ponzi scheme, through bank accounts in Vanuatu.
The scammer, operating from a plush office, in a fashionable district, was collecting up to $50,000 a month, from his victims, to maintain himself in the style, in which he had become accustomed.
His circumstances, though, have now changed.
He has just started serving a 13 year jail sentence..
Like many other criminals, this man had lured his victims with the illusion of high returns.
The false products he offered included managed investments and self managed superannuation funds.
Essentially, though, Ponzi schemes are simple.
They rely on steadily growing cash flows.
And a little of that inflow can be diverted, for a while, into truly attractive returns.
Eventually, of course, it all collapses.
In this case, though, the sophisticated scammer managed to keep his Ponzi scheme going for nine years,
The case, recorded in Austrac’s latest report, shows that everything seemed fine, for quite a long time.
“The scheme grew by word of mouth with friends, relatives and acquaintances of the suspect and victims investing …,” the report said.
“Victims of the scheme were from Australia, South Africa and the United Kingdom.
While some victims initially received money from their investment, the majority lost their investments,” Austrac said.
These losses were devastating
They included family inheritances, retirement funds and savings.
The scammer, though, was living well.
He stole more than $10 million, to support his lifestyle and business expenses, while it all lasted.
Alan Thornhill is a parliamentary press gallery journalist.
Private Briefing is updated daily with Australian personal finance news, analysis, and commentary.
Tuesday May 21
The Dow Jones Index fell 18.97 points to 15,335.40
Unions are seeking a rise of $30 a week in the National Wage Case, which opens today
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